VAT audit jurisdiction upheld where Commissioner issued the audit order; cheques collected during inspection had to be returned.
Where the Commissioner had issued the statutory order for VAT audit, departmental officers could carry out the audit as administrative implementation, and that process did not amount to impermissible sub-delegation or want of jurisdiction under Section 64(4) of the Tamil Nadu Value Added Tax Act, 2006. The Court found that the records showed the Commissioner had selected dealers for audit on specified risk parameters, while the officers only executed the audit programme, so the jurisdictional challenge failed and the audit was upheld. It also applied the settled rule that enforcement officers cannot collect tax amounts as advance recovery during inspection, and directed return of the cheques collected from the dealer.
Issues: Whether the VAT audit was jurisdiction because the authorization for audit was issued through the departmental hierarchy and not by the Commissioner directly, and whether the cheques collected during inspection were liable to be returned.
Analysis: Section 64(4) of the Tamil Nadu Value Added Tax Act, 2006 requires the Commissioner to order audit of the business of a registered dealer, while the actual conduct of audit may be entrusted to officers not below the prescribed rank. The proceedings produced by the respondents showed that the Commissioner had exercised the statutory power and had selected dealers for audit on specified risk parameters, with the departmental officers only implementing the audit programme. The Court distinguished earlier cases where the record did not establish a Commissioner's order or where the facts suggested impermissible delegation. It held that the mere use of the expression "authorised" in the inspection statement did not displace the Commissioner's written order. On the collection of cheques during inspection, the Court applied the settled principle that enforcement officers cannot collect tax amounts as advance recovery during inspection.
Conclusion: The challenge to the VAT audit failed, and the audit was upheld as having been ordered by the Commissioner in accordance with law. The cheques collected during inspection were directed to be returned to the petitioner.
Final Conclusion: The writ petition was dismissed on the principal jurisdictional challenge, but limited monetary relief was granted by directing return of the cheques collected during inspection and requiring the department to proceed further only in accordance with law.
Ratio Decidendi: Where the Commissioner has issued the statutory order for VAT audit, departmental officers may carry out the audit as part of administrative implementation, and such implementation does not amount to impermissible sub-delegation or want of jurisdiction.
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