The State of Tamilnadu vs P. Elayaperumal and Others

K. Raviraja Pandian, J.—This is the revision filed at the instance of the revenue against a common order of the Tribunal in as many as 27

appeals dated 25.02.2002, wherein and whereby the revisional order passed by the Assessing Authority by bringing a huge turnover to tax and the

consequential levy of penalty which has been confirmed by the Appellate Assistant Commissioner has been set aside. The correctness of the same

is canvassed in this revision by formulating the following questions of law:

Whether in the facts and circumstances of the case, the Tribunal is legally correct in having set aside the order of the Assessing Authority as

affirmed by the First Appellate Authority only on the ground that the department is in possession of extract sent by the Enforcement Wing Officers

and nothing more?

Whether the Tribunal is correct in law in holding that the view that the burden of proving the purchases of groundnut from Karnataka Dealers

would still lie upon the department and not upon the assessee?

Whether the Tribunal has legally erred in not holding that the burden of proof had been shifted upon the dealer once it is proved through the

extract that they had made purchases of groundnut from Karnataka dealers? and

Whether the order of the Tribunal in having deleted the consequent penalty is legally sustainable?

The material facts culled out from the memorandum of grounds of revision is to the effect that in respect of assessment years 1991-92, 1992-

93, assessment of as many as 27 dealers in groundnut has been completed based on the books of accounts and other documents required to be

furnished under the provisions of the Tamil Nadu General Sales Tax Act. Subsequently, the assessment sought to be revised u/s 16 of the Tamil

Nadu General Sales Tax Act on the premise that the Enforcement Wing Officials communicated to the Jurisdictional Assessing Officer purchase

extract sent by the Karnataka Sales Tax officers.

It is the case of the revenue that as per the extract which contains details of purchase such as bill number, date of purchase, quantity and value of

the groundnut, huge volume of the purchase turnover of the each of the assessee has escaped assessment. On that basis the Assessing Officer

issued a pre-revision notice calling upon the assessees concerned to file their objections if any. The Assessees filed objections to the proposal for

revising the assessment by requesting the invoice of the bills, the details of transport and other relevant details, which formed basis for the issuance

of the pre-revision notice.

It appears that the department has not furnished any details. So the assessees approached the Tamil Nadu Sales Tax Special Tribunal, which

was in existence then, seeking for the relief of direction for issuance of the necessary documents with which the department relied on for the

purpose of issuance of notice and obtained such an order. But, inspite of the same, except the extract furnished by the Karnatake Sales Tax

Authorities, nothing has been furnished to the dealers so as to defend their case. However, the revised assessment on the basis of extract has been

made which has been affirmed by the Appellate Assistant Commissioner on appeal by the assessees.

However, on further appeal, the Sales Tax Appellate Tribunal found that the department was in possession of the extract sent by the Karnataka

Assistant Commissioner and nothing more than that. The payment details, transport documents for transporting the goods from Karnataka to Tamil

nadu has not been made available by the department. The Tribunal also found that the dealers in Tamil Nadu were going to Karnataka State and

making purchases from Marketing Committee and the agents at Karnataka are arranging purchases. The Commission Agent obtains the cess

receipt from the Marketing Committee and produced to the dealers with his invoice which mentions the description, quantity etc.

As a matter of fact, the Tribunal has verified one such mediator''s invoice and ultimately found that when the purchases were effected from the

Marketing Committee, the invoice raised by the Marketing Committee were not made available. Based on the Commission Agent''s account, an

assessment cannot be framed against third parties in the absence of any materials without bringing the Commission Agent for cross-examination by

the dealer. It is also further recorded that even after the remand order of the Special Tribunal, no further evidence was produced except the extract

as nothing more than that was available with the department and recorded an unassailable finding that the Assessing Officer was not equipped with

any material to prove his claim that the dealers have purchased groundnuts from Karnataka dealers and not accounted them.

While the business connection of the assessee with the Karnataka Commission Agent cannot form basis to show that whatever transactions

accounted in other States are genuine unless the purchasers role has been proved beyond doubt by giving such unassailable reason, the revision of

assessment has been set aside. Consequently the penalty imposed was also set aside.

We are not able to see any illegality or irregularity in the order of the Tribunal as the reasoning given by the Tribunal is cogent and also in

accordance with the established principle of law. Hence we find the revision is liable to be dismissed as devoid of merit and the same is dismissed.