2019 (9) TMI 523 - HC - VAT and Sales Tax

Additions as sales suppression based on the alleged purchase suppression - Levy of penalty - TNVAT Act, 2006 - reconciliation of the profit and loss account with the monthly returns - HELD THAT - The difference as alleged by the Enforcement Authorities is not be correct, particularly, in the light of the categoric reconciliation provided by the petitioner. The Assessing Authority has proposed a deviation based on the reply and reconciliation provided on 25.07.2014 and finally and as a last resort, he requests the Joint Commissioner to clarify what the purchase and sales turnover should be since he was unable or not in a position to determine the same from the proposal (the word 'proposed' in the reply appears to be an error of language). No reply was received as a result that the officer passed the impugned orders, adverse to the assessee. It is trite to state that an assessment should be made based on materials available and after proper and independent application of mind by the Assessing Officer. In the present case, the intention of the Assessing Officer to conclude the assessment based on the objection dated 25.07.2014 appears very clear from his proposal for deviation not once, but twice. Inspite of the same, the insistence of the authorities to confirm the proposals of the Enforcement Wing is clearly contrary to law. The assessment orders are quashed - petition allowed.

Summary

Issues:
Three assessment orders under the Tamil Nadu Value Added Tax Act, 2006 for the periods 2010-11, 2011-12, and 2012-13 are challenged.

Analysis:
The petitioner, a sanitary ware dealer, faced allegations of purchase suppression leading to sales suppression after an inspection by the Enforcement Wing. The Assessing Authority proposed additions for sales suppression and penalties based on the inspection report. The petitioner contested these allegations, citing minimal differences in the profit and loss account and monthly returns for each period.

The Assessing Authority considered the objections raised by the petitioner and suggested a deviation from the Enforcement Wing's proposals. However, the Deputy Commissioner rejected this deviation and instructed a reconciliation of purchase turnover with the book of accounts. Despite the petitioner's efforts to clarify discrepancies, the deviation was not accepted.

Following the demise of the proprietor, fresh notices were issued, and the Assessing Authority expressed a desire to deviate from the Enforcement Wing's proposals. The Authority highlighted the minimal differences in the profit and loss account and returned turnover, indicating a lack of significant discrepancies.

The High Court emphasized that assessments should be based on available evidence and independent assessment by the Assessing Officer. It noted the Assessing Officer's clear intention to deviate from the Enforcement Wing's proposals, indicating a desire for a fair assessment. The Court found the insistence on confirming the Enforcement Wing's proposals contrary to law and circular mandates, leading to the quashing of the assessment orders and the allowance of the Writ Petitions without costs.