Cross-examination of third-party dealer is essential before using their material to sustain a tax assessment.

Tax liability based on third-party material cannot be sustained where the assessing authority fails to secure that dealer's effective presence for cross-examination under Section 54 despite a binding direction to do so. Mere issuance of summons is insufficient if the authority does not ensure attendance, and in the absence of cross-examination the materials obtained from that dealer cannot be used against the assessee. A further remand was held to serve no purpose, and the assessment orders were quashed.

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Issues: Whether an assessment could be sustained on materials relating to the other end dealer when the assessing authority had not effectively secured the dealer's presence for cross-examination under Section 54 of the Tamil Nadu General Sales Tax Act, 1959, and whether a further remand was permissible.

Analysis: The assessment had been made after earlier directions requiring the authority to exercise the powers under Section 54 to secure the dealer for cross-examination. Mere issuance of summons, without ensuring the dealer's presence, did not satisfy the direction or the statutory power. In the absence of cross-examination, the authority could not rely on the materials obtained from that dealer to fasten tax liability on the petitioner. Since the earlier order had already barred such reliance unless the requirement was fulfilled, a further remand would serve no purpose.

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

Final Conclusion: The writ petitions succeeded and the assessments were set aside because the petitioner was denied the effective cross-examination opportunity mandated by the earlier order and Section 54.

Ratio Decidendi: Where tax liability is founded on material attributable to a third party, and the authority fails to secure that party for effective cross-examination despite a binding direction to do so, the material cannot be relied upon to sustain the assessment.

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