2020 (11) TMI 79 - HC - VAT and Sales Tax

Best Judgement assessment - suppression of turnover - TNGST Act - HELD THAT - Both the reassessment orders for the Assessment Years 2002-03 and 2003-04 emanates from the inspection conducted in the petitioner's place of business between 08.10.2003 and 14.10.2004. Apparently, the inspection relates to the Assessment Year 2003-04. However, the reports that emanated from the inspection has been applied to the Assessment Year 2002-2003 also, which cannot be countenanced. In the present case, though the Assessing Officer were originally of the view that D3 proposals can be deviated and inspite of the fact that this Court had directed the Assessing Authority to independently take a view in the issues, the first respondent had, without any doubt, strictly adhered to the D3 proposals and the orders of rejection passed by the second respondent to the deviation proposals and came to a conclusion in the impugned orders. There are force in the submissions of the learned Senior counsel that during the original assessment, the first respondent, Assessing Authority had admitted that the day book, ledger, purchase bills, etc., were produced by the petitioner. Likewise, in the first deviation report forwarded by the first respondent for the Assessment Year 2002-03 dated 17.06.2008, the remarks of the processing officer evidences inspection of the stock statement register, which was maintained to monitor the day-to-day productions, purchases, sales and stock production. In the second deviation report of the first respondent for the Assessment Year 2002-03 dated 14.01.2011, it is recorded that the accounts of the dealers for the year 2002-03 were checked. Accordingly, the first respondent had verified every aspect of the issue relating to the turnover of the dealers and hence the submissions of the learned Government Advocate that the dealers have failed to produce the relevant records during the impugned assessment proceedings, cannot be the sole ground in rejecting the petitioner's claim. Penalty - HELD THAT - There was sales suppressions and the consequential levy of tax, the respondent had also levied penalty under Section 16(2)(c), as well as, Section 23 of the TNVAT Act. Now, that this Court has held that the impugned orders itself cannot be sustained, the consequential penalty also requires to be set aside. Petition allowed.

Summary

Issues:
Challenge to reassessment orders for Assessment Years 2002-03 and 2003-04 based on missing lab reports and alleged sales suppression.

Analysis:
1. The petitioner, a dealer in edible oil, challenged reassessment orders for Assessment Years 2002-03 and 2003-04 due to missing lab reports. The original assessment for 2002-03 was completed based on returns and accounts verification. An inspection in 2003 led to a revision notice in 2008, questioning lab reports' absence. Petitioner filed objections as directed by the court.

2. Subsequently, a pre-assessment notice for 2003-04 was issued based on missing lab reports, challenged by the petitioner. Despite objections, notices alleging sales suppression were issued for both years. The petitioner challenged these notices in court, leading to further objections and rejection by the Assessment Authority.

3. The court noted discrepancies in the assessment process, emphasizing the need for independent assessment without influence from superior officers. The Assessing Authority failed to provide independent reasoning and relied on previous rejections without proper justification.

4. The court referenced prior cases emphasizing the Assessing Officer's duty to independently consider proposals without undue influence. Despite directions to consider objections independently, the Assessing Authority adhered strictly to previous rejections, leading to flawed conclusions.

5. The court clarified that internal records like lab reports and Goods Receipt Notes are not statutory requirements. The Assessing Authority failed to establish the relevance of missing lab reports for sales suppression, as per court directions.

6. The court found merit in the petitioner's argument that relevant records were produced during the original assessment. The Assessing Authority had verified various aspects during inspections, undermining claims of failure to produce records during reassessment.

7. As the court invalidated the reassessment orders, penalties imposed under relevant sections were also set aside. The court quashed the proceedings for both Assessment Years and allowed the Writ Petitions, emphasizing the lack of justification in the reassessment process.