Mandatory scrutiny procedure under VAT rules required calling for accounts before revision; non-compliant assessment orders were set aside.

Madras HC held that a revised assessment under Section 22(3) of the Tamil Nadu Value Added Tax Act, 2006 could not be sustained where the record did not show compliance with Rule 10(11) of the Tamil Nadu Value Added Tax Rules, 2007. The rule requires the assessing authority to intimate selection for scrutiny, call for the assessee's accounts, and conduct detailed scrutiny before passing fresh orders. Because the impugned assessment orders disclosed no prior call for accounts or other indication that this mandatory sequence had been followed, they were set aside for procedural non-compliance. The matter was remitted for fresh assessment in accordance with the prescribed procedure.

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Issues: Whether revised assessment orders passed on the basis of selection for scrutiny under Section 22(3) of the Tamil Nadu Value Added Tax Act, 2006 were sustainable when the orders did not show that the assessee's accounts had been called for detailed scrutiny as required by Rule 10(11) of the Tamil Nadu Value Added Tax Rules, 2007.

Analysis: Section 22(3) contemplates selection of cases for detailed scrutiny and permits revision of assessment wherever necessary. Rule 10(11) makes the procedural sequence explicit by requiring the assessing authority to intimate the selection, call for the accounts of the assessee, scrutinise them in detail, and then pass appropriate orders. The impugned orders contained no indication that this mandatory procedural step had been followed, nor did they disclose any prior notice calling for accounts before revision of assessment.

Conclusion: The revised assessment orders were set aside for non-compliance with the mandatory procedure, and the matter was remitted for fresh assessment after calling for the accounts and undertaking detailed scrutiny.

Final Conclusion: The challenge succeeded to the extent of getting the impugned revised assessments annulled for procedural non-compliance, while leaving the revenue free to complete the assessments afresh in accordance with the prescribed statutory procedure.

Ratio Decidendi: Where a statute and its rules require a selection-based scrutiny assessment to be preceded by calling for the assessee's accounts for detailed scrutiny, an assessment order that does not disclose adherence to that mandatory step cannot be sustained.

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