Reasoned tax assessment required where disputed sales were treated as local sales without proper consideration of dealer records.

A quasi-judicial tax assessment must contain clear, explicit reasons and must meaningfully deal with the assessee's material before treating disputed sales as local sales. Here, the authority relied mainly on inspection materials and purchase orders, but did not properly analyse the dealer's objections, quotations, import and excise records, or CST payment evidence from other States; the counter affidavit could not cure that defect. The Madras HC set aside the assessment insofar as it concerned the inter-State sale issue and remitted the matter for fresh consideration and a reasoned order after hearing the assessee, while leaving the suppression allegation open.

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Issues: Whether the provisional assessment treating the disputed sales as local sales could stand when the order was passed without adequate reasons and without proper consideration of the dealer's documents, and whether the matter required remand for fresh consideration.

Analysis: The assessment order proceeded on the footing that the sales were intra-State, relying mainly on inspection materials and purchase orders, while the dealer's objections, quotations, import and excise records, and proof of CST payment in other States were not properly analysed. The order recorded conclusions such as camouflage of local sales and suppression, but did not identify the material document or reasoning supporting those findings. In quasi-judicial taxation matters, reasons must be clear and explicit, and the authority must deal with the controversy on the basis of the record. A counter affidavit cannot cure a defective order by supplying fresh reasons. The Court also left the suppression aspect open, observing that it was not deciding that issue in these proceedings.

Conclusion: The impugned assessment order was set aside insofar as it concerned the inter-State sale issue, and the matter was remitted to the assessing authority for fresh consideration and a reasoned order after giving the petitioner an opportunity of being heard.

Ratio Decidendi: A quasi-judicial tax assessment order that determines liability without clear reasons and without meaningful consideration of the assessee's material is unsustainable and may be set aside with a direction for fresh adjudication.

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