The assessees discharged the onus of proof for exemption under section 10 of the TNGST Act by producing purchase bills containing the registration certificate numbers of the respective selling dealers and their declaration of sufferance of tax at the relevant single point. The Revenue failed to prove that there was escapement of turnover. Therefore, the penalty under section 16(2) of the Act was not leviable.

THANIKKACHALAM, J.

The State is the petitioner herein. These revisions were filed against various assessees. These revisions were filed against the order passed by the Sales Tax Appellate Tribunal, in the case of each assessee.

2. The relevant assessments were originally made by the Deputy Commercial Tax Officer, Karur, after examining relevant invoices, vouchers, accounts and records and accepting the claim of exemption in respect of the purchases of groundnut effected by the assessees within the State from various dealers and on satisfaction of tax suffered at the relevant single point tax in respect of such groundnut purchases. Later no, the Deputy Commercial Tax Officer sought to revise the assessment under section16(1) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the TNGST Act"), on the ground that some of the purchases on which exemption was allowed originally were based on forged bills obtained from non-existent dealers, which was said to have been revealed on certain enquiries. The Deputy Commercial Tax Officer also levied penalty under section16(2) of the TNGST Act, 1959, for the alleged wilful non-disclosure of assessment turnover at 1 1/2 times the tax sought to be assessed.

The assessee contended that they had discharged the onus of proof for exemption under section10 of the TNGST Act, 1959, by producing purchase bills containing the registration certificate numbers of the respective selling dealers and their declaration of sufferance of tax at the relevant single point. They have also produced the cess free permit issued by the Madurai Marketing Committee at Dindigul for transporting groundnut kernel from Dindigul to Karur to the respective sellers on their application and verification thereof that the registration certificates granted to the sellers by the department have not been shown to have been cancelled at the material time. It was further submitted that even if the registration certificate had been cancelled with retrospective effect that would not make the purchases by the assessees as purchases from non-registered dealers. Therefore it would not nullify the sales effected by the sellers before such cancellation. Since the assessees had shown that the sales are second sales, the earlier purchase being made from a registered dealer, the assessees are entitled to claim exemption from tax. The assessing officer has rightly allowed the exemption claimed by the assessees originally. It was also pointed out that the Revenue has not discharged the onus placed upon it. For invoking section16 read with section10 of the TNGST Act, the department must prove that there is escapement of turnover. The reliance placed upon the statement recorded from certain persons behind the back of the assessee for supporting the reassessment are violative of the principles of natural justice. The assessee made a request for cross-examination of these persons from whom statements were recorded. The assessees also submitted that the proposal to levy penalty is illegal, void and without jurisdiction since there was no wilful non-disclosure of any assessable turnover, on the part of the assessees.

3. However, the Deputy Commercial Tax Officer rejected the objections by the assessees on the ground that the validity of the bills for the purchases of groundnut was doubtful and tax sufferance had not been proved. According to the department the sellers were not in the trade during the relevant period. Notices were issued to the mill owners whose statements were recorded, but they did not appear. Therefore, the department came to the conclusion that they suffered tax at the previous stage was not known.

4. On appeal, the assessee submitted that statements showing the impugned sellers' names and addresses, their registration certificate numbers, G.L. numbers, cess permit numbers, bill numbers with dates, lorry freight paid and the relevant day book pages were also filed. However, the Appellate Assistant Co