Reassessment for abnormally low sale price requires market-price enquiry and evidence of tax evasion intent under sales tax law.

Section 12-A of the Tamil Nadu General Sales Tax Act could not be invoked without an enquiry into the prevailing market price and material showing that sales were recorded at abnormally low prices with intent to evade tax. The assessment rested only on price variation in the dealer's accounts, without comparison with market rates, comparable dealers, or evidence of suppression of turnover or extra collection. The High Court held that the Tribunal was wrong in treating such enquiry as unnecessary, recognised the distinction between Section 12-A and Section 16, and found the reassessment unsustainable. The assessment and the Tribunal's reversal of the first appellate authority were therefore set aside.

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Issues: Whether assessment under Section 12-A of the Tamil Nadu General Sales Tax Act, 1959 could be sustained without enquiry into the prevailing market price and without material to show that the sales were shown at abnormally low prices with a view to evade tax.

Analysis: Section 12-A permits reassessment only when the assessing authority is satisfied, on enquiry, that the dealer has shown sales at abnormally low prices compared to the prevailing market price with an intention to evade tax. The assessment in question proceeded only on the basis of price variation found in the dealer's accounts, without any enquiry into the market price of oxygen, without examination of comparable dealers, and without material to show suppression of turnover or collection over and above the recorded price. The Tribunal's view that such enquiry was unnecessary was held to be incorrect, and the distinction between the power under Section 12-A and the power under Section 16 was recognised.

Conclusion: The invocation of Section 12-A was unsustainable, and the assessment and Tribunal's reversal of the first appellate authority could not stand.

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