In a recent decision, the Madras High Court held that the Enforcement Officials are not entitled to effect spot collection or to collect tax from the dealer during the course of investigation under the provisions of the Tamil Nadu Value Added Tax Act, 2006.
The decision was based on the Court’s earlier decision in Hotel Blue Nile Vs. State of Tamil Nadu & Others.
The petitioners in the instant case approached he High Court challenging the actin of the Department officials who forcefully collected five post dated cheques from them, on the spot, without having any order of assessment. The petitioners contended that the same is contrary to the principles laid down by this Court in the Judgment reported in (1992) 87 STC 513 (Hotel Blue Nile Vs. State of Tamil Nadu & Others).
While allowing the petition, Justice T.S Sivagnanam observed that “Time and again, this Court has reiterated that the Enforcement Officials are not entitled to effect spot collection as if it is an advance e tax nor they are empowered to collect tax from the dealer during the course of investigation. As early as in the year 1992, this Court, in the case of Hotel Blue Nile Vs. State of Tamil Nadu (Mad.), [(1992) 87 STC 513], held that the collection of cheques by the Enforcement Wing Officials, is without jurisdiction. This view has been consistently followed in several decisions of this Court. Thus, the action of the first respondent, in collecting the cheques from the petitioner is without jurisdiction.”
Read the full text of the Judgment below.
