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2012 (2) TMI 463 - HC - VAT and Sales TaxRevision of assessment order - petitioner was treated as liable under section 6A of the 1957 Act by the revisional authority - Held that - The petitioner was treated as liable under section 6A but without any mention or discussion of his liability under section 6A of the 1957 Act in the show-cause notice dated September 20 1994. As established in State of Andhra Pradesh v. Loharu Steel Industries Limited 1994 (11) TMI 408 - ANDHRA PRADESH HIGH COURT that a revisional authority cannot engraft a liability without notice to the assessee/dealer. Thus order of the revisional authority determining the liability of the revision petitioner under section 6A of the 1957 Act must therefore be held to be unsustainable for transgression of the audi alteram partem principle particularly in view of non providing an opportunity to show cause against the proposed enhancement. Reasoning of the Tribunal to impose liability under section 6A of the 1957 Act is fallacious as burden is upon assessee to show that they purchased a part of the turnover for milling and the rest for sale. Therefore if the order of exemption under G.O. Ms. No. 621 dated June 28 1989 were be restrictively interpreted as confined to the turnover relating to milling by the Federation then the burden is upon the Federation as an assessee (that the Federation is also a dealer under the provisions of the 1957 Act is not in dispute) to establish that they were in fact in the business of trading as well and had purchased part of the turnover for sale. Tax revision allowed.
Issues:
1. Interpretation of exemption notification under G.O. Ms. No. 621, dated June 28, 1989. 2. Application of section 6A of the Andhra Pradesh General Sales Tax Act, 1957. 3. Burden of proof on the dealer regarding purchase intentions for milling or resale. Interpretation of Exemption Notification: The case involved a revision petition challenging the order of the Sales Tax Appellate Tribunal regarding the liability to pay tax on groundnut purchases by a dealer from the Andhra Pradesh Oil Seeds Growers Federation Limited. The Tribunal dismissed the appeal, stating that the dealer failed to prove being the last purchaser of groundnuts in the State. The High Court analyzed the exemption under G.O. Ms. No. 621, dated June 28, 1989, and clarified that liability under entry 6 of Schedule III does not shift to the dealer if the Federation is exempt. The Court emphasized that the burden of proof lies on the Federation to show purchases for milling and resale if the exemption is interpreted restrictively. Application of Section 6A of the Act: The revisional authority had held the dealer liable under section 6A of the Act without proper notice, violating the principle of audi alteram partem. The High Court ruled that the revisional order was unsustainable due to lack of opportunity for the dealer to contest the liability under section 6A. The Court highlighted the statutory obligation for the revisional authority to provide a chance to show cause against any proposed enhancement, citing the State of Andhra Pradesh v. Loharu Steel Industries Limited case. Burden of Proof on the Dealer: The Tribunal's reasoning, based on the Federation's by-laws allowing trading in addition to milling, was deemed fallacious by the High Court. Referring to past judgments, the Court emphasized that the burden is on the assessee to demonstrate purchases for milling and resale. Therefore, if the exemption notification is narrowly construed, the Federation must prove trading activity to justify purchases for sale. The High Court set aside the Tribunal's order and the revisional authority's decision, noting the errors in determining the dealer's tax liability without proper opportunity for defense. In conclusion, the High Court allowed the tax revision case, emphasizing the need for adherence to procedural fairness and burden of proof principles in tax assessments.
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