2009 (11) TMI 868 - HC - VAT and Sales Tax

Whether, in the facts and circumstances of the case, the Tribunal is justified in allowing the deduction on the amount of tax collected as per rule 6(4)(h) of the Karnataka Sales Tax Rules, 1957? Held that - In view of the above, we find that the question of law formulated by the Revenue does not call for answering particularly in view of the judgment of the honourable Supreme Court in C. Venkatagiriah s case 1994 (3) TMI 377 - SUPREME COURT and the Rule of proof cannot be static and it varies from case to case . Hence, we refrain from answering the substantial question of law. Accordingly, we hold that the assessing officer should re-examine the claim of the assessee with regard to deduction of tax from the total taxable turnover and pass orders on merits after giving opportunity to the respondent-assessee and in accordance with law. We allow this revision petition in part and remit the matter to the assessing officer for fresh consideration.

Summary

Issues:
- Disallowance of exemption for failure to collect sales tax
- Interpretation of Karnataka Sales Tax Rules regarding deduction of tax collected
- Burden of proof on the assessee to show tax collection

Disallowance of exemption for failure to collect sales tax:
The assessee, a trading company, filed annual returns but was reported by the intelligence wing for not collecting sales tax on some bills. The assessing officer disallowed the exemption, leading to appeals before the appellate authority and then the Tribunal. The Tribunal allowed the appeal, directing the assessing authority to deduct the tax amount and recalculate turnovers. The Revenue challenged this decision, arguing that the burden of proof lay with the assessee to demonstrate tax collection.

Interpretation of Karnataka Sales Tax Rules regarding deduction of tax collected:
The Tribunal relied on a previous case to support its decision, while the Revenue contended that the burden of proof rested solely on the assessee. The court examined Rule 6 of the Karnataka Sales Tax Rules, noting that it was an enabling provision for determining turnover but did not absolve the assessee from proving tax collection. Referring to a Supreme Court judgment, the court emphasized that the burden of proof lies on the assessee and varies depending on the facts of each case.

Burden of proof on the assessee to show tax collection:
The court held that the assessing officer had not properly examined whether the taxes were collected, and the assessee had not provided sufficient evidence to support their claim. It directed the assessing officer to re-examine the claim with reference to records and sales bills. The court emphasized that the burden of proof regarding tax collection lies with the assessee, and the mode of proof is a factual determination, not a legal proposition. Refraining from answering the substantial question of law, the court allowed the revision petition in part and remitted the matter for fresh consideration by the assessing officer.