Independent tax adjudication and second sale exemption claims must be examined on merits, not accepted mechanically.

An assessment made without independent application of mind, and merely in mechanical compliance with enforcement or supervisory directions, was held unsustainable. The assessing authority, as an independent quasi-judicial body, had to examine the objections and supporting documents on its own merits. The petitioners' claim for second sale exemption also required fresh consideration because invoices, freight records, unloading vouchers and declarations had not been properly evaluated. Related objections on the constitution of the proprietary concern and other factual disputes likewise called for a fresh enquiry. The assessments were set aside and remitted for reconsideration after personal hearing and independent assessment of all materials.

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Issues: (i) Whether the assessment orders were vitiated for want of independent application of mind and for being passed merely to implement the enforcement proposal. (ii) Whether the petitioners' claim for second sale exemption required fresh consideration on the basis of the documents and objections produced. (iii) Whether the matters concerning the constitution of the proprietary concern and connected factual objections also required reconsideration by the assessing authority.

Issue (i): Whether the assessment orders were vitiated for want of independent application of mind and for being passed merely to implement the enforcement proposal.

Analysis: The assessing authority is an independent statutory authority discharging quasi-judicial functions and cannot act under the dictates of superior officers. The materials showed that the deviation proposals were rejected mechanically and the assessing officer ultimately acted on the enforcement proposal without examining the objections and supporting records independently. Such abdication of statutory duty undermines the fairness and legality of the assessment process.

Conclusion: The assessment orders were vitiated and could not be sustained.

Issue (ii): Whether the petitioners' claim for second sale exemption required fresh consideration on the basis of the documents and objections produced.

Analysis: The petitioners produced extensive documentary material in support of the claim, including invoices, freight-related records, unloading vouchers and declarations. The assessing authority was required to examine these materials and determine whether the burden under section 10 had been discharged and whether the claim for exemption could be denied on the basis of a proper enquiry. That exercise was not undertaken.

Conclusion: The claim for second sale exemption required fresh consideration by the assessing authority.

Issue (iii): Whether the matters concerning the constitution of the proprietary concern and connected factual objections also required reconsideration by the assessing authority.

Analysis: The objections relating to the constitution of the concern and allied factual disputes were not adjudicated on merits in the assessment orders. Those issues involved factual questions requiring a proper enquiry and could not be finally determined on the existing material in writ proceedings. They therefore had to be considered afresh along with the other objections.

Conclusion: These factual issues also required reconsideration by the assessing authority.

Final Conclusion: The assessments were set aside and the matters were sent back for fresh decision after personal hearing and independent consideration of all materials, without being influenced by the earlier enforcement or supervisory directions.

Ratio Decidendi: A tax assessment made without independent adjudication by the assessing authority and in mechanical compliance with superior directions is legally unsustainable, and disputed exemption claims supported by documentary material must be examined afresh on their merits.

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