Unauthorised tax audit and incompetent assessment notices were quashed for lack of valid authority.

Audit reports and consequential default notices for VAT, interest and penalty were quashed because the audit was conducted without proper authorisation and the assessing officer lacked competence to complete the assessment. The Delhi High Court treated the challenge as covered by its earlier decision in Capri Bathaid Pvt. Ltd. v. Commissioner of Trade and Taxes, and the revenue did not seriously dispute the absence of valid authorisation or competence. The operative effect was that the impugned audit report and demand notices could not stand.

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Issues: Whether the audit report and default notices of assessment of tax, interest and penalty issued by the VATO were liable to be quashed for want of authorisation and competence.

Analysis: The challenge to the audit and consequential assessment notices was treated as covered by the earlier decision of the same Court in Capri Bathaid Pvt. Ltd. v. Commissioner of Trade and Taxes. In view of that binding precedent, the absence of proper authorisation for conducting the audit and the lack of competence to complete the assessment were not seriously disputed by the revenue.

Conclusion: The impugned audit report and the default notices demanding VAT, interest and penalty were quashed.

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