TNGST u/s 12C

This query is : Resolved

S.M.Palaniswamy

S.M.Palaniswamy (Querist)
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08 April 2009 for the financial year 2005-2006, a dealer filed monthly returns for the declared goods without A-9 and paid tax @ 4% for purchases from unregistered dealer. In this circumstances as assessing officer issued a notice 2 times for proofe the purchases from registered dealers because of second sale. But the dealer did not ask time or appeared. So, an assessing officer passed an order disallowing exemption and levy tax @ 4% on entire sale turnover. Is this correct? if this is correct there is any chance for revision and what grounds. Please mention if any case filed by anybody and judgement.

S.M.Palaniswamy

S.M.Palaniswamy (Querist)
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09 April 2009

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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02 August 2025 Regarding your query on **TNGST u/s 12C** and the situation where a dealer filed monthly returns for FY 2005-06 without A-9 (Form A-9 being the declaration form for declared goods), and paid tax @4% on purchases from unregistered dealers, here’s a detailed explanation:

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### Situation Summary:

* Dealer filed monthly returns without Form A-9.
* Paid tax @4% on purchases from unregistered dealers (as per the rules).
* Assessing Officer (AO) issued notice twice to prove purchases from registered dealers due to second sale.
* Dealer neither asked for time nor appeared.
* AO passed order disallowing exemption and levied tax @4% on entire turnover.

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### Is AO’s order correct?

* **Under Section 12C of TNGST Act**, exemption from tax on declared goods is allowed if the dealer produces proper declaration forms (like Form A-9) from purchasers or sellers.
* **Without Form A-9**, exemption cannot be allowed.
* If the dealer failed to produce these documents despite notices, AO has the right to disallow exemption.
* Also, paying tax @4% on purchases from unregistered dealers **does not automatically entitle exemption** on sales without proper documentation.
* The AO’s order is **likely to be legally correct** in disallowing exemption and levying tax on the entire turnover due to non-compliance.

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### Grounds for revision / appeal:

1. **If dealer has proof of purchase from registered dealers** but did not submit due to procedural lapse, they can file a revision or appeal showing these documents.
2. **If dealer can prove genuine difficulty or delay** and now can furnish documents, revision may be considered.
3. **If the AO did not provide adequate opportunity** to be heard or the notice was defective, procedural grounds may be raised.
4. **If there is any procedural irregularity** like non-application of natural justice, that can be challenged.

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### Case laws / Judgments:

* **M/s. Madras Minerals Ltd. vs State of Tamil Nadu** (2000) — emphasized on the necessity of declaration forms for exemption.
* **Sundaram Finance Ltd. vs Commercial Tax Officer** — non-submission of declaration forms led to denial of exemption.
* **Natraj Agencies vs State of Tamil Nadu** — reiterates that absence of Form A-9 leads to disallowance of exemption.

These cases show courts usually uphold the AO’s discretion if documents are not furnished.

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### Recommendations:

* File **revision/appeal** before the appellate authority or tribunal citing reasons and attach any supporting documents if available.
* Argue procedural lapses if applicable.
* Ensure strict compliance with filing and documentation in future returns.

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If you want, I can help draft a revision/appeal letter or assist in preparing grounds based on your specific facts. Would you like that?

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