Sales suppression addition fails without Rule 18-C enquiry and market price verification under the Tamil Nadu sales tax law.

An addition for alleged sales suppression under the Tamil Nadu General Sales Tax Act could not rest on a gross profit difference alone. For assessment under Section 12-A, the assessing authority was required to conduct the enquiry contemplated by Rule 18-C, including ascertaining the relevant market price and supporting circumstances before inferring suppression. Because the assessment order merely relied on inspection results and showed no independent enquiry, the profit difference by itself was insufficient to sustain the addition. The revision succeeded in favour of the assessee.

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Issues: Whether an addition towards alleged sales suppression could be sustained under Section 12-A of the Tamil Nadu General Sales Tax Act on the basis of a gross profit difference alone, without the enquiry contemplated by Rule 18-C of the Tamil Nadu General Sales Tax Rules.

Analysis: The addition was made only because the inspection wing noticed a difference in gross profit between the first sale and the second sale effected by the sister concern. For an assessment under Section 12-A, the assessing authority was required to conduct the enquiry prescribed by Rule 18-C and to ascertain the relevant market price and other supporting circumstances before drawing an inference of suppression. The assessment order did not show any such independent enquiry and merely adopted the inspection results. In the absence of the mandated enquiry, the profit difference by itself could not justify the addition.

Conclusion: The addition was not sustainable and the revision succeeded in favour of the assessee.

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