2009 (4) TMI 838 - HC - VAT and Sales Tax

Whether the facts and circumstances of the case, the Tribunal is legally right in affirming the order of the First Appellate Authority in respect of allowance of the claim of second sale exemption even when the registration number of the socalled seller belonged to some other dealer ? Held that - Tribunal has come to the correct conclusion, which leaves no room for interference from this Court as the assessee has discharged the burden of proof by showing that the earlier sale was a taxable sale and the tax is really payable by the seller.

Summary

Issues:
1. Substantial Question of Law regarding second sale exemption based on seller's registration number belonging to a different dealer.

Analysis:
1. The case involved a revision by the Revenue against an order of the Tribunal regarding the allowance of second sale exemption to Sri Alaggar Traders. The Enforcement Wing Officers found discrepancies in the purchase details of the assessee, leading to suspicion that non-existent dealers were involved in obtaining the exemption. The Assessing Officer revised the assessment, levying tax and imposing a penalty. However, the Appellate Assistant Commissioner set aside this revision, noting that the selling dealer had a valid Registration Certificate and the burden of proof was on the Revenue to proceed against the actual sellers. The Tribunal also upheld this decision, emphasizing that the assessee had discharged the burden of proof. The issue revolved around whether the Tribunal was legally correct in affirming the exemption despite discrepancies in the seller's registration details.

2. The Appellate Authority's decision was based on the fact that the selling dealer, though not filing returns, had a valid Registration Certificate and was issued a Delivery Note by the Department. The Appellate Authority found that the selling dealer was known to the Department and was a registered dealer, justifying the exemption granted in the original assessment. The Assessing Officer's characterization of the selling dealer as fictitious was rejected. The Court agreed with the Appellate Authority's reasoning, emphasizing that the burden of proof had been met by the assessee, showing that the earlier sale was taxable and the tax was payable by the seller.

3. Legal precedents were cited to support the assessee's position. The Court referred to cases where it was established that the burden on the subsequent seller is to demonstrate that there was a first taxable sale, not to prove that the first sale had been taxed. The judgments highlighted that for declared goods like Iron and Steel, specific provisions exempted subsequent sales from taxation if the first sale was appropriately taxed. The Court found that the Tribunal's conclusion aligned with legal principles and previous judgments, warranting no interference. Therefore, the tax case revision was dismissed for lacking merit.