Section 64(4) orders are quasi-judicial: require prior notice and a reasoned speaking order; Commissioner cannot delegate below Deputy Commissioner

HC held that an order under Section 64(4) of the TNVAT Act is quasi-judicial, requiring prior notice and a reasoned, speaking order to the registered dealer before directing an audit. The Commissioner lacks power to delegate that authority to a subordinate below the rank of Deputy Commissioner; the Commissioner must himself pass the order. The Division Bench's prior ruling on the point was applied, and the appeal was allowed.

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Issues:
Challenge to order allowing writ petition but granting liberty to delegate power for enquiry.

Analysis:
The writ appeal challenged the order allowing a writ petition but granting liberty to delegate power for an enquiry. The impugned proceedings required the petitioner to prepare for a proposed VAT audit and cooperate with audit officers by providing necessary documents. The Single Judge concluded that the Joint Commissioner did not have the necessary approval to issue the proceedings, directing the Commissioner to delegate power as per Section 64(4) of the TNVAT Act.

The Division Bench previously settled a similar issue in a different case, emphasizing the importance of Section 64(4) of the TNVAT Act. This section empowers the Commissioner to order an audit of a registered dealer's business by an officer not below the rank of Deputy Commercial Tax Officer. The criteria for selecting dealers for audit include those who have not filed returns, claimed excessive tax refunds, or whose returns are deemed incorrect. The Commissioner must individually assess each case and issue specific orders for audit, ensuring compliance with natural justice principles.

The Court clarified that the Commissioner cannot delegate the power to pass audit orders to lower authorities. Each order under Section 64(4) must reflect the Commissioner's evaluation of the dealer's default and the need for an audit. The audit process is crucial, not just under the TNVAT Act but also possibly under other relevant statutes like the Companies Act or Income Tax Act. The audit report can be used as evidence during assessment proceedings, making it a serious matter that requires due process and careful consideration.

Therefore, the Court held that the Commissioner must personally exercise the powers under Section 64(4) without delegation. The direction given by the Single Judge to delegate power was deemed unsustainable, and the order was interfered with in line with the earlier Division Bench decision. The Commissioner was advised to follow the principles outlined in the previous judgment when exercising powers under Section 64(4) of the Act. The writ appeal was allowed accordingly, with no costs incurred.

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