VATO (Audit) has power to Pass Assessment Order under DVAT Act: Delhi HC [Read Order]

The Delhi High Court on Wednesday ruled that the Value Added Tax Officer (Audit) has power to pass assessment under the provisions of the Delhi Value Added Tax Act, 2004.

In the instant case, the petitioner contended before the division bench that the Value Added Tax Officer (Audit) cannot pass an assessment order in terms of the Act.

The petitioner relied on the decision in Tata Sponge Iron Ltd. v Commissioner of Sales Tax, Orissa, wherein it was held that the officer who prepares the audit report cannot himself pass an assessment order based on such audit report.

The bench noted that at no stage of proceedings before the VATO, the OHA, or the AT, did the Appellant raise the issue regarding the jurisdiction of the VATO (Audit) to pass the default assessment order.

Further, under Section 58 (4), the auditor can carry out an assessment or re-assessment as the case may be, in terms of Sections 32 and 33 of the DVAT Act. “The powers under Section 58 can be delegated by the Commissioner to named officers in terms of Section 66 (1) read with Section 68 of the DVAT Act.”

The bench agreed with the departments’ contention that during the time of passing the impugned order, there was an order dated 31st October 2005 issued by the Commissioner, VAT under Section 68 of the DVAT Act read with Rule 48 of the Delhi Value Added Tax Rules, 2005 delegating his powers under various provisions of the DVAT Act to an officer of a particular designation. As per Sl. No. 15 of the said order, the Commissioner delegated all the powers of an auditor under Section 58 of the DVAT Act to the VATO.

“At the time when the impugned orders of default assessment of tax, interest, and penalty were passed by the VATO (Audit), the above order was in force. It is a validly issued order and is not a subject matter of challenge in the present proceedings”, the bench said.

Overruling the contentions of the petitioners, the bench held that the decision in Tata Sponge Iron Ltd. v Commissioner of Sales Tax, Orissa, is not applicable to the present case. “Under the OVAT Act the officer undertaking the audit has to forward the report to the assessing officer who then, in terms of Section 42 of the OVAT Act, makes an ‘audit assessment’. The position under Section 58 of the DVAT Act is very different.”

Read the full text of the Order below.