2021 (2) TMI 749 - HC - VAT and Sales Tax

Revision/reopening of regular assessment - Section 16 of the Tamil Nadu General Sales Tax Act, 1959 - HELD THAT - While the petitioner has tried to distance from the liability by shifting the burden on the respondent, the respondent on the other hand has passed an order without proper discussion and has merely reiterated the content of the revision notice - It was for the petitioner to have properly explained the case as to why the documents that were collected by the Department during inspection would not justify a revision of the assessment for enhancement of tax liability of the petitioner. In absence of a proper explanation from the petitioner there is a strong presumption that the petitioner deliberately did not account for those transaction in the books of accounts/bills and the sales were clandestine in nature to evade tax. They prima facie indicate that the conduct of the petitioner was to suppress the facts with a view to evade tax. The respondent was therefore entitled to pass a speaking order by drawing adverse inference and confirm the liability as the officers acting under the provisions of the Tamil Nadu General Sales Tax, 1959 are expected to pass orders based on the principles of preponderance of probabilities. However, there is no proper discussion in the impugned order. Nevertheless, the petitioner ought to have filed an appeal before the Appellate Commissioner under the provisions of the Tamil Nadu General Sales Tax Act, 1959. If the petitioner had filed an appeal under the provisions of the Act, petitioner would have pre-deposited 25% as a condition for filing the appeal and another 25% at the time of stay petition before the appeal was taken up for final hearing. Instead, the petitioner present writ petitions and prolonged the litigation for the last 18 years and thereby deprived the revenue to the state - The petitioner has abused the jurisdiction of this Court by filing the writ petitions the present writ petition even though the petitioner had a choice to approach the Appellate Commissioner against the impugned order. By filing the present writ petition, the petitioner has gained time and postponed the liability. The matter is remitted back and the petitioner is directed to deposit 50% of the disputed tax with the respondent within a period of one month from the date of receipt of this order - petition allowed by way of remand.

Summary

Issues:
Challenge to revision order dated 31.3.2010 under Section 16 of the Tamil Nadu General Sales Tax Act, 1959 based on re-opening of assessment, burden of proof on department to prove tax liability, reliance on Supreme Court decision, revision based on slips found during inspection, lack of proper explanation by petitioner, abuse of jurisdiction by filing writ petition instead of appeal.

Analysis:

The petitioner challenged a revision order dated 31.3.2010 by the respondent under Section 16 of the Tamil Nadu General Sales Tax Act, 1959. The revision was initiated based on the re-opening of the assessment under a notice dated 7.7.2008, which reopened a regular assessment made on 16.8.2004. The petitioner contended that the burden of proof was on the department to establish any transaction or turnover not liable for tax, leading to invoking Section 16 of the Act.

During the proceedings, the petitioner referred to a decision of the Hon'ble Supreme Court in I.T.C. Ltd. vs. Supdt. Of Commercial Taxes (1997) 11 SCC 88 at page 90. The revision of the assessment was supported by 297 slips found in the possession of the petitioner during an inspection by the Enforcement Wing of the Commercial Tax Department. The petitioner attempted to shift the burden of proof to the respondent, who, in turn, passed an order without thorough discussion, merely reiterating the content of the revision notice.

The Court noted that the petitioner failed to provide a satisfactory explanation regarding the documents collected during inspection, indicating a potential evasion of tax through clandestine sales. The respondent was deemed entitled to pass a speaking order drawing adverse inference and confirming the liability based on the principles of preponderance of probabilities. However, the impugned order lacked proper discussion, and the petitioner was advised to appeal before the Appellate Commissioner under the Act.

The Court found that the petitioner abused the jurisdiction by filing writ petitions instead of opting for the appellate process, which prolonged the litigation for 18 years, depriving the state revenue. To ensure justice, the impugned order was set aside, and the case was remitted back to the respondent for a fresh order within three months, with a directive for the petitioner to deposit 50% of the disputed tax within one month. Failure to comply would result in the revival of the impugned order, allowing for recovery proceedings in accordance with the law.

In conclusion, the Court emphasized that the deposited amount would be considered as paid "under protest" and without prejudice. If the petitioner succeeded in the remand proceedings, the amount would be refunded promptly. Failure to deposit would lead to the revival of the impugned order for recovery. The writ petition was disposed of with these observations, with no costs incurred, and the connected miscellaneous petition was closed.