High Court rules in favor of petitioner in CST Act '56 turnover assessment dispute, sets aside orders

The Madras High Court, in a case concerning the assessment of taxable turnover under the CST Act '56 for the year 2015-16, ruled in favor of the petitioner. The court found merit in the petitioner's arguments regarding errors in transaction reversals and discrepancies in export document values. Emphasizing the unjust rejection by the assessing authority and the burden of proof on the authority, the court set aside the impugned orders and directed the respondents to issue a revised order. The writ petition was allowed without costs, and the related miscellaneous petition was closed.

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Issues:
Assessment of taxable turnover for the year 2015-16 under CST Act' 56 based on various transactions and documents submitted by the petitioner. Rectification petition filed under Section 84 of the Act for alleged mistakes in the order dated 31.08.2019. Challenge to the rectification order dated 23.10.2019 in a writ petition.

Analysis:
The judgment by the Madras High Court, delivered by Justice G.R. Swaminathan, pertains to the assessment of taxable turnover for the year 2015-16 under the CST Act' 56. The petitioner was called upon by the second respondent to file statutory declaration forms and other documents for claiming exemption on certain transactions. The impugned order dated 31.08.2019 determined the total taxable turnover to be Rs. 32,29,98,054/-. The petitioner challenged this order by filing a petition under Section 84 of the Act for rectifying alleged mistakes. The subsequent rectification order dated 23.10.2019 provided only partial relief, leading the petitioner to file a writ petition questioning both orders.

The key contentions raised by the petitioner included errors in showing certain sale transactions as reversed and discrepancies in the value of export documents compared to the books of account. The petitioner explained that the differences were due to fluctuations in foreign exchange, which is common in the export business. The petitioner presented a typed set of papers containing an order dated 02.06.2020, where a similar explanation was accepted by the authority. The court noted that the assessing authorities should have applied a consistent approach as in subsequent years.

The court found merit in the petitioner's contentions, emphasizing that the assessing authority's rejection based on the absence of certain documents was unjustified. It was observed that the petitioner had provided evidence, including a certificate from Chartered Accountants, to support the reversal of transactions. The court held that the burden of proof cannot be on the petitioner to disprove sales, and if the authority doubts the claim, the onus is on them to establish the contrary. Consequently, the court set aside the impugned orders in favor of the petitioner, directing the respondents to issue a revised order. The writ petition was allowed without costs, and the connected miscellaneous petition was closed.

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