1981 (10) TMI 164 - HC - VAT and Sales Tax

Issues Involved:
1. Justification of the Tribunal's decision on the non-collection of tax.
2. The burden of proof on the assessee regarding non-collection of tax.
3. The validity of the Tribunal's findings about the declarations in form C.
4. The Tribunal's consideration of relevant facts and documents.
5. The Tribunal's decision on the exemption claim under section 10 of the Central Sales Tax (Amendment) Act, 1969.

Issue-Wise Detailed Analysis:

1. Justification of the Tribunal's Decision on Non-Collection of Tax:
The Tribunal held that the assessee failed to prove that the non-collection of tax on the sales amounting to Rs. 11,32,257 was because no such tax could have been levied or collected. The Tribunal emphasized five factors: the sales were subject to declarations in form C, the contracts were f.o.r. destination, the assessee obtained declarations in form C, inconsistent conduct in tax recovery, and subsequent conduct in collecting tax on similar transactions.

2. The Burden of Proof on the Assessee Regarding Non-Collection of Tax:
The Tribunal concluded that the assessee did not discharge the burden of proving that no tax was collected under the Central Act on the ground that such tax could not have been levied or collected. The Court noted that the burden of proving the fact of non-collection lies with the dealer effecting such sale as per sub-section (2) of section 10 of the Central Amendment Act. However, the Court observed that once evidence is adduced by both parties, the burden of proof becomes less significant, and the totality of the evidence must be evaluated.

3. The Validity of the Tribunal's Findings About the Declarations in Form C:
The Tribunal's emphasis on the fact that the assessee obtained declarations in form C and that the sales were subject to such declarations was found to be misplaced. The Court noted that the assessee requested time to obtain declarations in form C to limit its tax liability without prejudice to its main contention that no tax was payable under section 10. The Tribunal's reliance on this fact was deemed irrelevant and unjustified.

4. The Tribunal's Consideration of Relevant Facts and Documents:
The Court found that the Tribunal ignored significant evidence, particularly two letters addressed by the assessee to the Sales Tax Officer and the Assistant Commissioner of Sales Tax in June 1973. These letters indicated that the non-collection of tax was based on the belief that no tax was payable due to the Supreme Court's decision in the State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons [1965] 16 STC 231 (SC). The Tribunal's failure to consider these letters and the assertions made therein was a critical oversight.

5. The Tribunal's Decision on the Exemption Claim Under Section 10 of the Central Sales Tax (Amendment) Act, 1969:
The Court held that the Tribunal's findings were vitiated due to the exclusion of relevant evidence and the consideration of irrelevant material. The Court emphasized that the exemption under section 10 could be claimed if the non-collection of tax was on the ground that no tax could have been levied or collected, as evidenced by the assessee's conduct and the contemporaneous claims made in the quarterly returns and letters.

Conclusion:
The Court concluded that the assessee successfully established its claim for exemption under section 10 of the Central Sales Tax (Amendment) Act, 1969, for the sales amounting to Rs. 11,32,259. The Tribunal's decision was found to be flawed due to the misinterpretation of evidence and the reliance on irrelevant factors. The reference was answered in the negative, in favor of the assessee, and against the State Government. The State Government was directed to pay the costs of the reference to the assessee.

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