2008 (6) TMI 570 - HC - VAT and Sales Tax

Whether the applicant is owner of the vehicle for the purposes of section 28B of the U.P. Trade Tax Act? Held that - All the three authorities below including the Tribunal have found that the dealer-applicant has failed to prove that the vehicle in question, as a matter of fact, was given on hire basis to the alleged transport companies. The said finding is based on relevant material on record. No evidence was produced by the applicant except a bald statement that the said vehicle was given to the concerned transport companies. A fresh opportunity was afforded to the applicant to substantiate the plea by the High Court while passing the remand order but the applicant failed to avail it. He could not establish that he was not in any manner involved with the transportation of the goods in the State of U.P. from the outside of the State. The driver of the vehicle in question, admittedly, got form 34 issued while entering in the State of U.P. On the facts of the case, it has been rightly held that the applicant is the owner of the vehicle in question and is, therefore, liable to pay the sales tax dues. Appeal dismissed.

Summary

Issues:
- Interpretation of section 28B of the U.P. Trade Tax Act regarding the term "owner" in relation to a vehicle.
- Assessment of liability for sales tax under section 28B based on the ownership of a vehicle used for transporting goods.
- Burden of proof on the applicant to demonstrate the hiring of the vehicle to transport companies.
- Evaluation of evidence regarding the transportation of goods and the responsibility for sales tax payment.

Interpretation of Section 28B:
The revision before the Allahabad High Court pertained to the assessment year 1986-87 under the U.P. Trade Tax Act, focusing on whether the applicant qualifies as the "owner" of a vehicle as per section 28B of the Act. The core issue was whether the applicant, who owned a specific vehicle, could be held liable for sales tax under section 28B based on the transportation of goods. The Tribunal initially restored the assessment order, which was then challenged through a revision. The High Court emphasized that to claim protection under the Explanation to section 28B, the applicant must prove that the vehicle, though registered in their name, was hired by transport companies. Mere naming of companies or theories was deemed insufficient to absolve the owner of liability. The Court stressed the importance of establishing the hiring of vehicles to transport companies to determine tax liability accurately.

Burden of Proof and Liability Assessment:
The applicant contended that they should not be considered the "owner" of the vehicle under section 28B, seeking the deletion of the sales tax amount. However, the Court found it challenging to agree with this argument. Despite the applicant's claims of hiring the vehicle to transport companies, the assessing authorities concluded otherwise. The High Court highlighted that all lower authorities, including the Tribunal, determined that the applicant failed to prove the vehicle was hired to transport companies based on the available evidence. Notably, the applicant's failure to cancel relevant forms and the driver's actions at the entry check-post raised doubts about the transportation of goods and the liability for sales tax.

Evidence Evaluation and Liability Determination:
The Court emphasized that the applicant's inability to substantiate the claim of not being involved in transporting goods within the State of U.P. led to the confirmation of their status as the "owner" of the vehicle. Despite opportunities provided during the legal proceedings, the applicant could not establish their lack of involvement in the transportation activities. The absence of concrete evidence supporting the hiring of the vehicle, coupled with the driver's actions and the presumption of goods being sold in U.P., contributed to the decision upholding the liability for sales tax dues. Ultimately, based on the factual findings, the Court concluded that the applicant remained liable for the sales tax and dismissed the revision accordingly, without imposing any costs.

Conclusion:
The Allahabad High Court's judgment delved into the interpretation of section 28B of the U.P. Trade Tax Act, the burden of proof on the applicant regarding the hiring of a vehicle, and the assessment of liability for sales tax based on ownership. The detailed analysis emphasized the importance of concrete evidence and the applicant's failure to establish their claim, leading to the confirmation of their liability. The Court's decision was grounded in factual findings and legal interpretations, resulting in the dismissal of the revision without cost implications.