Separate assessment authorisation is required after audit; audit permission alone cannot sustain assessment, penalty, or interest orders.

Audit authorisation and assessment power were treated as separate legal requirements under VAT administration. An authorisation to audit accounts, by itself, was held not to confer authority on a non-territorial officer to complete assessment, impose penalty, or levy interest. Applying the earlier view, the Court held that a distinct authorisation for assessment was necessary before valid assessment proceedings could be undertaken. The assessment orders, penalty orders, and interest orders were set aside, and the matters were remitted for fresh post-audit action in accordance with law.

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Issues: Whether an assessment order, penalty order and order for payment of interest passed by a non-territorial officer pursuant to audit authorization alone, without a separate authorization for assessment, were sustainable.

Analysis: The audit authorization and the power to assess were treated as distinct requirements. The prior decision relied upon had already held that authorization only to audit the value added tax accounts did not, by itself, confer authority to complete assessment. The impugned orders were therefore examined against that principle, and the Court followed the earlier view that a separate order authorizing assessment was necessary before assessment could be undertaken lawfully.

Conclusion: The assessment orders, penalty orders and orders for payment of interest were set aside, and the matters were remitted for fresh post-audit action in accordance with law.

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