Delhi High Court Quashes VAT Assessment Orders Passed By Audit Officer Citing Lack Of Jurisdiction

The Delhi High Court has quashed a batch of VAT assessment orders issued by VAT Audit Officer, stating that the authority did not have necessary delegation to carry out assessments.Form DVAT-50 enables the VAT Commissioner to authorize officials for carrying out audit, investigation and enforcement functions under Delhi Value Added Tax Act and Rules.However, a division bench of Justices Prathiba M. Singh and Shail Jain noted that no such authorization was made in favour of VATO (Audit) before 15th October, 2014. It held,“...when the VAT (Audit) officer, not being the jurisdictional officer concerned and also not having the necessary delegation to carry out assessments, the assessments orders in this batch of appeals would not be valid.”The development comes in a batch of appeals preferred under Section 81 of the DVAT Act, against various assessment orders passed by VATO (Audit).The High Court found that prior to the Circular dated April 11, 2016 issued by the Department, there was no authorisation for VATO (Audit) to pass an assessment order under the DVAT Act.Further, Form DVAT-50, which is mandatory to exercise powers of audit, investigation and enforcement, was not issued prior to 15th October, 2014.Reliance was placed on Capri Bathaid Pvt. Ltd. and Ors. v Commissioner of Trade and Taxes (2016) where the High Court had held that in the absence of a specific order, it is the jurisdictional VATO, and not the VATO (Audit), who will continue to exercise the power of assessment vis-a-vis an Assessee.Reference was also made to Larsen & Toubro Ltd. &Anr. v. Govt. of NCT of Delhi& Ors. to hold that amid lack of delegation and non-issuance of Form DVAT-50, the initial audit as also the assessment by VATO (Audit) are untenable.As such, the appeals were disposed of and assessment orders were quashed citing lack of authority.Appearance: Mr. Varun Nischal, Mr. Arif Ahmed Khan, Ms. SairaTagre, Mr. Afroz Ahmed Ahmad Khan, Ms. Shaziya Fahim and Mr. Jitendra Kumar, Advs. for Petitioner; Mr. K. Gopalakrishnan, Adv. for RespondentCase title: H.G. International v. The Commissioner Of Trade And Taxes, Delhi (and batch)Citation: 2025 LiveLaw (Del) 1543Case no.: ST.APPL. 63/2014 (and batch)Click here to read order

Delhi High Court Quashes VAT Assessment Orders Passed By Audit Officer Citing Lack Of Jurisdiction

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