Authority to collect tax during inspection under VAT law rejected where no completed assessment or valid demand existed.

Enforcement officials under the Tamil Nadu Value Added Tax Act, 2006 lacked authority to collect tax by taking cheques during inspection when monthly returns had not been verified and no assessment or valid demand had been completed. The Madras HC followed the earlier view that section 64(4) did not confer such jurisdiction, and treated the precedent as directly applicable on the facts. The cheques taken at inspection were therefore not authorised, and their return was directed.

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Issues: Whether the enforcement officials had authority to collect cheques towards tax at the time of inspection, without completing assessment or raising a valid demand.

Analysis: The Court followed the earlier view that section 64(4) of the Tamil Nadu Value Added Tax Act, 2006 did not confer power on enforcement officials to collect tax during inspection. Collection of cheques before verification of monthly returns and before completion of assessment was held to be beyond jurisdiction. The precedent relied upon was treated as squarely applicable on the facts of the case.

Conclusion: The collection of cheques at the time of inspection was not authorised, and the respondents were directed to return the cheques.

Ratio Decidendi: Enforcement authorities under the Tamil Nadu Value Added Tax Act, 2006 cannot collect tax by taking cheques during inspection in the absence of completed assessment or valid demand.

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