2018 (3) TMI 1042 - HC - VAT and Sales Tax

Court sets aside assessment order under Tamil Nadu Sales Tax Act for 2003-2004 due to flawed proceedings and lack of reasoning.

M/s. Ruchi Metals Versus The Commercial Tax Officer

The court set aside the assessment order under the Tamil Nadu General Sales Tax Act for the assessment year 2003-2004 due to insufficient reasoning and ... Validity of assessment order - TNGST Act - The impugned order appears to be a very reasoned order, but however, on a closer scrutiny, it is seen that upto paragraph-7, the assessing officer has verbatim repeated the proposal in the notice dated 04.04.2005, extracted the entire explanation given by the petitioner, and the finding rendered by the respondent is only in paragraph-8, that too a single line - Held that: - the stand taken in the impugned order that they are bogus dealers / bill traders, appears to be factually incorrect and inconsistent with the averments in the counter affidavit and in particular, paragraph-7 of the counter affidavit. The other paragraphs in the counter affidavit deals with the burden of proof and on whom it lies etc. A reference has been made to Sections 10(2) and 3(2) of the TNGST Act in this regard. This Court has no hesitation to hold that the impugned proceedings is wholly vitiated on account of total non-application of mind and being devoid of reasons. The matter is remitted to the respondent for fresh consideration who shall afford adequate opportunity to the petitioner to cross-examine the third parties and after examining all the records, the respondent shall redo the assessment in accordance with law - Petition allowed by way of remand. Issues:Challenge to assessment order under Tamil Nadu General Sales Tax Act for the assessment year 2003-2004.Analysis:The petitioner, a registered dealer, challenged the assessment order for the assessment year 2003-2004 under the Tamil Nadu General Sales Tax Act. The Enforcement Wing officials inspected the petitioner's business premises, identifying discrepancies leading to a show-cause notice. Allegations included excess stock value and transactions with non-existing dealers. The petitioner denied the allegations, providing explanations and supporting documents. However, the assessment order lacked detailed reasoning, merely repeating the initial proposal without proper consideration of the petitioner's submissions.The respondent's counter affidavit, filed later, presented conflicting information regarding the status of the alleged non-existing dealers. This discrepancy raised doubts about the accuracy of the original assessment order. The court noted that attempts to rectify the order through the counter affidavit were legally untenable, citing established legal precedents. The burden of proof under Section 10(2) of the TNGST Act required the petitioner to demonstrate that purchases were taxed, supported by records. The petitioner's request for cross-examination of third-party statements was disregarded, depriving them of a fair opportunity to challenge the evidence against them.In light of the insufficient reasoning and lack of proper consideration in the assessment order, the court found the proceedings flawed and set aside the order. The matter was remitted back to the respondent for a fresh assessment, emphasizing the need for a thorough review, providing the petitioner with the opportunity to cross-examine third parties and ensuring compliance with legal requirements. The court allowed the writ petition, directing a reevaluation of the assessment in accordance with the law, without imposing any costs.