2015 (10) TMI 2605 - HC - VAT and Sales Tax

Officials lack jurisdiction to collect cheques during inspection without assessment and valid demands.

The court held that officials lacked jurisdiction to collect cheques during inspection without assessment and valid demands. Relying on precedent, the ... Jurisdiction to collect tax at the time of inspection - return of cheques - reliance placed in the decision of the case of Sri Balaji Auto Spares v. Assistant Commissioner (CT), Annadhanapatty Circle, Salem [2012 (3) TMI 380 - MADRAS HIGH COURT] for seeking refund of cheques - Held that: - it was held in the case that the powers conferred, under section 64(4) of the Tamil Nadu Value Added Tax Act, 2006, does not provide the power or the authority to the respondents to collect the tax, said to be payable by the petitioner. The enforcement wing officials had no jurisdiction to collect tax at the time of the inspection, without verification of the monthly returns, before the completion of the assessment - the issue is squarely covered by the facts of the present case, the case is applicable to the present case. The respondents are directed to return the cheques. However the respondents are open to pass appropriate assessment orders - appeal allowed - decided in favor of appellant. Issues:1. Jurisdiction of officials to collect cheques during inspection without assessment and valid demands.2. Applicability of legal provisions in tax collection during inspection.3. Relief sought through Writ of Mandamus for the return of collected cheques.Issue 1: Jurisdiction of officials to collect cheques during inspection without assessment and valid demandsThe petitioner filed a writ petition seeking a Writ of Mandamus directing the respondents to return three cheques collected during an inspection for a tax amount without prior assessment and valid demands. The petitioner argued that the officials had no jurisdiction to collect the cheques at the time of inspection. The petitioner relied on a previous judgment where the court held that officials cannot collect tax without verifying monthly returns or completing the assessment process. The court directed the respondents to return the cheques within ten days, emphasizing that officials do not have the authority to collect cheques during inspections.Issue 2: Applicability of legal provisions in tax collection during inspectionThe court referred to a previous judgment where it was established that the powers conferred under section 64(4) of the Tamil Nadu Value Added Tax Act, 2006, do not authorize officials to collect tax during inspections without completing assessments. The court reiterated that officials must follow due process and cannot collect tax amounts without proper verification and assessment. The judgment emphasized the importance of adhering to legal provisions and respecting the rights of the assessee.Issue 3: Relief sought through Writ of Mandamus for the return of collected chequesBased on the arguments presented and the precedent set by previous judgments, the court allowed the writ petition and directed the respondents to return the collected cheques to the petitioner within ten days. The court clarified that while the cheques are to be returned promptly, the respondents are still permitted to pass appropriate assessment orders within a specified timeframe. The judgment highlighted the importance of upholding the rule of law and ensuring that tax collection procedures are carried out in accordance with legal requirements.This detailed analysis of the judgment highlights the key issues of jurisdiction in tax collection, the application of legal provisions during inspections, and the relief granted through the Writ of Mandamus for the return of collected cheques.