Court overturns assessment order under TN VAT Act, stresses burden of proof on dealer for taxable transactions

The court set aside the assessment order under the Tamil Nadu Value Added Tax Act, 2006, which proposed tax demand, penalty, and addition due to purchase omission by the petitioner. The court emphasized the burden of proof on the dealer for taxable transactions and outlined guidelines for reassessment, requiring a thorough enquiry involving relevant parties. The matter was remanded to the respondent for a fresh consideration, directing proper investigation before reassessing in compliance with the law.

---

---

Issues:
Challenge to assessment order under Tamil Nadu Value Added Tax Act, 2006 based on purchase omission leading to tax demand, penalty, and addition towards probable omission. Burden of proof on dealer for transactions liable to tax. Revision of assessment under Section 27 of the Act. Guidelines for re-assessment based on web page reports and involvement of other end dealers in the enquiry process.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu Value Added Tax Act, challenged an assessment order based on purchase omission discovered during an inspection by Enforcement Wing Officers. The respondent proposed tax demand, penalty, and addition towards probable omission after finding certain purchases unaccounted for in the petitioner's monthly returns for the assessment year 2011-12. The petitioner objected, denying business transactions with the dealers in question and arguing against liability for tax and penalty due to mistakes by other dealers using their tax identification number.

The respondent, after a personal hearing, upheld the proposal citing Section 17(1) of the Act, placing the burden of proving transactions not liable to tax on the dealer. However, the court noted that the assessment was a revision under Section 27, allowing for reassessment within the stipulated time with an opportunity for the dealer to contest the revision. The Assessing Officer must consider objections raised by the petitioner and cannot solely rely on Enforcement Wing Officers' reports, especially when the revision is based on information from the Commercial Tax Department Website.

Referring to a previous case, the court outlined guidelines for conducting re-assessments based on web page reports, emphasizing the need for an enquiry involving the other end dealer. As the petitioner denied business transactions with the dealers in question, the Assessing Officer should have conducted a thorough enquiry to determine the accuracy of the information. Since this was not done, the court set aside the impugned order, remanding the matter to the respondent for a fresh consideration involving all relevant parties and conducting a proper enquiry before reassessing in accordance with the law.

---