Unlawful turnover addition for audit-report default under Tamil Nadu VAT law was set aside for lack of statutory basis.

A 2% addition to taxable turnover for alleged failure to file the audit report under section 63-A of the Tamil Nadu Value Added Tax Act was unsustainable because the provision contemplated audit compliance and a specific penalty, not turnover enhancement. The court held that the assessing authority could not impose an addition without statutory authority, particularly when the Department did not meet the challenge to the basis of the demand and the dealer had sought time to file objections. The assessment order was set aside and the matter remitted for fresh consideration in accordance with law.

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Issues: Whether the assessing authority could sustain an addition of 2% to the taxable turnover for alleged failure to file the audit report under section 63-A of the Tamil Nadu Value Added Tax Act, 2006, and whether the impugned assessment order was liable to be set aside.

Analysis: Section 63-A required a dealer crossing the prescribed turnover to get accounts audited and submit the audit report, and provided for a penalty of Rs. 10,000 on failure to comply. The demand of 2% addition to the taxable turnover was not found in the statutory scheme of section 63-A. Since the Department proceeded on a ground of non-compliance with section 63-A, it could not impose an enhancement of turnover by 2% without legal authority. The petitioner had also sought time for objections, and the authority did not rebut the challenge to the basis of the impugned demand.

Conclusion: The addition of 2% to the taxable turnover was unsustainable. The impugned order was set aside and the matter was remitted to the authority for fresh consideration in accordance with law.

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