1986 (8) TMI 419 - HC - VAT and Sales Tax

Summary

Issues:
Assessment under section 21 of the U.P. Sales Tax Act for the year 1977-78 based on coal allotment; Proper enquiries by assessing authority; Validity of notice under section 21; Burden of proof on Revenue; Direction for further enquiries by Tribunal; Authority to decide on issuance of notice under section 21; Tribunal's role as a fact-finding authority.

Analysis:
The judgment deals with a revision under section 11(1) of the U.P. Sales Tax Act, where the assessee challenged the Sales Tax Tribunal's decision regarding assessment year 1977-78 under section 21 of the Act. The assessee, a society receiving coal for supply, was assessed on a turnover of Rs. 3,00,000 and a tax of Rs. 12,000 based on information from the Director of Movement. The first appellate court remanded the case, citing inadequate enquiries by the assessing authority to verify coal receipt. The subsequent appeal under section 10 was allowed, directing the first appellate court to make further enquiries from the Director of Movement.

The counsel for the assessee argued against the Tribunal's direction for additional enquiries, emphasizing that the case should be decided based on existing record material to determine the validity of the notice under section 21. The court acknowledged that in section 21 proceedings, the burden of proof lies with the Revenue to establish underassessment or wrongful deductions. It highlighted the necessity for sufficient material before initiating section 21 proceedings, preventing a "second inning" for the Revenue after inadequate initial evidence.

The judgment stressed that the Tribunal, as the final fact-finding authority, must assess the sufficiency of material for issuing a section 21 notice based on existing records. Criticizing the Tribunal's decision to refer the case back for further enquiries, the court held that such action was impermissible given the existing findings. The Revenue's counsel failed to counter the assessee's contentions, leading to the revision's success. Consequently, the Tribunal's order was set aside, directing a fresh decision on the appeal without cost allocation to either party.

In conclusion, the judgment establishes the importance of sufficient material for initiating section 21 proceedings, emphasizing the burden of proof on the Revenue and the Tribunal's duty as the final fact-finding authority. It clarifies that the decision on notice issuance should be based on existing record evidence, preventing unnecessary delays or re-investigations by the Revenue.