Tvl. Swarna Steels Vs State of Tamil Nadu (Madras High Court)
Madras High Court has allowed a Tax Case (Revision) filed by Tvl. Swarna Steels, setting aside a sales tax addition made by the authorities. The court reiterated its stance that a mere difference in gross profit between a first and second sale cannot, by itself, be a legal ground for making an addition under Section 12-A of the Tamil Nadu General Sales Tax Act (TNGST Act), without proper inquiry as per prescribed rules.
The current matter involved an identical issue to a previous case concerning the same assessee for Assessment Year 2001-02, decided by the same High Court on June 12, 2013, in Tax Case (Revision) No. 292 of 2011. The learned counsel for the assessee circulated a copy of this prior order, and the learned Special Government Pleader confirmed the identical nature of the issues and that the earlier decision favored the assessee.
Referring to paragraph 9 of its June 12, 2013, order, the High Court emphasized that the addition of Rs. 8,05,303 in the previous instance was solely based on an Inspection Wing Official noting a significant gross profit difference between the first and second sales by a sister concern. The Court in its earlier ruling, which is now applied to the current case, explicitly disagreed with the Sales Tax Appellate Tribunal’s reasoning.
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