2007 (9) TMI 566 - HC - VAT and Sales Tax

Payment through draft - ex-U.P. principals - Held that - It is open to the applicant to adduce evidences to prove the existence of the ex-U.P. principals which may be in the form of filling affidavits or producing those parties. Since the dealer has claimed that the payments were made through draft, therefore, the Tribunal s direction to make the inquiry with regard to the draft cannot be said to be unjustified. In view of the above, no interference is called for. Revision fails and is accordingly dismissed.

Summary

Issues:
1. Whether purchases made on behalf of ex-U.P. principals for inter-State transactions are liable to tax.
2. Burden of proof on the dealer to establish purchases for ex-U.P. principals.
3. Justification of remand order for further inquiry regarding draft payments.

Analysis:
1. The case involved a dispute regarding purchases made on behalf of ex-U.P. principals for inter-State transactions and the liability of tax on such purchases. The applicant claimed that these purchases were not taxable as they were in the course of inter-State purchases. The assessing authority initially rejected the claim, leading to appeals and remands.

2. The burden of proof was on the dealer to establish that the purchases were indeed made for ex-U.P. principals. The Tribunal held that the burden lies upon the dealer to prove the purchases were on behalf of ex-U.P. principals. The existence of ex-U.P. principals was crucial, and the dealer needed to provide evidence such as purchase orders, entries in books of account, and mode of payment to substantiate the claim.

3. The Tribunal's decision to remand the matter for further inquiry regarding draft payments was justified. The Tribunal directed an inquiry into the drafts claimed to have been received from the ex-U.P. principals as purchase consideration. The remand was deemed necessary to ascertain the validity of the payments made through drafts and to establish the existence of the ex-U.P. principals.

Overall, the High Court upheld the Tribunal's decision, emphasizing the importance of proving the existence of ex-U.P. principals in such transactions. The Court concluded that no interference was warranted, and the revision was dismissed accordingly.