Court sets aside assessment orders and audit report due to lack of jurisdiction, emphasizes statutory compliance

The court allowed the writ petition, setting aside the assessment orders and the Value Added Tax audit report due to lack of jurisdiction stemming from an unauthorized audit authorized by a Joint Commissioner not empowered under Section 64(4) of the Tamil Nadu Value Added Tax Act. The court emphasized the importance of adherence to statutory provisions in authorizing audits by the appropriate authority, ruling that assessments based on unauthorized audits lack legal validity. The respondents were given liberty to conduct a fresh audit in compliance with the law, with no costs awarded.

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Issues:
Challenge to assessment order based on Value Added Tax Audit authorized by Joint Commissioner not empowered under Section 64(4) of Tamil Nadu Value Added Tax Act, 2006.

Analysis:
The petitioner contested an assessment order issued by the 4th respondent for the years 2012-13 to 2015-16, arguing that the orders stemmed from a Value Added Tax Audit authorized by a Joint Commissioner lacking the authority under Section 64(4) of the Act. The petitioner's statement recorded during the audit referenced the authorization by the Joint Commissioner, raising the question of the Commissioner's exclusive power to order audits. The court referred to a previous case where similar issues were deliberated (WP.No.32566 and 32641 to 32645 of 2016 dated 11.01.2017).

The court analyzed Section 64(4) of the Act, emphasizing that only the Commissioner can order audits of registered dealers through officers not below the rank of Deputy Commercial Tax Officer based on specific criteria outlined in the provision. It was argued that the Commissioner could not delegate this power to the Joint Commissioner, as evidenced by the proceedings dated 16.05.2014. The court noted that the Joint Commissioners of the Enforcement Wing were tasked with authorizing officers for audits, which was not in line with the statutory provision.

The court considered the petitioner's refusal to sign the audit statement and the lack of acquiescence, leading to the conclusion that the assessment orders based on the unauthorized audit lacked jurisdiction. Relying on previous court orders and legal principles, the court allowed the writ petition, setting aside the assessment orders and the Value Added Tax audit report. The respondents were granted liberty to conduct a fresh audit, if necessary, and pass new assessment orders in compliance with the law. No costs were awarded, and pending applications were closed accordingly.

In summary, the judgment highlighted the importance of adherence to statutory provisions regarding the authorization of audits by the appropriate authority, emphasizing that assessments based on unauthorized audits lack legal validity and jurisdiction. The court's decision to set aside the assessment orders and grant liberty for a fresh audit underscored the necessity of procedural compliance in tax assessments.

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