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Issues: (i) whether the assessment order was liable to be set aside for violation of principles of natural justice in refusing reasonable time to furnish corrected declarations and supporting particulars; (ii) whether the assessee was entitled to concessional rate of tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, and whether the seller could be denied the benefit on the ground that actual end-use by the purchasing dealer was not proved.
Issue (i): Whether the assessment order was liable to be set aside for violation of principles of natural justice in refusing reasonable time to furnish corrected declarations and supporting particulars.
Analysis: The assessee had filed objections to the pre-assessment notice and sought additional time to cure defects and produce corrected statutory declarations. The request was effectively for a short extension to comply with the requirements. The superior authority had directed that time be granted, but the assessing authority completed the assessment without awaiting compliance. Such refusal to grant reasonable opportunity, especially when the assessee was cooperating and had sought time for rectification, amounted to a clear breach of natural justice.
Conclusion: The assessment order was unsustainable on the ground of violation of principles of natural justice and was set aside to that extent.
Issue (ii): Whether the assessee was entitled to concessional rate of tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, and whether the seller could be denied the benefit on the ground that actual end-use by the purchasing dealer was not proved.
Analysis: Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 permits concessional tax on specified goods when the statutory conditions are met, subject to the stated exclusions. The proviso excludes only the specified commodities and requires declarations in the prescribed manner. The provision was contrasted with section 5(3) of the Kerala General Sales Tax Act, which operated in a materially different statutory setting. The controlling principle applied by the Court was that, once the statutory declarations and other conditions under the Tamil Nadu provision are satisfied, the seller is not required to prove actual utilisation of the goods by the purchaser in manufacture. Any misuse or violation of the declaration, if discovered, can be visited on the purchasing dealer, not the seller.
Conclusion: The assessee was entitled to the concessional rate of tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, and denial of that benefit was unjustified.
Final Conclusion: The assessment was interfered with, the assessee's entitlement to concessional taxation was upheld, and the remaining issues were directed to be reconsidered de novo in accordance with law.
Ratio Decidendi: For concessional tax under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, fulfillment of the statutory declaration and other prescribed conditions is sufficient, and the seller cannot be denied the benefit merely because the purchaser's subsequent use of the goods is questioned.
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