Cross-examination is essential before using third-party material to fasten sales tax liability in an assessment.

An assessment under the Tamil Nadu General Sales Tax Act was held unsustainable because the assessing authority failed to secure the presence of the other-end dealer for cross-examination, despite earlier directions to do so under Section 54. Material said to have been obtained from that dealer could not be relied on to fasten tax liability on the assessee without affording cross-examination. The defect went to the root of the assessment, and the matter was not remitted again in view of the earlier binding directions. The assessment order was quashed and relief was granted to the assessee.

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Issues: Whether the assessment order could be sustained when the assessing authority failed to secure the presence of the other end dealer for cross-examination and nevertheless relied upon material said to have been obtained from that dealer.

Analysis: The assessment was made under the Tamil Nadu General Sales Tax Act, 1959. The earlier directions had required the assessing authority to exercise the powers under Section 54 to summon the dealer and afford cross-examination. The authority merely issued summons, but did not secure the dealer's presence. In the absence of cross-examination, the materials collected from that dealer could not be used to fasten tax liability on the petitioner. The defect went to the root of the assessment and the matter could not be remanded again in view of the earlier binding directions.

Conclusion: The assessment order was unsustainable and was quashed; the writ petition was allowed in favour of the assessee.

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