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2014 (5) TMI 498 - HC - VAT and Sales TaxExemption of purchase Tax Genuineness of the transactions - Goods bought prior to cancellation of registration Whether ground that purchases made prior to the date of cancellation of registration exempt the assessee Section 7-A Tamil Nadu General Sales Tax Act,1959 - Held that - The mere fact of payment by way of cheque by itself would not prove the case of the assessee that the said Raghavendra Enterprises had actually dealt with the goods - Unless the purchases had suffered tax, the question of excluding the operation of Section 7-A Tamil Nadu General Sales Tax Act,1959 did not arise - Thus the tax assessment confirmed - When the said dealer has not proved the genuineness of the transactions, and there being no material to substantiate the contention of the assessee that the said Raghavendra Enterprises had in fact handled the goods, even for the period prior to the date of cancellation of registration Tribunal order upheld Decided against assessee.
Issues:
1. Levy of purchase tax under Section 7A of the Tamil Nadu General Sales Tax Act, 1959 on the purchase of declared goods. 2. Shifting the "point of taxation" for declared goods under Section 14 of the Central Sales Tax Act, 1956. 3. Cancellation of certificate of registration with retrospective effect. Issue 1: Levy of purchase tax under Section 7A: The case involved a manufacturer of M.S. Rounds who faced an assessment reopening to tax the turnover due to the cancellation of the purchaser's registration. The Assessing Officer rejected the exemption claim for purchases made prior to the cancellation date, leading to confirmation of the assessment. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal upheld the assessment, emphasizing the lack of proof of genuine transactions by the purchaser. The Tribunal highlighted the cancellation process, lack of stock found, and absence of returns filed by the dealer to support the decision. The Tribunal denied the genuineness of the purchases and confirmed the assessment under Section 7A. Issue 2: Shifting the "point of taxation" for declared goods: The Tribunal rejected the argument that the point of taxation for declared goods cannot be shifted from the first sale to the purchase point. It emphasized the need for purchases to have suffered tax before excluding the operation of Section 7A. The Tribunal dismissed claims that the dealer acted as a broker and arranged direct deliveries to customers, stating that payments by cheque alone did not prove genuine transactions. The Tribunal relied on legal precedents to confirm the assessment while canceling the penalty under Section 16(2) of the Act. Issue 3: Cancellation of registration with retrospective effect: The assessee contended that exemption should be allowed for purchases made before the registration cancellation date. However, the Court upheld the Tribunal's decision, stating that without evidence of genuine transactions or handling of goods by the dealer, exemption could not be granted. The Court found no grounds to differ from the Tribunal's view and dismissed the Tax Case Revision, sustaining the order. In conclusion, the judgment upheld the assessment under Section 7A, emphasizing the importance of proving genuine transactions and tax liability for purchases of declared goods. The Court supported the Tribunal's decision regarding the cancellation of registration and the denial of exemption in the absence of substantial evidence.
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