Court rules against tax authorities collecting cheques during inspections, citing lack of power.

The court ruled in favor of the petitioner, a garments manufacturer and dealer, in a case where authorities collected cheques during a surprise inspection for tax assessment. Citing a previous judgment, the court held that enforcement authorities lacked the power to collect cheques during inspections. Following the precedent, the court directed the authorities to return the specific cheques to the petitioner and emphasized that the assessing authority could still take lawful actions. No costs were awarded, and the case was closed.

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Issues:
Petitioner seeking return of cheques collected during inspection, Jurisdiction of authorities to assess and collect tax during inspection.

Analysis:
The petitioner, a manufacturer and dealer in garments, filed a writ petition seeking the return of cheques collected by respondents 1 and 2 during a surprise inspection on the grounds that the authorities lacked jurisdiction to assess and collect tax during the inspection. The total tax demand arrived at was Rs. 36,92,584. The petitioner contended that the authorities had overstepped their jurisdiction, prompting the petition before the court.

During the hearing, the petitioner's counsel relied on a previous decision of the court in M/s.Astek Electricals and Controls Vs. The Assistant Commissioner, highlighting that enforcement authorities do not have the power to compel the petitioner to hand over cheques. The court reiterated that the enforcement wing authorities were not authorized to collect cheques, as established in the referred case. The court acknowledged the petitioner's argument and ruled in favor of the petitioner based on the precedent set by the earlier judgment.

In line with the precedent set in M/s.Astek Electricals and Controls case, the court allowed the writ petition and directed respondents 1 and 2 to return the cheques bearing specific numbers to the petitioner immediately. The court emphasized that the assessing authority could still take appropriate actions within the bounds of the law. No costs were awarded, and the connected miscellaneous petition was closed as a result of the judgment.

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