2008 (3) TMI 628 - HC - VAT and Sales Tax

Liability to pay the entry tax - exemption claimed - Held that - In the absence of any material collected by the respondents/Revenue to indicate that the goods had not been subjected to entry into the local area and taxable event had not occurred earlier, in my considered view, the petitioner who had discharged his burden by producing the bills which had no rubber seal to the effect local goods for the area , cannot be held liable to pay the tax in the absence of any proof to the contrary. Accordingly, the impugned order of reassessment and the order passed by the revisional authority holding the petitioner liable to pay the entry tax are liable to be, and are hereby, quashed. However, the assessing authority shall be at liberty to pass fresh order after collecting the material, if available, by supplying the same to the petitioner and after affording opportunity to it to submit its reply.

Summary

Issues involved:
Challenge to order of Assistant Commissioner and Additional Commissioner regarding entry tax liability on coal purchases.

Detailed Analysis:

1. Initiation of Reassessment Proceedings:
The petitioner, a partnership firm engaged in coal business, was subjected to reassessment proceedings under the Entry Tax Act for not paying entry tax on purchases made from specific dealers. The Assistant Commissioner held the petitioner liable for entry tax amounting to Rs. 4,07,712.

2. Revision and Dismissal:
The petitioner filed a revision before the Additional Commissioner, arguing that the absence of a rubber seal on the invoices absolved them from entry tax liability. However, the revisional authority dismissed the revision, stating that the lack of a rubber seal did not exempt the petitioner from paying entry tax, as it would only attract penalties for the selling dealer.

3. Legal Interpretation - Burden of Proof:
The petitioner relied on Section 7 of the Act and Rule 7 of the Entry Tax Rules, arguing that the selling dealer was obligated to affix a rubber seal on invoices indicating "local goods, entry tax not paid." Citing a Full Bench judgment, the petitioner contended that by producing bills without the required seal, they had prima facie discharged their burden of proof.

4. Judicial Precedents and Burden of Proof:
Referring to previous judgments, the court emphasized that the absence of a rubber stamp on bills is prima facie evidence that the goods were not of local origin and liable for entry tax in the hands of the selling dealer. The petitioner was entitled to the benefit of this presumption.

5. Court's Decision:
After examining the bills and considering legal precedents, the court accepted the petitioner's contention. It noted that the seals on the invoices did not meet the statutory requirements. The court held that in the absence of evidence proving the goods were not subjected to entry into the local area, the petitioner, who had produced bills without the required rubber seal, could not be held liable for entry tax.

6. Quashing of Orders and Fresh Assessment:
Consequently, the court quashed the reassessment order and the revisional authority's decision, relieving the petitioner of entry tax liability. It directed the assessing authority to collect additional evidence, if available, and provide the petitioner with an opportunity to respond before issuing a fresh order.

7. Final Verdict:
The petition was allowed, with no costs imposed on either party, concluding in favor of the petitioner based on the legal interpretation of the burden of proof regarding entry tax liability on coal purchases.