Assessing Officer can’t be Compelled to Follow the Directions of Enforcement Authority: Madras HC Quashes Assessment [Read Order]

The Madras High Court, while quashing an assessment passed under Tamil Nadu Value Added Tax Act (TNVAT), ruled that Assessing Officer, being an Independent Authority, cannot be compelled to follow the direction of the enforcement authority and the court quashed the assessment.

In instant case the petitioner is a registered dealer on the file of the respondent, under the provisions of both the Tamil Nadu Value Added Tax Act, 2006 and Central Sales Tax Act, 1956, is a Large Tax Payers Unit. The petitioner is engaged in the manufacture of Iron and Steel products, having Factories/Branches in various parts of India, a group Enforcement Wing Officials conducted the audit under Section 64 (4) of TNVAT Act, for a period from 2008-09 to 2015-16.

For all the assessment year the petitioner was deemed to have been assessed under Section 22 (2) of TNVAT Act.

Based on the Audit Slip, the petitioner was directed to submit their explanation which was complied with by the petitioner. The Audit Report was forwarded to the respondent, who is an Assessing Officer of the petitioner, which has resulted in issuance of the Revision Notices, dated 27.04.2017, for all the eight assessment years.

The common issue found in the all eight assessment year was they have affected zero rated sales, i.e. the sales to the Special Economic Zone (SEZ) and the another issue was the mismatch of details found in Annexure II of the petitioner’s purchasing dealer with that of the details founds in Annexure I of the selling dealer. This calls for the revision notice by the assessing officer. On receipt of the Revision Notices, the petitioner submitted their interim replies and raised their objection on other grounds, on which, revision of assessments was proposed.

After perusing the impugned assessment orders, Justice T S Sivagnanam observed that the respondent has found fault with the petitioner, by stating that, they have not furnished any information to the Enforcement Wing Officials, or to the Assessing Officer, and without going through the details furnished by the petitioner, has simply stated that the seller details and invoice details were not furnished.

Based on the records it was proved that two errors have been committed by the respondent while making such observation, firstly related to the respondent did not call for any such specific document. Secondly, non-furnishing of the documents before the Enforcement Wing Officials is of little avail.

The judge clearly stated that the petitioner is a limited Company, having a huge turnover and the Assessing Officer is an Officer, attached to Large Tax Payers Unit. Therefore, it is all the more important for the respondent to make thorough exercise in respect of such assessments, as the correct rate of tax has to be recovered from these large tax payers/assessees.

Finally the High Court quashed the assessment and declared that the duty of the Assessing Officer is paramount, as he is an independent authority, and cannot be guided or compelled to follow the direction of the enforcement authority.

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