1969 (3) TMI 72 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the U.P. Sales Tax Act regarding the taxation of tincture zingiberis turnover. Determination of the onus of proof in establishing whether tincture zingiberis was locally purchased or imported.

Analysis:
The judgment pertains to a case involving the taxation of tincture zingiberis turnover under the U.P. Sales Tax Act. The assessee, engaged in the medicine business, contested the inclusion of tincture turnover in its taxable amount, claiming not to be the manufacturer or importer. The Sales Tax Officer included the tincture turnover in the assessment, leading to subsequent appeals and revisions. The Judge (Revisions) Sales Tax acknowledged the tincture as medicine but upheld the assessment due to the absence of purchase vouchers proving local acquisition, suggesting the possibility of importation. The key question raised was whether the onus lay on the dealer to prove local purchase or on the department to establish importation.

The judgment highlighted the unsatisfactory nature of the case statement, lacking clarity on the legal basis of the claim and decision. Despite this, the court delved into the relevant provisions of the Act. Section 3 of the Act imposes tax on every sale without differentiation based on local purchase, manufacture, or import. However, Section 3-A allows the State Government to tax specific goods at a single point of sale through notifications. Referring to Notification No. 3504/X, medicines and pharmaceutical preparations were exempted from tax under specified conditions, indicating the applicability of this notification to the tincture.

Section 3-A creates an exception to Section 3, exempting goods covered by notifications from general taxation. In such cases, the burden of proof shifts to the department to demonstrate importation or manufacture by the dealer. Unlike under Section 3, where the dealer must prove non-liability for tax, under Section 3-A, the department must establish the specific circumstances of the sale. The court clarified that the department needed to prove importation of the tincture, absolving the dealer of this responsibility. Consequently, the court ruled in favor of the assessee, awarding costs and counsel fees.

In conclusion, the judgment resolved the issue by determining the onus of proof regarding the tincture zingiberis turnover under the U.P. Sales Tax Act. It emphasized the application of Section 3-A and the burden on the department to demonstrate importation, ultimately ruling in favor of the assessee based on the legal framework and notification provisions.