2011 (1) TMI 1289 - HC - VAT and Sales Tax

Whether the Sales Tax Appellate Tribunal is right in proceeding on the footing that in order to discharge the burden of proof contemplated under section 10 of the Tamil Nadu General Sales Tax Act, 1959 the proof of existence of registered dealers from whom the assessee purported to have purchased goods is sufficient, ignoring that for claiming second sales exemption the assessee has to prove earlier taxable sale? Whether the Sales Tax Appellate Tribunal has not committed an error in not insisting upon proof of actual transaction of sale for claiming second sale exemption? Held that - On careful consideration of the order of the Appellate Assistant Commissioner as well as the Tribunal, we are convinced that such a conclusion arrived at by the Appellate Assistant Commissioner as affirmed by the Tribunal was based on relevant facts and materials and there is no reason to take a different view than what has been stated by the said authorities. We, therefore, do not find any scope to interfere with the order impugned in this revision petition. The questions of law raised in this revision are, therefore, answered against the petitioner. The tax case revision fails

Summary

Issues:
Challenge of order by Commercial Tax Department before High Court against Sales Tax Appellate Tribunal's decision on taxable turnover exemption and proof of actual sales transaction.

Analysis:
The High Court dealt with the challenge brought by the Commercial Tax Department against the Sales Tax Appellate Tribunal's decision on the taxable turnover exemption and the requirement for proof of actual sales transactions. The case pertained to the assessment order for the year 1989-90. The questions of law raised included whether the burden of proof under section 10 of the Tamil Nadu General Sales Tax Act was adequately discharged by proving the existence of registered dealers from whom goods were purportedly purchased, and whether proof of actual sale transactions was necessary for claiming second sale exemption.

The respondent-assessee contended that the entire alleged taxable turnover of Rs. 29,90,445 was from second sales and hence exempt from tax. Initially, there was an assessment order which was set aside by the Appellate Assistant Commissioner, leading to a subsequent order confirming the taxable turnover and imposing a penalty under section 12(3) of the Act. The Appellate Assistant Commissioner examined the claim of exemption in detail, focusing on the registration certificates of the dealers involved in the transactions.

The High Court noted that the Appellate Assistant Commissioner found discrepancies regarding the cancellation dates of the registration certificates of the dealers. Despite conflicting information, the Appellate Assistant Commissioner concluded that the exemption claimed through second sales was valid based on the evidence provided by the assessee, including money receipts for renewal fees. The High Court upheld the findings of the Appellate Assistant Commissioner and the Tribunal, stating that the conclusion was based on relevant facts and materials. Consequently, the High Court dismissed the tax case revision, ruling against the petitioner, and declined to interfere with the impugned order. No costs were awarded in the matter.

In summary, the High Court's decision upheld the exemption claimed by the assessee for second sales, emphasizing the importance of reliable evidence to support the cancellation of registration certificates of the dealers involved. The judgment highlighted the necessity of considering all relevant facts and materials in determining the validity of tax exemptions claimed under the Sales Tax Act.