Limitation and proof of conscious undervaluation must be shown before reassessment for low-priced sales can stand.

Limitation barred the reassessment notices and final orders where they were issued after the applicable statutory periods under the Tamil Nadu Value Added Tax Act, 2006, and the bar was established on the admitted dates. The undervaluation additions under Section 24 also failed because the department relied only on suspicion, price variation and an exemption-related inference, without concrete enforcement material, a scientific basis, or comparison with similarly placed dealers to show conscious sale at abnormally low prices. As the statutory ingredients were not met and tax had been paid on the wholesale price, the assessments were unsustainable and were quashed in favour of the assessee.

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Issues: (i) Whether the reassessment proceedings were barred by limitation under the Tamil Nadu Value Added Tax Act, 2006. (ii) Whether the impugned assessments alleging undervaluation of footwear sales under Section 24 of the Tamil Nadu Value Added Tax Act, 2006 were sustainable.

Issue (i): Whether the reassessment proceedings were barred by limitation under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The limitation period differed depending upon whether the proceedings were treated as those under Section 24 or under Section 27(1)(a). On the admitted dates, the notices and final orders in several matters were issued after expiry of the relevant statutory periods. Since the dates were not in dispute, the bar of limitation was established on the record.

Conclusion: The reassessment proceedings in the affected matters were barred by limitation and were liable to be set aside in favour of the assessee.

Issue (ii): Whether the impugned assessments alleging undervaluation of footwear sales under Section 24 of the Tamil Nadu Value Added Tax Act, 2006 were sustainable.

Analysis: Section 24 applies where sales are shown at abnormally low prices with a view to evade tax, and it requires material showing conscious undervaluation when compared with the prevailing market price of identically placed dealers. The notices and assessment orders rested on suspicion arising from price variation and the exemption threshold, but did not disclose any concrete material from the enforcement inspection, any scientific basis for the conclusion of undervaluation, or any comparative exercise with similarly placed dealers. The record also indicated that tax had been discharged on the wholesale price, rendering the exercise revenue neutral. On these facts, the statutory ingredients of Section 24 were not satisfied.

Conclusion: The undervaluation additions and the impugned assessments were unsustainable and were liable to be quashed in favour of the assessee.

Final Conclusion: The writ petitions succeeded, the assessment orders were set aside, and the connected proceedings were closed.

Ratio Decidendi: A reassessment for low-priced sales cannot be sustained unless the revenue establishes, by material evidence, that the dealer consciously undervalued sales at abnormally low prices compared with the prevailing market price of identically placed dealers; suspicion, price variation, or exemption-driven inference is insufficient.

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