1973 (11) TMI 79 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of Section 6 and Section 6-A of the Mysore Sales Tax Act, 1957.
2. Interpretation and application of Section 6 and Section 6-A of the Act.
3. Burden of proof under Section 6-A.
4. Legality of assessment orders without proposition notices.
5. Availability of statutory remedies and appellate procedures.

Detailed Analysis:

1. Validity of Section 6 and Section 6-A of the Mysore Sales Tax Act, 1957:
The petitioners challenged the validity of Section 6 and Section 6-A of the Act. However, during the proceedings, the petitioners' counsel conceded that if Sections 6 and 6-A are properly construed, it would not be necessary to question their validity. Consequently, the court focused on interpreting these sections rather than examining their constitutionality. The challenge to the validity of Section 6-A(1) was ultimately dismissed, and the petitioners did not press their contention regarding the validity of Section 6.

2. Interpretation and Application of Section 6 and Section 6-A of the Act:
The court examined the relevant provisions of the Act to ascertain their true meaning and effect. Section 6 was identified as a charging section, imposing tax under specific conditions. The conditions for tax liability under Section 6 include:
- The dealer must purchase taxable goods in the course of business.
- The purchase must occur in circumstances where no tax is leviable at the sale point under Section 5.
- The dealer must either consume the goods in manufacturing, dispose of them in a manner other than sale within the state, or dispatch them outside the state except in inter-State trade or commerce.

The proviso to Section 6 exempts certain transactions from tax, specifically sales or purchases of goods specified in the Fourth Schedule and goods in the Second Schedule already taxed under Section 5(3)(a).

3. Burden of Proof under Section 6-A:
Section 6-A(1) places the burden of proving that any transaction or turnover is not liable to tax on the dealer. The court clarified that this burden pertains to cases where the dealer claims exemption from tax. The taxing authority bears the burden of proving the necessary ingredients for taxation. The court referenced the Supreme Court's decision in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co., affirming that the burden of proving tax liability lies on the taxing authority.

4. Legality of Assessment Orders without Proposition Notices:
In Writ Petition No. 2041 of 1972, the petitioner challenged an assessment order made without a proposition notice. The court found that the Commercial Tax Officer failed to issue a proposition notice and did not record clear findings establishing tax liability under Section 6. Consequently, the court quashed the assessment order, allowing the Commercial Tax Officer to make a fresh assessment after issuing an appropriate proposition notice.

5. Availability of Statutory Remedies and Appellate Procedures:
For petitioners in other writ petitions challenging assessment orders made after issuing proposition notices, the court noted that they had statutory remedies available through appeals. Since the petitioners could not challenge the validity of Sections 6 and 6-A before the appellate authority, they approached the court. With the challenge to Section 6-A(1) failing and the petitioners not pressing their contentions regarding Section 6, the court dismissed these writ petitions, directing the petitioners to pursue their appellate remedies within 30 days.

Conclusion:
The court's judgment provided a detailed interpretation of Sections 6 and 6-A of the Mysore Sales Tax Act, 1957, clarified the burden of proof in tax liability cases, and addressed the legality of assessment orders issued without proposition notices. The court also emphasized the availability of statutory remedies and directed petitioners to pursue appellate procedures where applicable.

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