2019 (4) TMI 1640 - HC - VAT and Sales Tax

Validity of assessment order - TNGST Act - suppression of turnover or not - recovery of arrears of tax - HELD THAT - It is clear that during the assessment year 1996-97, the petitioner's father was running a proprietary concern, who had purchased 323 bags of groundnut kernels from a registered dealer and groundnuts purchased, for which the tax has been paid. However it is on the date of the inspection, the petitioner's father was not able to produce the purchase bill. However, on record it is clear that the petitioner's father had subsequently brought his purchases into the account and paid the tax due thereby rectifying the defects pertaining to the year 1996-97. Merely because the purchase bill was not produced at the time of inspection for the alleged stock that were found at the time of inspection, does not always mean that there is a suppression. The petitioner has also maintained a stock register, which has been signed by the Marketing Committee regarding the purchases made. The view taken by the first respondent in the Appeal, which is under challenge before this Court is not correct. The order passed by the second respondent is well found and on perusing the order passed by the first respondent, the first respondent has not given any valid reason for interfering with the orders passed by the second respondent other than stating that at the time of inspection, there was no purchase bill produced by the assessee and the subsequent documents produced are fabricated. Merely on this ground, the first respondent has set aside the order passed by the second respondent, which is not correct. Petition allowed.

Summary

Issues:
Challenge to assessment order for the year 1996-97 based on suppression of turnover and subsequent rectification.

Analysis:
The petitioner sought to quash an order by the Sales Tax Appellate Tribunal regarding the assessment for the year 1996-97. The petitioner's late father, a proprietor of a business, was assessed for a total turnover of ?14,91,313 and taxable turnover of ?9,11,613, despite reporting ?1,14,000. The Enforcement Wing Officers found discrepancies during an inspection, leading to an estimated suppression of ?5,31,675. The Appellate Assistant Commissioner refixed the taxable turnover at ?1,25,510 and granted relief under Section 12(3)(b) of the Act. The State Department appealed, resulting in the impugned order by the first respondent setting aside the Appellate Assistant Commissioner's decision.

The petitioner argued that the subsequent rectification of accounts by the father was not considered by the first respondent, leading to double taxation. The State contended that the records were not produced initially, and subsequent documents were fabricated. The State also questioned the authenticity of the stock book maintained by the petitioner's father.

Upon review, the Court found that the petitioner's father had rectified the defects by bringing the purchases into the account and paying the due tax. The Court noted that the non-production of purchase bills during inspection did not necessarily indicate suppression, especially when the purchases were recorded in the stock register and tax was paid subsequently. The Court held that the first respondent's decision lacked valid reasons for overturning the Appellate Assistant Commissioner's order, leading to the allowance of the Writ Petition in favor of the assessee.

In conclusion, the Court set aside the first respondent's order, emphasizing the importance of considering subsequent rectifications and stock records in tax assessments.