Heard Mr.S.Raveekumar, learned counsel for the petitioner and Mr.S.Kanmani Annamalai, learned Additional Government Pleader appearing for the respondent.
2.The petitioner, who is a registered dealer on the file of the respondent under the provisions of the Tamil Nadu General Sales Tax Act has filed this writ petition challenging the order of assessment under the provisions of the Tamil Nadu General Sales Tax Act for the assessment year 2003-2004.
3.The place of business of the petitioner was inspected by the Enforcement Wing officials on 09.03.2004 and four defects were noticed based on which show-cause notice was issued by the respondent on 04.04.2005 stating that on comparison of the actual physical stock held at the time of inspection in the business premises and the godown with that of the stock book, it revealed an excess stock of sale value of Rs.81,000/-. The said offence was compounded and the compounding fee of Rs.1,000/- was collected from the petitioner. The next allegation is with regard to verification of purchase list filed by the petitioner and by taking the details from the purchase list, it was stated that the petitioner has transacted business with the four dealers, viz.M/s.Sri Mahavir Traders, M/s.Kumar Enterprises, M/s.Sri Lakshmi Agencies and M/s.Navakar Enterprises, and all the four dealers are non-existing dealers and they have not reported the turnover to the Department and therefore, the petitioner has shown the purchases from bogus and non-existing dealers and they have not proved the sufferance of tax at the earlier stage and therefore, the respondent proposed to deny the second sale exemption and levy tax on the said transaction. The respondent also proposed to levy penalty under Sections 12(3)(b) and 10(3) of the TNGST Act. The petitioner submitted their representation dated 20.05.2005, wherein it has been pointed out that they have produced all the necessary particulars relating to the transactions done by them. Payment particulars were also produced by them as they were effected by cheques. The petitioner denied the allegations made against them and requested for copies of the documents and statements obtained from the third parties and also to provide them an opportunity to cross-examine those third parties. Subsequently, the petitioner gave a further explanation touching upon the factual as well as the legal issues. The respondent, on receipt of further explanation, has completed the assessment and passed the impugned order.
4.The impugned assessment order consists of 8 paragraphs running to 9 pages at the first blush. The impugned order appears to be a very reasoned order, but however, on a closer scrutiny, it is seen that upto paragraph-7, the assessing officer has verbatim repeated the proposal in the notice dated 04.04.2005, extracted the entire explanation given by the petitioner, and the finding rendered by the respondent is only in paragraph-8, that too a single line. The petitioner has pointed out as to how the transactions effected by them were genuine transactions, and the allegation that the selling dealers are bogus dealers is false. Certain factual details were placed by the petitioner for the consideration of the respondent. However, the respondent, in a single line, stated that the Department has proved that the four dealers are bill traders and bogus dealers. The finding rendered by the respondent is not supported by any reason. The respondent has not made any endeavour to consider the correctness of the stand taken by the petitioner in their representation dated 20.05.2005 and the objections dated 03.06.2005.
5.What is interesting to note is, in the counter affidavit filed by the respondent in this writ petition which was filed only during 2009, a slightly different stand has been taken with regard to the four selling dealers. Two of them are stated to be not found, the reason being that no returns have been filed about those two dealers in their respective assessment circles, they being M/s.Sri Mahavir Traders and M/s.Kumar Enterprises. The other two dealers, viz. M/s.Sri Lakshmi Enterprises and M/s.Navakar Enterprises are stated to have stopped the business on 19.08.2003. Therefore, the stand taken in the impugned order that they are bogus dealers / bill traders, appears to be factually incorrect and inconsistent with the averments in the counter affidavit and in particular, paragraph-7 of the counter affidavit. The other paragraphs in the counter affidavit deals with the burden of proof and on whom it lies etc. A reference has been made to Sections 10(2) and 3(2) of the TNGST Act in this regard. A vain attempt has been made by the respondent to improve upon the impugned order by way of counter affidavit. This obviously cannot be done in the light of the settled legal position in the case of Mohinder Singh v. Chief Election Commissioner, reported in AIR 1978 SC 851, which has been consistently followed by this Court in several decisions, one of which arising under the Central Sales Tax Act is in the case of K.A.Rubbers v. The Assistant Commissioner (CT), Hosur, in W.P.No.27470 of 2011 dated 10.12.2011.
6.With regard to burden of proof is concerned, Section 10(2) of the TNGST Act casts a burden upon the petitioner to prove that the purchases effected by them on such goods had already been subjected to tax under the TNGST Act. The petitioner would state that they have produced voluminous records to prove the said fact and that the benefit of second sale exemption cannot be denied on the ground that the selling dealer is not found in the subsequent period. To support such a stand, reliance has been placed on the decision of the Hon'ble Division Bench of this Court in the case of State of Tamil Nadu v. Sri Alaggar Traders, reported in [2010] 28 VST 228 (Mad).
7.With regard to the allegation that the petitioner had effected business with bill traders and bogus dealers, the petitioner wanted copies of statements and an opportunity to cross-examine such of those persons who are stated to have been given statements which would be adverse to the interest of the petitioner. This request made by the petitioner was not considered and no opportunity of cross-examination was afforded by the respondent. Thus, when the respondent proposes to rely upon the statements and records of third parties and if such material has been collected behind the back of the petitioner, then the petitioner is entitled to dispute the correctness of the statements and the efficacy and admissibility of such statements have to be tested, for which, an opportunity of cross-examination ought to have been granted. Such a view was taken by this Court in the case of Sri Kumaran Trading Company, Chennai v. The Deputy Commercial Tax Officer, Manali Assessment Circle, Chennai, in W.P.No.14851 of 2005 dated 03.10.2016.
8.In the light of the above discussion, this Court has no hesitation to hold that the impugned proceedings is wholly vitiated on account of total non-application of mind and being devoid of reasons. Thus, the writ petition is liable to be allowed.
9.In the result, the writ petition is allowed and the impugned order is set aside and the matter is remitted to the respondent for fresh consideration who shall afford adequate opportunity to the petitioner to cross-examine the third parties and after examining all the records, the respondent shall redo the assessment in accordance with law. No costs. Consequently, the connected miscellaneous petition is closed.