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2013 (9) TMI 147 - HC - VAT and Sales TaxInter-State OR Intra-State Purchases - Despite a billed purchase by the petitioner the AO after formal enquiry branded the transactions of the petitioner with these dealers as fake one - Whether the Tax Board was justified in upholding that the intra-state purchases of Gwar split made by the petitioner assessee were intra-state purchases - Held that:- The Tax Board had committed a manifest error of law in concluding that the sale transactions were intra-State and not inter-State, and that being so the question of law framed by this Court in all these petitions is decided in favour of the assessee and against the Revenue. On examining the assessment orders with bird’s eye view it was amply clear that the assessing authority had not at all cared to verify the genuineness of the bills from the dealers of Gujarat and had categorized those bills as fictitious bills castigating the assessee for camouflaging the transaction - For arriving at the conclusion the enquiry procedure adopted by the assessing authority was per-se an empty formality - It was really strange that when the assesses had produced umpteen material before the assessing authority to show genuineness of the sale transactions why the assessing authority had shown utmost haste in drawing the drastic conclusion that the alleged inter-State transactions were sham and in fact are intra-State sale transactions. State of Kerala Vs. M.M. Mathew & Anr. [1978 (8) TMI 178 - SUPREME COURT OF INDIA] - The methodology, which was pressed into service by the assessing authority for drawing this sort of conclusion solely on the basis of sample transaction and statements of truck owners and drivers prima facie falls short of the requisite enquiry for unearthing the truth - The Court was quite conscious about the fact that evasion of tax was a menace to the society and the revenue authorities acting as watchdogs were empowered to unearth truth for penalizing potential tax evaders - The Court cannot lose sight of a very vital aspect of the matter that no revenue authority should term a genuine sale transaction as a sham on mere conjectures and surmises. Before castigating an assessee for a fake, or spurious transaction, or for his conduct of evasion of tax, a proper and meaningful enquiry was utmost essential which confirmed adherence of principles of natural justice - The assessing authority while categorizing the inter-State sale transactions of the assessee as fake and spurious, had not made any endeavor to verify the facts from the traders of Ahmedabad, nor any effort was made by the assessing authority to examine account books of the dealers - It was a bare requirement for the assessing authority before drawing an inference that the alleged transactions were intra-State transaction and not inter-State transactions. The assessing authority were also required to be set at naught for deciding the matter afresh in the light of observations made by the Court - the matter was remanded back to the assessing authority for making assessment of the tax for the assessment years 1995-96, 1996-97 and 1997-98 afresh after affording reasonable opportunity of being heard to the assessee strictly in accordance with law - Decided in favour of Assessee.
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