2016 (10) TMI 747 - HC - VAT and Sales Tax

Validity of assessment order - TNVAT Act, 2006 - CST Act - inspection of premises of petitioner by the officials of the Enforcement Wing - It is not a case where the petitioner is not able to furnish details. But, the petitioner has furnished the details which have been brushed aside by the respondent while completing the assessment. This is evident from the stand taken in the counter affidavit - Held that - the petitioner has produced the relevant documents at the time of personal hearing but, the respondent has stated that the records produced by the petitioner are insufficient to establish the genuineness of the transactions. If that is the stand taken by the respondent, then, there was a duty cast upon the respondent to discuss about the nature of the documents produced by the petitioner and how he proposes to disbelieve those documents as to whether all the documents are liable to be rejected, etc. At one point of time, part of the transactions have been recognised by the respondent Department. The transaction made by the petitioner to a company at Sriperumbudur is not disbelieved at the hands of the purchasing dealer. In such circumstances, the respondent appears to have not conducted a thorough enquiry in to the matter, as it appears that the documents are voluminous and in a summary manner, the assessment was done for the 7 assessment years. With regard to the turn over omission, which appears for all the assessment years, the petitioner has stated before the Enforcement Wing Officials themselves that they are unable to cull out the details from bare perusal of the figures. Therefore, even after the issuance of show cause notice, while submitting their reply they sought for details such as Bill number etc - Even this request has been rejected by the Assessment officer, as an after thought. Since, the respondent has already initiated action, he is bound to conduct a thorough and complete enquiry into the matter and any slipshot or cursory perusal of the documents cannot be appreciated since, the proceedings are under a taxation statue. The impugned assessment has to be done in a proper manner after considering all the documents to be submitted by the petitioner. The petitioner shall be furnished the documents sought for and the petitioner is also entitled to produce the books of accounts, etc. - petition allowed - matter remanded.

Summary

Issues:
Challenge to assessment orders under the TNVAT Act and CST Act for various assessment years.

Analysis:
The judgment involved a challenge to assessment orders under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act) and the Central Sales Tax Act (CST Act) for various assessment years. The petitioner, a registered dealer, contested the assessment on grounds including incorrect claim of Input Tax Credit (ITC), sales suppression, stock variation, tax suppression on consignor & consignee movement, and penalty. The petitioner provided detailed objections, stating that purchases were properly accounted for, payments were made through bank accounts, and transactions with specific companies were genuine. The petitioner submitted relevant documents and participated in a personal hearing, presenting sales/purchases summaries, profit and loss accounts, and other statements.

The High Court noted that the assessing officer's findings were arbitrary and cryptic, especially regarding the movement of goods and the genuineness of transactions. The respondent had alleged that necessary documents were withheld, but the petitioner had produced relevant records during the personal hearing. The Court observed that the respondent failed to adequately explain why the documents provided were considered insufficient to establish the genuineness of transactions. Additionally, part of the transactions had been recognized by the respondent, indicating a lack of thorough inquiry.

The Court emphasized the importance of a proper assessment process, highlighting that a complete enquiry was necessary, especially in taxation matters. It criticized the cursory approach taken in the assessment and directed the respondent to conduct a fresh consideration. The judgment allowed the writ petitions, setting aside the impugned orders, and remanded the matters back to the respondent for a fresh assessment. The respondent was instructed to provide a personal hearing to the petitioner's representative, allow the submission of relevant documents, and re-do the assessment in accordance with the law. No costs were awarded in this decision.