1995 (9) TMI 335 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the sale of 80 Honda portable generators at Madras was taxable under the Tamil Nadu General Sales Tax Act, 1959.
2. Whether the assessee took delivery of the generators and subsequently sold them locally.
3. Whether the burden of proof was met by the Revenue to establish the local sale of the generators.
4. Whether the penalty levied on the assessee was justified.

Issue-wise Detailed Analysis:

1. Taxability of Sale of Generators:

The primary issue revolves around whether the sale of 80 Honda portable generators at Madras, valued at Rs. 5,36,000, was taxable under the Tamil Nadu General Sales Tax Act, 1959. The Joint Commissioner had set aside the order of the Appellate Assistant Commissioner and restored the assessment order, bringing the sales turnover to tax and levying a penalty.

2. Delivery and Local Sale of Generators:

The assessee, a dealer in generators, was originally assessed for a turnover that included the disputed generators. The Revenue found that 74 generators were consigned to the assessee by Perfect Power Systems, New Delhi. However, the assessee denied the purchases and claimed that the goods were not intended for them. The investigation revealed that the generators were booked from Madras to Delhi, but there was no record of their delivery to the assessee or their return to Delhi. The Joint Commissioner concluded that the generators were sold locally at Madras, as there was no corroborative evidence of their receipt back in Delhi.

The Appellate Assistant Commissioner, however, found that the generators were not taken delivery of by the assessee and were returned to Delhi. This conclusion was based on the investigation and the affidavit of Shiv Mohan, which stated that the generators were sent back to Delhi due to a lack of market in Madras.

3. Burden of Proof:

The learned counsel for the appellant argued that there was no material evidence to show that the assessee took delivery of the goods or sold them locally. The documents produced, including way-bills, gate pass, freight bill, and a certificate from carriers, indicated that the generators were returned to Delhi. The burden of proof was on the Revenue to show that the assessee effected the sale locally, which the counsel argued was not discharged.

The Joint Commissioner, however, relied on the delivery challans that referenced Central sales tax calculation, suggesting an initial sale to the assessee. The Additional Government Pleader argued that it was unbelievable that goods worth over Rs. 5 lakhs would be sent without a specific order. The Joint Commissioner found that there was no corroborative evidence linking the receipt of the generators back in Delhi.

4. Justification of Penalty:

The penalty of Rs. 96,480 was levied on the grounds of wilful suppression. The Appellate Assistant Commissioner had deleted the penalty, finding no proof of the assessee taking delivery of the generators or selling them locally. The Joint Commissioner, however, restored the penalty, presuming the local sale due to lack of evidence of return to Delhi.

Judgment Analysis:

The High Court considered the rival submissions and focused on whether there was material evidence to conclude that the assessee sold the generators locally. The Court noted that the documents produced by the assessee, such as the consignment note, gate pass, freight bill, and letters from carriers and an advocate, indicated that the generators were returned to Delhi. The Court found that the Revenue had not discharged its burden of proving the local sale.

The Court observed discrepancies in the Joint Commissioner's findings and emphasized that the initial investigation had verified the accounts of Perfect Power Systems, showing the booking of generators from Madras to Delhi. The Court found the argument that the records were subsequently unavailable due to mob fury plausible.

The Court concluded that the Revenue did not provide sufficient evidence to prove the local sale of the generators. The appeal was allowed, the order of the Joint Commissioner was set aside, and the order of the Appellate Assistant Commissioner was restored, removing the tax and penalty on the assessee.

Conclusion:

The High Court allowed the appeal, setting aside the Joint Commissioner's order and restoring the Appellate Assistant Commissioner's order. The Court held that the Revenue failed to prove the local sale of the generators and thus, the tax and penalty were not justified. The burden of proof lay with the Revenue, which was not met, leading to the appeal being allowed without costs.