1986 (12) TMI 344 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of the assessee under the Central Sales Tax Act for the assessment year 1973-74.
2. Burden of proof on the department regarding the movement of goods.
3. Interpretation of Section 6-A of the Central Sales Tax Act.
4. Application of legal principles from previous judgments to the present case.

Detailed Analysis:
1. The judgment deals with the liability of the assessee under the Central Sales Tax Act for the assessment year 1973-74. The assessee, a manufacturer of chemicals, received orders from customers in Delhi and supplied goods directly from its head office at Ghaziabad. The Sales Tax Officer held the assessee liable for Central sales tax, which was partially allowed on first appeal. The Sales Tax Tribunal later allowed the appeal of the assessee and dismissed the appeal of the department, citing lack of evidence that the goods were manufactured as per specifications and sent to customers.

2. The issue of burden of proof arises in this case, particularly in relation to Section 6-A of the Central Sales Tax Act. The Tribunal was criticized for placing the burden of proof on the department instead of the assessee, as required by the law. Section 6-A shifts the burden of proving that the movement of goods between states was not due to a sale onto the dealer, who must provide a declaration and evidence to support their claim of exemption from tax. The judgment emphasized that the burden of proof lay with the assessee, not the department.

3. The interpretation of Section 6-A was crucial in this judgment. The provision was enacted to prevent tax evasion by dealers claiming exemption for transactions that were not sales. The section places the burden of proof on the dealer to show that the movement of goods between states was not a sale. The judgment highlighted that the department was not required to prove the transactions were not inter-State; rather, it was the responsibility of the assessee to provide evidence to support their claim of exemption.

4. The judgment referenced previous legal decisions to support its analysis. It cited the Supreme Court's decision in Sahney Steel and Press Works Ltd., which clarified that the liability for inter-State sales arises when goods are supplied from a head office to a branch office for further sale. The judgment distinguished other cases where goods were not directly sent to buyers from the head office, emphasizing the specific circumstances of the present case. By applying legal principles from previous judgments, the court concluded that the Sales Tax Tribunal had erred in placing the burden of proof on the department and set aside the tribunal's decision.

In conclusion, the judgment focused on the correct interpretation of the burden of proof under the Central Sales Tax Act and emphasized the importance of providing evidence to support claims of exemption from tax liability. The court's analysis of relevant legal provisions and previous judgments guided its decision to set aside the Sales Tax Tribunal's order and direct a rehearing of the case based on the observations made.