By TIOL News Service

CHENNAI, NOV 06, 2017: THE ISSUE BEFORE THE COURT IS - Whether AO should invoke powers vested in him u/s 54 of the TNGST Act, for summoning and enforcing attendance of any dealer and examining him on oath, before determining tax liability of assessee. YES is the verdict.

Facts of the case

The Assessee was engaged in the business of edible oil and filed its return for the AY in question. The AO suspected that the purchases shown by the Assessee was not genuine. Accordingly, the AO sned show cause notice to the Assessee for explanation. The seller was also summoned to produce the accounts for cross examination with the Assessee to the alleged purchase of Refined Sunflower Oil. But the selling dealers had not came forward to appear along with their account and they had not co-operated with the AO for cross examination. Therefore, the AO passes orders with reference to the available materials on hand.

High Court held that,

++ the Revenue should exercise all the powers conferred on it under Section 54 of the TNGST Act. If the Revenue is unable to produce the other end dealer (Karnataka dealer), the question of using the materials collected from Karnataka against the assessee does not arise, as this has been specifically prohibited in the orders passed by this Court dated 01.02.2005. Thus, the assessment order confirming the proposal in the show cause notice on the ground that the dealer has not appeared before the Revenue cannot be sustained. Thus, taking note of the observation passed by this Court in the earlier writ petition, the question of remitting the matter to the Revenue once again does not arise, as the Court has specifically barred the same by observing that without offering the other end dealer for cross examination, the materials gathered by the Revenue from the said dealer cannot be relied on for determination of the tax liability of the petitioner.

(See 2017-TIOL-2310-HC-MAD-CT )