TMI Blog2018 (6) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... audit, but it is a proceedings by which the order passed by the Commissioner, is implemented or carried forward. The factual matrix in the present case is different from that of the case dealt with by the Court in Jeevan Buy N.Save [2017 (2) TMI 180 - MADRAS HIGH COURT], in the sense that the name of the petitioner finds place in the proceedings of the Commissioner. The Commissioner has exercised his power under Section 64(4) of the TNVAT Act and it is he who has authorised the VAT Audit. Petition dismissed - decided against petitioner. - Writ Petition No.6031 of 2018 and W.M.P.No.7428 of 2018 - - - Dated:- 28-4-2018 - Mr. T.S.Sivagnanam, J. For Petitioner : Mr.C.Backthasiromani For Respondents : Ms.G.Dhana Madhri, G.A. For Intervenor : Mr.N.Inbarajan ORDER This Writ Petition has been filed challenging the report submitted by the Commercial Tax Officer, Group-II, Enforcement (Central), pursuant to a VAT Audit conducted in the business premises of the petitioner. 2. The petitioner, who is a registered dealer on the file of the fifth respondent under the provisions of the Tamil Nadu Value Added Tax Act (TNVAT Act) and Central Sales Tax Act, is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, [M/s.M.D.Overseas Ltd., vs. Assistant Commissioner (CT) Peddunaickenpet Circle]. By placing reliance on these decisions, the learned counsel would submit that when the authorisation given by the Joint Commissioner for conducting the VAT Audit, is without jurisdiction, the report prepared based on such audit is equally without jurisdiction and therefore, the same requires to be set aside. 4. Mr.N.Inbarajan, with the leave of the Court, appeared as the Intervenor, supporting the stand taken by the petitioner. It is submitted by the learned counsel that Section 22(3) of the TNVAT Act, gives power to the Commissioner to select not exceeding 20% of the total number of assessments for details scrutiny regarding the correctness of the returns submitted by the dealer and in such cases, revision of assessment shall be made wherever necessary. It is submitted that the procedure to be followed is in terms of Rule 10(11) of the Tamil Nadu VAT Rules, which states that the method of selection by the Commissioner referred to in sub-section (3) of Section 22, shall be based on suitable stratified random sampling method and such selection shall not exceed 20% of the cases assessed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.168 of the annexure of the Commissioner's proceedings and the Commissioner authorised the Joint Commissioner of the Enforcement Wing, to authorise such officers, not below the rank of Deputy Commercial Tax Officers, who shall comply with the requirements under Section 64(5)(a) (b) of the TNVAT Act, to conduct the VAT Audit. It is further submitted that as long as the dealers are selected by the Commissioner for the purpose of audit and authorises any officer not below the rank of Deputy Commercial Tax Officers, it is sufficient compliance of Section 64(4) of the TNVAT Act. Further, it is submitted that due to administrative set up of the respondent department, it is not practically possible for the Commissioner to exactly name the Officer, who will go for audit on that particular date. The Commissioner has not delegated his powers under Section 64(4) of the Act and he has selected the dealers on whom VAT Audit will be conducted and authorised the Joint Commissioner to conduct the audit by deputing his field level officers. Therefore, the audit initiated by the Commissioner is in accordance with the provisions of Section 64(4) of the Act. With regard to the administrative set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business for the purpose of conducting VAT Audit, under Section 64(4) of the TNVAT Act, as per the authorisation issued by the Joint Commissioner, the second respondent. By placing heavy reliance on the said observation as recorded in the sworn statement, it is submitted that the authorisation was made by the Joint Commissioner and not the Commissioner and therefore, the entire proceedings are without jurisdiction. 10. To appreciate the correctness of the submissions made by the learned counsel for the petitioner, it is first necessary to look into the statutory provision and more particularly, Section 64(4), which reads as follows:- 64.(1)...... (2)..... (3)..... (4) The Commissioner may order for audit of the business of any registered dealer by an officer not below the rank of 1[Deputy] Commercial Tax Officer. For the purpose of this section, the selection of dealers for audit shall be made from amongst the dealers,- (a) who have not filed returns within the prescribed period; or (b) who have claimed exorbitant amount of refund of tax; or (c) who have filed returns, but in the opinion of the Commissioner he is not satisfied with the correctness of any re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Court while accepting the case of the petitioner, allowed the said Writ Petition and set aside the VAT Audit report as well as the assessment order giving liberty to the respondents to conduct fresh VAT Audit, if necessary. 14. A careful reading of the decision in Jeevan Buy N.Save (supra), would show that the Court considered that the submissions of the said dealer merits acceptance on the ground that there was no record placed before the Court to show that the said dealer's case was picked up for conduct of audit. This was so because, the annexure, which was stated to have been appended to the proceedings of the Commissioner, was not placed before the Court. Therefore, the Court came to the conclusion that it appears that the Commissioner has delegated their power to authorise conduct of VAT Audit to the Joint Commissioner of the Enforcement Wing. 15. In my considered view, the Court did not render a positive finding that the proceedings of the Commissioner is infact a delegation of his power to the Joint Commissioner. The Court use the expression appears . Therefore, on facts, the Court came to the conclusion that it appears that there has been delegation of pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) of the TNVAT Act and also follow the instructions issued in the VAT Audit manual during the course of audit of the business of the dealers. The Joint Commissioners were directed to review the programmes monthly and also organise one day refresher training for all groups to ensure that the groups are brought up-to-date on procedures and relevant case laws. The annexure to the said proceedings contains a list of dealers. The annexure, which was placed before the Court contains the names of 288 dealers. The petitioner's name finds place in serial No.168. Thus, the factual matrix in the present case is different from that of the case dealt with by the Court in Jeevan Buy N.Save (supra), in the sense that the name of the petitioner finds place in the proceedings of the Commissioner. As mentioned above, the Commissioner has exercised his power under Section 64(4) of the TNVAT Act and it is he who has authorised the VAT Audit. 18. The petitioner has come forward before this Court by referring to the word authorised used while recording sworn statement from the proprietrix of the petitioner on 23.09.2015. This presumably has been used on account of paragraph 3 of the order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no quarrel over this legal position. The Government at least in two instances, has conferred this power on the Commissioner namely, the power under Section 22(3) and Section 64(4). Therefore, it is the Commissioner, who shall exercise this power and select assessments for the purpose of detailed scrutiny, regarding the correctness of the returns submitted by the dealer. There is a cap with regard to the power exercisable under Section 22(B) by prescribing 20%, as the total number of cases to be selected for scrutiny. The Rule, namely Rule 10(11) lays down as to the method of selection to be done by the Commissioner. Thus, the Government while delegating its power to the Commissioner has also circumscribed the manner in which the power has to be exercised. The power under Section 64(4) of the Act, is undoubtedly a much wider power than Section 22(3). This provision confers power on the Commissioner to order for audit of the business of any registered dealer. While exercising the power under Section 64(4) what the Commissioner of Commercial Taxes is expected to do, is to order for an audit of the business of any registered dealer. The statute prescribes the rank of the officer, who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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