2009 (4) TMI 857 - HC - VAT and Sales Tax

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? Held that - While the business connection of the assessee with the Karnataka commission agent cannot form the basis to show that whatever transactions which were accounted in other States are genuine, unless the purchaser s role has been proved beyond doubt by giving such unassailable reason, the revision of assessment has to be set aside. Consequently the penalty imposed was also set aside. 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. Appeal dismissed.

Summary

Issues:
1. Revision filed by Revenue against Tribunal's order
2. Correctness of setting aside the revisional order by assessing authority
3. Burden of proof on Department vs. Assessee
4. Legal validity of deleting penalty by Tribunal

Analysis:
1. The revision was filed by the Revenue against a common order of the Tribunal in 27 appeals. The Tribunal had set aside the revisional order passed by the assessing authority, which brought a significant turnover to tax along with a penalty. The questions of law raised in the revision included the correctness of setting aside the assessing authority's order.

2. The material facts revealed that the assessment of 27 dealers in groundnut was completed based on the required documents under the Tamil Nadu General Sales Tax Act. The Revenue sought to revise the assessment based on information from Enforcement Wing Officials regarding purchases from Karnataka dealers. The assessing officer issued a pre-revision notice, but the Department failed to provide detailed information requested by the assessees.

3. The Tribunal found that the Department only possessed extracts from Karnataka Sales Tax Officers without additional payment details or transport documents. It was noted that purchases were made from Karnataka by Tamil Nadu dealers through commission agents, and the absence of invoices raised doubts. The Tribunal emphasized that without concrete evidence, the burden of proof cannot shift solely based on business connections.

4. The Tribunal's decision to set aside the revision and penalty was upheld, as it was deemed legally sound and in accordance with established principles. The Court found no irregularity in the Tribunal's order, stating that the reasoning provided was cogent. Consequently, the revision filed by the Revenue was dismissed for lacking merit.