2008 (10) TMI 626 - HC - VAT and Sales Tax

Non disclosures - whether the petitioner having not disclosed the transaction in its return and having not explained the alleged purchases of high speed diesel from Indian Oil Corporation the order of the assessment officer as well as the revisional authority need no interference? Held that - In view of the observations of the revisional authority the assessing officer was required to have inquired into the nexus and was required to prove the petitioner s nexus with the alleged inter-State purchases before holding the petitioner guilty of alleged inter-State purchases of high speed diesel. The impugned order without any proof of nexus of the petitioner with the alleged purchases could not have been affirmed by the revisional authority. Thus considered view while passing the impugned order the revisional authority has totally ignored its earlier remand order. The assessing officer has also not decided the matter in accordance with the directions contained in the remand order passed by the revisional authority. Appeal allowed.

Summary

Issues:
Challenge to common order dated November 3, 2003 passed by Additional Commissioner, Commercial Tax, Indore in Revision No. 26 of 2003 and Revision No. 30F/03/ET.

Analysis:
The petitioner, engaged in manufacturing and sale of chemicals, challenged an order alleging inter-State purchase of high-speed diesel without proper recording. The assessing officer made an addition and imposed a penalty, which was later remanded for further inquiry. However, a fresh assessment was completed without considering the directions given by the revisional authority, leading to the imposition of tax and penalty again. The petitioner contended that the burden was shifted unfairly and that relevant details were submitted. The respondents argued that non-disclosure and lack of explanation justified the assessment.

Upon review, the court found merit in the petitioner's contention. The revisional authority had emphasized the burden of proof lying with the party alleging a fact and the necessity of establishing a nexus between accounts and transactions. The assessing officer failed to investigate the nexus as directed, resulting in an unjustified affirmation of the assessment. The court noted the revisional authority's disregard for its own remand order and the assessing officer's failure to follow the directions.

Therefore, the court allowed the petition, quashing the impugned orders and remanding the matter to the assessing officer for a fresh decision in line with the revisional authority's directions. The court emphasized the importance of proving nexus and following procedural fairness. No costs were awarded in the matter.