Court quashes tax notice, orders return of collected cheques. Tax authority must follow proper procedures.

The court allowed the writ petition, quashing the tax authority's notice and directing the return of the collected cheques. The judgment emphasized the necessity for tax authorities to follow proper procedures and not collect taxes during inspections without verifying returns. The decision provided relief to the petitioner, highlighting the importance of adhering to legal provisions during tax assessments.

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Issues:
Petition for Writ of Certiorarified Mandamus seeking return of cheques collected during inspection by tax authorities.

Analysis:
The petitioner, running a lodge, filed a writ petition seeking the return of two cheques collected by tax authorities during an inspection. The petitioner argued that the authorities had no jurisdiction to collect the cheques during the inspection. The affidavit stated that only 6 out of 90 rooms were occupied on the day of inspection. The authorities demanded a substantial sum as escaped assessment for two financial years, based on assumptions of full occupancy for 100 days a year. Under threat of coercive action, the petitioner's partner issued two cheques. The petitioner relied on a previous court decision where it was held that tax collection during inspection without verifying returns was unauthorized. The court directed the return of the cheques within ten days, allowing the tax authorities to make proper assessment within four weeks.

The court referred to a previous case where it was observed that tax collection during inspection without verifying monthly returns was unauthorized. The court directed the tax authorities to return the cheques collected during the inspection, emphasizing that authorities lacked the power to collect taxes at that stage. The decision was based on the provisions of the Tamil Nadu Value Added Tax Act, highlighting the importance of following due process before tax collection. The court allowed the tax authorities to conduct proper assessments within a specified time frame, ensuring compliance with relevant laws.

In conclusion, the court allowed the writ petition, quashing the notice from the tax authority and directing the return of the collected cheques. The judgment reiterated the necessity for tax authorities to follow proper procedures and not collect taxes during inspections without verifying returns. The decision provided relief to the petitioner and emphasized the importance of adhering to legal provisions while conducting tax assessments.

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