2011 (8) TMI 1023 - HC - VAT and Sales Tax

Whether in respect of estimated sales of ₹ 1,20,000, the goods had been made with reference to the goods purchased by the assessee from an unregistered dealer? Held that - From the conclusions drawn by the assessee and the Tribunal on appreciation of records, it is established that the purchases could not be shown to have been made from a registered dealer within the State of Uttar Pradesh. The authorities have rightly proceeded to hold that in the facts of the present case the assessee was liable to pay tax at the rate of 12 per cent having regard to the provisions of section 2(ee) of the U. P. Trade Tax Act/the assessee had taken a categorical stand before the authorities that the goods had been purchased from registered dealer within the State, which stand he could not establish. The assessee cannot now turn around and contend before this court that the assessee be treated to have purchased the goods from an unregistered dealer within the State of Uttar Pradesh. Therefore, sales made by the assessee may not be taken to be the first sale within the State of Uttar Pradesh after manufacture , within the definition of section 2(ee) of the U. P. Trade Tax Act. The present trade tax revision lacks merit and is accordingly dismissed.

Summary

Issues:
1. Assessment of undisclosed sales and imposition of tax at 12% rate.
2. Interpretation of the term "manufacturer" under section 2(ee) of the Trade Tax Act.
3. Burden of proof on the assessee under section 12A of the Trade Tax Act.

Analysis:
1. The case involved a trade tax revision against the Trade Tax Tribunal's order regarding undisclosed sales by the assessee, estimated at Rs. 10 lacs, leading to a 12% tax levy. The Tribunal found the assessee making sales through "estimate" books instead of cash memos, and lacking necessary records. The Tribunal justified the tax levy under section 12A and the definition of "manufacturer" in section 2(ee) of the Trade Tax Act. The assessee's appeal was dismissed, upholding the tax imposition.

2. The contention raised was that the assessee's purchase from an unregistered dealer did not constitute the first sale within Uttar Pradesh, hence not meeting the definition of a "manufacturer" under section 2(ee). The Department argued that the assessee failed to provide evidence of purchases from registered dealers, justifying the tax imposition. The Tribunal's decision was supported by a precedent, emphasizing the burden of proof on the assessee regarding such facts.

3. The court examined sections 2(ee) and 12A of the Trade Tax Act, highlighting the obligation on the dealer to disclose exclusive information. Citing a previous case, it reiterated that the burden of proving facts within the assessee's knowledge lies on the assessee. The court found that the assessee failed to establish purchases from registered dealers, leading to the upheld tax liability. The revision was dismissed, affirming the Tribunal's decision based on the legal provisions and evidence presented.