East Coast Constructions & Industries Ltd. v. State of Tamil Nadu

Tamil Nadu General Sales Tax Act, 1959

--Revision of assessment--Denial of exemption under section 3B(2)(b)Notice failed to specify grounds for denial of exemption----Where the notice failed to reveal any material details as to how assessing officer proposed to disallow the exemption already granted in respect of purchases made through inter-State sales, matter was remitted back to assessing officer for consideration afresh. --Assessee, engaged in business of civil construction, was allowed exemption representing value of building material purchased in course of inter-State trade. However, the assessment order was revised, disallowing exemption granted in original assessment order. Assessee contended that when there was no escapement of income, question of revising the assessment did not arise. Further, as the reasons for disallowing exemption were not put to its notice, Authority was not entitled to revise the assessment order. Held: Reasoning in the order of assessment should emerge from the related grounds raised in notice of proposal and not to be stated as the first time, while passing the order of assessment. Assessee could not be put to surprise with certain reasons in the assessment order, when crux of such reasons, in the form of grounds, were not stated in notice of proposal. Thus, as the order was passed in violation of principles of natural justice, matter was remanded back to AO for redoing the revision of assessment on merits and in accordance with law, after issuing a fresh notice of proposal with material details and particulars as to how the exemption already granted was sought to be disallowed.