2011 (1) TMI 1287 - HC - VAT and Sales Tax

Whether the order passed by the first respondent in Ref. M2/53216/96 SMR. No. 628/97 dated October 21 2004 is a non est and unsustainable one in the eye of law? Held that - The show-cause notice has been issued in the present case to the petitioner on November 18 1997. Even though the order has been passed on October 21 2004 by the first respondent yet the first respondent has commenced the proceedings to revise the assessment and issued the show-cause notice dated November 18 1997 within five years from the date of the order of the second respondent dated May 30 1996 and therefore there is no violation as per section 34(2)(c) of the Tamil Nadu General Sales Tax Act 1959 and in this regard the contra plea taken by the petitioner is negatived by this court. Appeal dismissed.

Summary

Issues involved:
1. Jurisdiction of the first respondent to commence proceedings after a lapse of five years from the order of the second respondent.
2. Validity of the order passed by the first respondent invoking suo motu powers under section 34 of the Tamil Nadu General Sales Tax Act, 1959.
3. Allegations of purchase suppression and unaccounted transactions against the petitioner.
4. Compliance with procedural requirements under section 34(2)(c) of the Act.

Detailed Analysis:
1. The petitioner challenged the jurisdiction of the first respondent to initiate proceedings after a lapse of five years from the order of the second respondent. The petitioner argued that the first respondent lacked the authority to commence proceedings beyond the specified time limit. However, the court found that the show-cause notice was issued within the permissible period, thereby rejecting the petitioner's claim of jurisdictional violation.

2. The petitioner contended that the order passed by the first respondent, invoking suo motu powers under section 34 of the Act, was unsustainable and lacked jurisdiction. The petitioner argued that the first respondent failed to provide reasons for invoking such powers and overlooked crucial aspects regarding stock variations and gross profit calculations. On the contrary, the respondents presented evidence of purchase suppression and unaccounted transactions by the petitioner, justifying the first respondent's decision to set aside the appellate order and restore the assessing officer's decision.

3. The respondents alleged that the petitioner engaged in purchase suppression and unaccounted transactions, leading to discrepancies in reported turnover. The court noted instances where excess and deficit stocks were found during inspections, indicating possible purchase and sales suppression by the petitioner. The respondents highlighted the petitioner's failure to maintain proper accounts and the transportation of goods without proper documentation, supporting their claims of tax evasion.

4. The court examined the procedural compliance under section 34(2)(c) of the Act, which governs the initiation of proceedings by the first respondent. Despite the petitioner's argument that the first respondent's actions violated this provision, the court determined that the show-cause notice was issued within the statutory time limit, thereby upholding the validity of the proceedings initiated by the first respondent.

In conclusion, the court dismissed the writ petition, ruling that the petitioner's claims lacked merit and upheld the first respondent's decision to set aside the appellate order. The court emphasized the importance of maintaining accurate records and complying with tax regulations to avoid allegations of purchase suppression and tax evasion.