2008 (7) TMI 917 - HC - VAT and Sales Tax

Whether, on the facts and in the circumstances of the case, the Trade Tax Tribunal was legally justified to quash the order passed under section 21 of the U.P. Trade Tax Act? Whether, on the facts and in the circumstances of the case, the proceeding under section 21, Tribunal was legally justified to hold, that reassessment proceeding based on change of opinion as exemption was wrongly allowed? Held that - Section 12A of the Act provides that in any assessment proceeding, when any fact is specially within the knowledge of the assessee, the burden of proving that fact shall lie upon him. It further provides that in particular, the burden of proving the existence of circumstances bringing the case within any of the exceptions, exemption or relief mentioned in various sections of the Act shall lie upon the assessee and the assessing authority shall presume the absence of such circumstances. In this view of the matter, the burden of proof on the facts of the present case lies upon the assessee itself to establish that the purchases made by it were tax-paid purchases and the commodity being taxable at single point, no further tax should be levied. The Tribunal was not justified in setting aside the order passed by the first appellate authority and to quash the order passed under section 21 of the U.P. Trade Tax Act. Revision allowed.

Summary

Issues:
1. Appeal against Trade Tax Tribunal's order dated June 8, 2000.
2. Allegations of tax evasion by dealer-opposite party.
3. Burden of proof on dealer to establish tax-paid purchases.
4. Tribunal's decision to quash reassessment proceedings under section 21 of U.P. Trade Tax Act.
5. Legal justifications for setting aside Tribunal's order.

Analysis:
The case involved an appeal against the Trade Tax Tribunal's order dated June 8, 2000, concerning proceedings initiated under section 21 of the U.P. Trade Tax Act against the dealer-opposite party, a trader dealing in iron and steel. The dispute arose from discrepancies in tax-paid purchases worth Rs. 5,51,55,913 made by the dealer from three suppliers during the assessment year 1989-90. The Tribunal allowed the dealer's appeal, setting aside the reassessment proceedings under section 21.

The main issue revolved around the burden of proof on the dealer to establish that the purchases were tax-paid. The Department contended that the Tribunal erred in setting aside the reassessment order without addressing whether further enquiry was necessary. The Tribunal's decision was based on the dealer's possession of purchase vouchers and audited account books, but the selling dealers denied the transactions. The Department argued that the burden was on the dealer to prove tax-paid purchases, which it failed to do.

The Court emphasized that under section 12A of the Act, the burden of proving tax exemptions lies with the dealer, especially when the facts are within their knowledge. The Tribunal's reliance on previous court decisions was deemed unjustified, as those cases did not consider section 12A. The Court held that the Tribunal should not have quashed the reassessment order and restored the first appellate authority's decision for further enquiry.

In conclusion, the Court set aside the Tribunal's order, ruling in favor of the Department. The decision highlighted the importance of the dealer proving tax-paid purchases and the inadequacy of the Tribunal's reasoning in quashing the reassessment proceedings. No costs were awarded in the judgment.