2009 (4) TMI 837 - HC - VAT and Sales Tax

Reopening of assessment - Held that - The only reason for the revenue to reopen the assessment was that there was a huge purchase of oil. This has been explained by the assessee, that those oils were manufactured out of the groundnut purchased from the agriculturists and the bought vouchers were also produced while framing the original accounts and they were accepted. The reason now stated for reopening the assessment is the bought vouchers did not contain the complete details of the persons from whom the assessee purchased the groundnut. When the assessee is purchasing a small quantity of groundnut from the agriculturists it may not be possible for them to record the entire details as to the name, address and the village from which the agriculturists hail and the extent of the land he is owning or the source of purchase such as whether the groundnut has been acquired by him as a cooly for working in the groundnut field or he is owning a land in wahich groundnut is cultivated. In addition to that, the idea conceived by the revenue that all these purchases were crushed by the sister concern, which was also laid in the very same campus is also defeated by the meter reading of the sister concern, which is owning a crushing unit. There is virtually no electrical consumption. In addition to that it is also on record that the said sister concern has stopped its activities several years ago and that stoppage of the activities has also been informed to the Department. Revision dismissed.

Issues:
1. Appeal against Sales Tax Appellate Tribunal's order
2. Allegations of unaccounted purchases and tax evasion
3. Reopening of assessment and imposition of penalty
4. Burden of proof on the assessee regarding purchased goods
5. Interpretation of bought vouchers and supporting documentation

Analysis:

1. The appeal before the High Court was against the order of the Sales Tax Appellate Tribunal related to the T.N.G.S.T. assessment for the year 1992-93. The assessee, a dealer, was assessed on a total turnover of Rs.1,02,69,69.50 and a taxable turnover of Rs.59,09,402.50. Subsequently, enforcement officials found discrepancies in the accounts, particularly regarding heavy purchases of groundnut oil without proper documentation. The Department sought to reopen the assessment and impose penalties under Section 16(1) and 16(2) of the Act.

2. The Government Pleader argued that the purchases of groundnut were not adequately supported by bought vouchers, as they lacked complete details of the agriculturists. The contention was that the groundnut purchased was crushed in a sister concern's unit to evade taxes. Citing a Kerala High Court decision, the burden of proof was placed on the assessee to produce complete bought vouchers to verify the source of unaccounted purchases.

3. The High Court examined the material on record and found that the reason for reopening the assessment was the incomplete details in the bought vouchers. The assessee explained that the groundnut purchased was used to manufacture oil and bought vouchers were produced during the original assessment. The Court noted that it might be impractical for the assessee to record detailed information for small purchases from agriculturists. Additionally, the revenue's theory that all purchases were crushed by the sister concern was debunked by evidence showing the sister concern had ceased operations.

4. Considering the facts presented, the High Court upheld the decisions of the Appellate Assistant Commissioner and the Tribunal, finding no grounds for interference. The Court concluded that the revision was dismissed, indicating that the assessee's explanations and supporting evidence were satisfactory, and the burden of proof regarding purchased goods had been adequately addressed.

This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the Court's reasoning for dismissing the revision appeal.

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