2018 (4) TMI 649 - HC - VAT and Sales Tax

Reopening of assessment - Section 16(1) of the Tamil Nadu General Sales Tax Act 1959 - purchases of groundnut - inter-state supply - case of revenue is that the dealers have not accounted for the purchases of Groundnut from Karnataka dealers, which were detected during the course of verification of extracts received from the Enforcement Wing Officers. Held that - The business connection with the Karnataka Commission agents are the dealer will not be a conclusive proof to show whatever the transactions accounted in the order State are genuine unless the purchasers role has been proved beyond doubt. In none of the transaction there in no single checkpost records produced. The Assessing Officer cannot simply brush aside by stating that it is not his duty when heavy burden is cast upon the dealers and when the dealers are asked to prove the negative point. There is no other alternative except the Department to prove to provide all the required materials. Since the materials have not been provided after reasonable opportunity, it is concluded that the alleged purchase omissions by the dealers are not proved beyond doubt - There is no perversity in the finding of the Tribunal nor any illegality, warranting reversal. The issue as to whether reasonable opportunity has been given to the assessee, has been, held in favor of the assessee. Tax Case Revision is dismissed.

Issues Involved:
1. Legality of the Tribunal's order.
2. Proper consideration of the case by the Tribunal.
3. Burden of proof regarding unaccounted transactions.
4. Right to cross-examine third parties.
5. Sufficiency of evidence provided by the department.
6. Validity of reassessment and penalties.

Issue-wise Detailed Analysis:

1. Legality of the Tribunal's Order:
The Revenue contended that the Tribunal's order was against the law, weight of evidence, and probabilities of the case. The Tribunal's decision to allow the appeal was challenged on the grounds that it did not properly consider the evidence and failed to note that the assessing authority had validly reopened assessments based on extracts from the Enforcement Wing Officers.

2. Proper Consideration of the Case by the Tribunal:
The Tribunal was criticized for not considering the case in the proper perspective. The Revenue argued that the Tribunal should have recognized that the first appellate authority had upheld the revisionary orders and penalties due to the dealers' failure to provide recorded evidence disproving the alleged transactions.

3. Burden of Proof Regarding Unaccounted Transactions:
The Revenue asserted that the burden of proving the non-existence of transactions lay with the dealers, especially when the department had provided details such as bill numbers, dates, and quantities. The Tribunal was faulted for not acknowledging that the dealers had not utilized the opportunities given to them to disprove the transactions.

4. Right to Cross-Examine Third Parties:
The dealers argued that they were denied the opportunity to cross-examine third parties whose accounts were used as evidence against them. The Tribunal's decision was supported by the principle that the right to cross-examine is not absolute but depends on the facts and circumstances of each case. The Tribunal found that the department had not provided sufficient evidence beyond the extracts from the Enforcement Wing Officers, which necessitated cross-examination.

5. Sufficiency of Evidence Provided by the Department:
The Tribunal noted that the department only had extracts from the Karnataka Enforcement Wing and no additional evidence to corroborate the alleged transactions. The Tribunal emphasized that mere extracts were insufficient to fix liability on the dealers without further supporting documents or the opportunity for cross-examination.

6. Validity of Reassessment and Penalties:
The Tribunal found that the reassessments and penalties were not justified as the department failed to provide adequate evidence. The Tribunal highlighted that the dealers were not given proper materials to rebut the allegations and that the burden of proof was improperly placed on the dealers to disprove the transactions. Consequently, the Tribunal set aside the reassessments and penalties.

Conclusion:
The High Court upheld the Tribunal's decision, finding no perversity or illegality in its findings. The Tribunal properly analyzed the evidence and concluded that the department had not provided sufficient materials to support the reassessments. The High Court dismissed the Tax Case Revision, affirming that the dealers were not given a reasonable opportunity to disprove the allegations, and thus, the reassessments and penalties were invalid.

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