Audit-slip-based assessment needs fuller enquiry before ex parte tax liability is confirmed and orders are set aside.

Assessment based only on audit slips was insufficient where the dealer denied participation in the alleged transactions and claimed misuse of its name, TIN and PAN. The Assessing Officer was required to conduct a fuller enquiry by obtaining material from the Customs Department, the Income Tax Department and the concerned banks before making a conclusive ex parte assessment. The rejection of the rectification applications was therefore unsustainable. The impugned orders and ex parte assessments were set aside, and the matters were remanded for fresh enquiry, fresh show cause notices and further action in accordance with law.

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Issues: Whether the rejection of the petitioner's applications for rectification under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 was justified when the assessment was based only on audit slips and the petitioner sought enquiry from the Customs Department, Income Tax Department and banks to verify the alleged transactions.

Analysis: The assessment proceedings were founded on audit slips, while the petitioner disputed any involvement in the alleged high-value transactions and asserted misuse of its name, TIN and PAN. In these circumstances, the Assessing Officer ought to have undertaken a fuller enquiry and obtained material from the Customs Department, the Income Tax Department and the concerned banks before proceeding further. The existence of an audit slip could justify initiation of proceedings, but the materials available had to connect the petitioner to the transactions before a conclusive ex parte assessment was made.

Conclusion: The rejection of the rectification applications was unsustainable. The impugned orders and the ex parte assessments were set aside, and the matters were remanded to the Assessing Officer to make the necessary enquiries, issue fresh show cause notices, and proceed afresh in accordance with law.

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