Uncorroborated third-party extract cannot sustain escaped turnover reassessment; penalty falls once the tax demand fails.

Reassessment of escaped turnover under the Tamil Nadu General Sales Tax Act could not be sustained on a third-party purchase extract alone where no invoices, transport records, payment details, or other supporting material were produced despite request. The High Court held that such an uncorroborated extract did not prove unaccounted purchases or shift the burden to the dealer, so the Revenue failed to establish suppression. Because the penalty was wholly consequential to the reassessment, it also could not survive once the tax demand was set aside. The Tribunal's order was therefore upheld and the Revenue's revision dismissed.

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Issues: (i) Whether the revisional assessment bringing turnover to tax could be sustained on the basis of the purchase extract alone without supporting materials; (ii) whether the burden of proving unaccounted purchases shifted to the dealer on the basis of such extract; (iii) whether the penalty could survive once the assessment was set aside.

Issue (i): Whether the revisional assessment bringing turnover to tax could be sustained on the basis of the purchase extract alone without supporting materials.

Analysis: The assessment was sought to be reopened under Section 16 of the Tamil Nadu General Sales Tax Act, 1959 on the strength of an extract received from the Karnataka sales tax authorities. The record showed that no invoices, transport documents, payment particulars, or other supporting evidence were furnished to the assessees, even after the remand and despite their request for the material relied on. The extract by itself was treated as insufficient to prove escaped turnover, and the Department had not established the alleged unaccounted purchases through reliable evidence.

Conclusion: The revisional assessment could not be sustained on the purchase extract alone and was rightly set aside.

Issue (ii): Whether the burden of proving unaccounted purchases shifted to the dealer on the basis of such extract.

Analysis: The extract merely indicated some details said to relate to purchases, but it did not, without more, conclusively establish that the assessees had made undisclosed purchases from Karnataka dealers. In the absence of primary records, transport particulars, or an opportunity to test the material through cross-examination of the relevant intermediary, the evidentiary burden did not shift to the dealer in the manner suggested by the Revenue.

Conclusion: The burden did not shift to the dealer merely because of the extract, and the Revenue failed to prove the alleged suppression.

Issue (iii): Whether the penalty could survive once the assessment was set aside.

Analysis: The penalty was entirely consequential to the revised assessment. Once the foundation for the tax demand failed for want of proof, the penalty could not independently stand.

Conclusion: The penalty was also liable to be set aside.

Final Conclusion: The common order of the Tribunal was upheld, and the Revenue's revision was dismissed as without merit.

Ratio Decidendi: A reassessment of escaped turnover cannot be sustained on an uncorroborated third-party extract alone; the Revenue must establish the alleged suppression by reliable supporting evidence, and a penalty dependent on such assessment falls with it.

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