Invoice entries alone cannot sustain adverse tax assessment without enquiry into supporting evidence and tax adjustment certificates.
Invoice entries alone were not conclusive to treat the dealer as the first seller of tractors in Tamil Nadu. The Court found that the assessing authority ignored the manufacturer's certificate stating that entry tax collected had been adjusted towards sales tax and surcharge under the applicable statutory scheme, and also failed to verify the factual position before drawing an adverse inference. A best-judgment style conclusion based only on the invoice description, without proper enquiry or material discrediting the supporting certificate, was unsustainable. The assessment order was therefore set aside.
Issues: Whether the petitioner could be treated as the first seller of tractors inside Tamil Nadu and whether the assessment based on the invoice entry and alleged non-payment of sales tax was sustainable.
Analysis: The invoice description by itself was not treated as conclusive. The existence of a certificate from the manufacturer asserting that it was the first seller inside the State, and stating that entry tax collected had been adjusted towards sales tax and surcharge under Section 4(1) of the Tamil Nadu Tax on Entry of Motor Vehicles into the Local Areas Act 1990, was found to have been ignored without proper enquiry. The assessing authority had not verified the factual position before drawing an adverse inference, and no material was shown to discredit the manufacturer's certificate. A best judgment type conclusion reached without such verification was held to be unsustainable.
Conclusion: The petitioner could not be treated as the first seller on the basis adopted by the assessing authority, and the assessment was held unsustainable.
Final Conclusion: The impugned assessment order was set aside and the writ petition was allowed, with no costs.
Ratio Decidendi: An assessment cannot be sustained where the authority draws an adverse conclusion solely from invoice entries without making the necessary enquiry or considering reliable supporting material showing that tax liability was already discharged or adjusted under the applicable statutory scheme.
TaxTMI 
AI Drafter ✕
TaxTMI 
