An assessing authority cannot unilaterally fasten tax liability based on third-party transactions without providing the assessee a fair opportunity to cross-examine or contest the validity of those specific transactions.

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT Dated: 21.04.2026 CORAM THE HONOURABLE MR JUSTICE D.BHARATHA CHAKRAVARTHY and W.M.P.(MD).No.8790 of 2026 Tvl.Sivasakthi Material Suppliers, represented by its Proprietor, S.Karuppasamy, TIN : 33165684543

5/166-1, Krishna Nagar (Guru Illam), Uthumalai, Tenkasi-627 860. ... Petitioner Vs.

The Deputy Commercial Tax Officer, Tenkasi -1 Assessment Circle, Commercial Tax Building, Tenkasi. ...Respondent Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Certiorarified Mandamus, to call for the records of the respondent in TIN 33165684543/2015-16, dated 19.01.2023 and quash as illegal, arbitrary, barred by limitation, wholly without jurisdiction and direct the respondent to conduct an enquiry with other end dealers as contemplated under section 27 of the TNVAT Act 2006 and pass an assessment order afresh after affording opportunity of being heard within such time as may be directed by this Court.

For Petitioner : Mr.N.Sudalai Muthu For Respondent : Mr.R.Suresh Kumar, Additional Government Pleader ORDER The writ petition is filed challenging the impugned order dated

19.01.2023, which is an order of assessment passed under Section 27 of the TNVAT, Act, 2006.

2. Heard Mr.N.Sudalai Muthu, learned counsel appearing for the petitioner and Mr.R.Suresh Kumar, learned Additional Government Pleader, who takes notice on behalf of the respondent.

3. The learned counsel appearing for the petitioner would submit that, firstly, the respondents have relied upon certain transactions as reflected in third parties’ accounts and have fastened the liability upon the petitioner. The petitioner is a person dealing in gravel and sand at Tenkasi, and there is no possibility of the petitioner having dealt with persons located at Chennai. The petitioner completely denies those transactions. In such cases, this Court, in JKM Graphics Solution P Ltd vs. CTO, Vepery Assessment Circle, Chennai, has already held that the respondent authority should evolve a centralized mechanism to ascertain whose version is correct and whose version is false, and should not unilaterally decide the issue.

4. This Court further observed that the mechanism contained in the Maharashtra VAT Act, whereby both parties are confronted in order to arrive at the truth, was a better mechanism. However, in view of the advent of the Tamil Nadu Goods and Services Tax Act, 2017, the directions issued by the Court were never implemented. Nevertheless, in the petitioner’s case, it was necessary for the respondents to have adopted such a course of action.

5. Per contra, the learned Additional Government Pleader would submit that, if the petitioner claims that no such transactions had taken place, it was incumbent upon the petitioner to satisfy the authority that no such transaction had ever occurred. In any event, the impugned order was passed in the year 2023, whereas the petitioner has approached this Court only now.

6. I have considered the rival submissions made on either side and perused the material records of the case.

7. If the petitioner’s case is that no transaction had ever taken place and that he did not supply goods to the third parties, it cannot reasonably be expected of the petitioner to produce documentary evidence to prove a negative. However, the petitioner can very well summon the invoices or other documents referred to in the impugned order and seek examination of the concerned dealer who disclosed the transactions. The process advocated by this Court in JKM Graphics Solution P Ltd vs. CTO, Vepery Assessment Circle, Chennai, namely, by cross-examining the other dealer or by demonstrating before th