While upholding the vires of section 43 of the West Bengal Value Added Tax Act, 2003, the Calcutta High Court held that a notice need not be issued to assesse at the time of selection for audit under the said provision.
The petitioners, Paharpur Cooling Towers Limited, approached the High Court alleging that the method of selection for audit under Section 43 of the West Bengal Value Added Tax Act, 2003 is arbitrary, illegal and violative of principles of natural justice.
Section 43 of the Act provides that audit based review of accounts of the dealers will be done within five completed years prior to the date of selection as against existing provision of completion of assessment within two years from the year end under West Bengal Sales Tax Act, 1994. The provision allows a Commissioner to select on a random basis or upon information or otherwise, such percentage or such class or classes of assessees, as may be prescribed, for audit of accounts, registers of documents. The Commissioner, therefore, has to make a selection for the purpose of audit of accounts of an assessee in respect of a financial year. Section 43(1) of the Act of 2003 casts a duty upon the Commissioner to select a certain prescribed percentage of the assessees.
According to the petitioner, it has a right to be heard at the time of selection process since the provision implies principle of natural justice.
Justice Debangsu Basak noted that in a given financial year there will be a certain percentage of assessees who will be required to undergo an audit in terms of the said provision.
Dismissing the petition, it further said that the nature of activity involved in the selection of an assessee does not create a right of being heard in favour of an assessee prior to the selection. “The Commissioner, in the first place has to select an assessee. The assessee has to be selected from out of a large number of assessees as a certain percentage is required to be selected and not the entirety of the assessees. Therefore, at a given stage, the Commissioner has to select the percentage prescribed.”
“Requirement of audit in revenue jurisprudence is well recognized. Subjecting an assessee to an audit by itself does not result in an adverse civil consequence for the assessee. Section 43 mandates a selection of the prescribed percentage. Acting under Section 43 of the Act of 2003 a Commissioner is obliged to select the prescribed percentage in the manner mandated. The petitioner has not substantiated that, the petitioner has been selected beyond the parameters of Section 43. Therefore, the question of giving him a hearing does not arise prior to his selection. Subsequent to the selection the assessee falls within the procedure prescribed in Section 43,” it added.
Read the full text of the Judgment below.
