The Delhi High Court yesterday delivered a judgment [Capri Bathaid Private Limited vs Commissioner of Trade & Taxes – W.P.(C) 8913/2014] and held that the powers given to the authorities are to be exercised with due care and they should not act mechanical during the proceedings.
The Court held the entire survey,search and seizure proceedings were without jurisdiction and was contrary to section 68(2) of the DVAT Act, 2004. The Court disposed four Writ petitions filed by different petitionerson matters having similar nature.All the petitioners are registered dealers under Delhi Value Added Tax Act,2004. Through the petitions, they raised similar questions concerning the exercise, of the powers of survey, search, seizure and assessmentby the officers under the DVAT Act.In all the above writ petitions, notices were issued by the Court and interim orders were passed restraining the Respondents from taking any coercive steps against the petitioners.
The claims of the Petitioners were that,the survey operations undertaken by the authorities in all the four petitions were without the authority of law. Further, the orders of default assessment of tax, interest and penalty passed by the AVATO Enf-I under Sections 32 and 33 of the DVAT Act were without the authority of law.
The common issues to adjudicate by the Court were the following.Firstly, whether the Assistant Value Added Tax Officer Enf-I was duly empowered to conduct the survey, search and seizure operation and later passed the default assessment orders of tax, interest and penalty under the DVAT Act?Secondly, whether the AVATO Enf-I could have proceeded to reverse the input tax credit claimed during an earlier period and could such reversal take place in the order of default assessment for a different period?
On deciding the case, the Court found that the default notices of assessment of tax and penalty passed by the AVATO Enf-I were wholly without jurisdiction. The validity of the search and seizure conducted by the Authority on the premises of the petitioner was rechecked by the Court. In the absence of producing the proper order authorizing the AC/AVATO/ VATI to carry out survey, search was held as invalid. While vitiating the entire survey, search and seizure proceedings, Dr. S. Muralidhar, J. observed that “there is a basic misconception that the VAT Authorities are to mechanically exercise the power of survey under Section 59 of the Act followed immediately by a search and seizure operation under Section 68 of the DVAT Act. This has been adversely commented upon by the Court in two orders in the recent past”.
The Court further found that the orders of assessment of penalty were also passed mechanically by the Authorities as the returns filed by the dealers were not taken into account. In addition no notices were given to the petitioners before the assessment.It was also held that, There could not be a revision or reassessment of the tax computed for the periods of 2013-14 for which returns were filed, by reversal of the ITC claimed for that period without following the due process as envisaged under the DVAT Act. It was not open to the AVATO Enf-I who was not authorized to make any assessment, to adjust the ITC reversal pertaining to an earlier period ending on 31st March 2014 in the returns filed for the different quarters of 2014-15.
Read the Judgment here.
