1988 (3) TMI 415 - HC - VAT and Sales Tax

Summary

Issues:
1. Jurisdiction of the Commissioner to revise the order of penalty.
2. Burden of proof on the assessee regarding payment of tax on first sales.

Jurisdiction of the Commissioner to revise the order of penalty:
The case involved a co-operative society claiming exemption from sales tax on rice purchases. The Commercial Tax Officer imposed penalties on the society, which were later canceled by the Appellate Deputy Commissioner. However, the Commissioner of Commercial Taxes, using revisionary powers, reinstated the penalties based on statements obtained without giving the assessee a chance to rebut. The High Court noted the lack of procedural fairness in the Commissioner's approach, emphasizing the need for proper investigation and opportunity for the assessee to challenge evidence. The Court found the Commissioner's actions unjustified and lacking in due process, ultimately quashing the Commissioner's order and restoring the Appellate Deputy Commissioner's decision.

Burden of proof on the assessee regarding payment of tax on first sales:
The Court examined the burden of proof under Section 7-A of the A.P. General Sales Tax Act, which requires the dealer to prove that the first sales were taxed. In this case, the assessee provided invoices, affidavits, and tax payment information to support their claim. However, the Commercial Tax Officer failed to conduct a thorough investigation and denied the assessee the opportunity to challenge statements obtained by the department. The Appellate Deputy Commissioner correctly recognized this deficiency and canceled the penalties. The Court stressed the importance of fairness and proper inquiry in tax assessments, highlighting the need for the tax authorities to allow the assessee to contest evidence and ensure a just decision. The Court, in light of the circumstances and the age of the transaction, decided to quash the Commissioner's order and uphold the decision of the Appellate Deputy Commissioner, allowing the appeals.

In conclusion, the High Court ruled in favor of the co-operative society, setting aside the penalties imposed by the Commissioner of Commercial Taxes. The judgment emphasized the importance of procedural fairness, proper investigation, and the opportunity for the assessee to challenge evidence in tax assessments. The Court highlighted the burden of proof on the assessee regarding tax payment on first sales and underscored the necessity of a just and thorough inquiry by tax authorities.