TMI Blog2016 (10) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... ery validity. The violation of the principles of natural justice is writ large on the face of the impugned order, which is sufficient to hold that the same is not sustainable. Petition allowed - matter remitted back to the respondent with a direction to consider the request of the petitioner for furnishing of statements and records and an opportunity of cross examination and thereafter proceed in accordance with law - decided in favor of petitioner. - Writ Petition No.14851 of 2005 and WPMP.No.16188 of 2005 and WVMP.No.76 of 2009 - - - Dated:- 3-10-2016 - T. S. Sivagnanam, J. For the Petitioner : Mr. T. Pramod Kumar Chopda For the Respondent : Mrs.Vasudha Thiagarajan, AGP ORDER Heard both. 2. The petitioner is a registered dealer in iron and steel products on the file of the respondent under the provisions of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called the Act). For the assessment year 2003-04, the petitioner reported a total and taxable turnover of ₹ 78.76 crores and ₹ 54.43 lakhs respectively. The respondent, on verification, issued a notice proposing to disallow the entire claim of second sale exemption on the basis of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchaser. 7. In support of his contentions, the learned counsel for the petitioner has referred to the decision of the Hon'ble Division Bench of this Court in the case of M/s.Jeetendra Agencies Vs. CTO, Coonoor Assessment Circle [W.P. No.32711 of 2002 dated 28.8.2002], the decision in the case of M/s.Vardhaman Steels Vs. CTO, Vallalar Nagar Assessment Circle, Chennai [W.P.No.32133 of 2004 dated 5.11.2004] and the decision in the case of M/s.AMA Steels Vs. Assistant Commissioner (CT), Harbour III Assessment Circle, Chennai-1 [W.P.No.21238 of 2011 dated 18.10.2011]. 8. The learned counsel for the petitioner has also filed a typed set of papers consisting of details of first purchases made from the registered dealers for the relevant assessment year, details of second and subsequent purchases made from registered dealers, proceedings for cancellation of registration of M/s.Kamalesh Enterprises, M/s.Aashna Enterprises and M/s.Shreyansh Ispat (Chennai) Ltd, which were cancelled only on 10.12.2003 and contended that such cancellation cannot have an impact on the transactions done by the petitioner much prior to the said cancellation. 9. It is further submitted that the reque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [reported in (1998) 109 STC 439]. 13. Per contra, Mrs.Vasudha Thiagarajan, learned Additional Government Pleader appearing for the respondent submitted that the petitioner, which is a dealer in iron and steel, is an assessee on the file of the respondent and their place of business was inspected by the officials of the Enforcement Wing on 1.7.2003 and certain defects were noticed. During the course of inspection, it was found that the petitioner did not have any proof for movement of goods such as lorry receipt, freight payment details and also name and address of the transporters, etc. and initially, the assessee refused to hand over records, which were recovered at the time of inspection. 14. Relying upon a statement given by Mr.Mahendrakumar Jain, Proprietor/Partner/Director of M/s.Aashna Enterprises, M/s.Kamalesh Enterprises and M/s.Shreyansh Ispat Private Limited, the learned Additional Government Pleader submitted that the said person had categorically admitted before the Inspecting Officers that they never handled any goods, but they issued only sale invoices. Further, the deposition made on behalf of M/s.Balaji Transports also confirmed the same in the statement given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 20. On receipt of the pre-revision notice, the petitioner submitted interim objections on 9.12.2004. The receipt of the interim objections is not in dispute. In the said interim objections, while denying the allegations made in the pre-revision notice dated 16.11.2004, as defamatory and mala fide, the petitioner requested copies of the records, which were relied upon in the notice, agreeing to pay cost and further requested for an opportunity to enable them to file their objections to the proposal. 21. In the said interim objections, the petitioner also requested the photostat copies of the statements, a file containing 44 pages recovered at the time of inspection on 1.7.2003 and the copies of the statements recorded from Mr.Mahendrakumar Jain, M/s.Tulsyan NEC Ltd., and M/s.Balaji Transports. The petitioner also sought an opportunity to verify the accounts maintained by the three enterprises owned by M/s.Mahendrakumar Jain for the assessment years 1998-99 to 2003-04, as mentioned in the pre-revision notice, so as to verify the details pertaining to purchases/sales, bank account, freight charges, etc. A similar request was made for verification of the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the interim objections. Therefore, it was contended that mere recording of alleged self serving statement of Mr.Mahendrakumar Jain or from any other person cannot be the basis for rejecting the claim for exemption made by the petitioner. 26. The petitioner also objected to the levy of penalty under Sections 12(3)(b) and 10(3)(1) of the Act on the ground that the turnover sought to be assessed is culled out from the books of accounts and according to the petitioner, the question of levy of penalty would not arise. Further reliance was placed on the orders of this Court in W.P.Nos. 33108 to 33110 of 2004 dated 18.11.2004 wherein under similar circumstances, the Department was directed to furnish D7 records and afford an opportunity to cross examine the third parties before passing the order. 27. With the above averments as well as some more facts, the petitioner requested for furnishing of copies and for cross examination and also for an opportunity to file their final objections. The respondent, while admitting the receipt of the interim objections, stated that all the defects were on the basis of the inspection conducted and from the statement recorded from the person, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose statements by cross examination. Accepting the case of the dealer, the Hon'ble Supreme Court set aside the order of the High Court as well as the Sales Tax Tribunal and remitted the matter back to the Tribunal with liberty to the assessee to produce documents subject to proof of its genuineness and the Tribunal was directed to redo the matter. 33. Therefore, when statements recorded from a third party was the sole basis of revision of assessment, such material is an adverse material to the interest of the dealer. In any event, it cannot be stated that the respondent cannot rely upon those statements, but could have done so only after furnishing copies thereof to the petitioner and when the petitioner disputed the correctness of those statements, the efficacy and admissibility of those statements have to be tested, for which, an opportunity of cross examination ought to have been afforded. 34. Admittedly, the petitioner submitted their objections to the pre-revision notice vide their letter dated 9.12.2004. They are only interim reply. In the interim reply, the petitioner had clearly set out as to what are the records required by them and that there is a specific requ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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