2008 (11) TMI 645 - HC - VAT and Sales Tax

Whether, on the facts and in the circumstances of the case, the Tribunal was right in sustaining the addition even after holding that the petitioner has filed a revised return and paid the tax is correct in law? Held that - When the sales suppression was accounted for by the dealer themselves, and the same was also taken into consideration by the assessing officer while determining the total and taxable turnover, it was not open to the assessing authority to reopen the assessment by invoking section 16(1)(a) of the Act on the ground that the sales suppression though subsequently accounted for, has been reported to the Department only on account of the detection of the case by the enforcement wing officials. The assessing officer was not legally justified in reopening the assessment by invoking section 16(1)(a) of the Act. Accordingly, the question of law is answered in favour of the assessee and against the Department.

Summary

Issues:
Challenging the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the sustained addition after filing a revised return and paying the tax.

Detailed Analysis:

1. Factual Matrix:
The petitioner, a dealer in boiler components, filed returns for the year 1999-2000 but omitted two invoices. After an inspection, a revised return was filed disclosing the omitted turnover. The assessment was finalized, but later, the assessing officer reopened the assessment, alleging deliberate sales suppression.

2. Appellate Proceedings:
The Appellate Assistant Commissioner set aside the addition of three times the suppressed amount but confirmed the suppressed turnover. The penalty was imposed, and the appeal was partially allowed. The Tribunal confirmed the addition of suppressed turnover but set aside one penalty and directed the assessing officer to calculate the delay for the other penalty.

3. Legal Arguments:
The petitioner argued that since the suppressed turnover was later disclosed in the revised return, reopening the assessment was unjustified. The Department contended that failure to disclose turnover justified reopening.

4. Judicial Analysis:
The court observed that the suppressed turnover was included in the revised return filed before the assessment was completed. The assessing authority was not justified in reopening the assessment under Section 16(1)(a) as there was no escaped turnover. The Appellate Assistant Commissioner and the Tribunal erred in adding the suppressed turnover again.

5. Legal Conclusion:
The court held that the assessing officer was not legally justified in reopening the assessment. The question of law was answered in favor of the assessee. The tax case was allowed with no costs.

In conclusion, the court ruled in favor of the assessee, highlighting that the assessing officer was not justified in reopening the assessment based on the disclosed suppressed turnover. The judgment emphasized the importance of assessing escaped turnover before invoking relevant legal provisions and criticized the authorities for adding the suppressed turnover again during re-determination.