BURDEN OF PROOF

[Mr. M. GOVINDARAJAN]

In any litigation the burden of proof lies on the litigant to prove the allegations in the complaint or suit.  In some law provisions are there on whom the burden of proof lies. For example Sec. 12 of Kerala Sales Tax Act, 1963 provides-

Sec. 12. BURDEN OF PROOF:

(1) The burden of proving that any transaction of dealer is not liable to tax under this Act shall lie on the dealer;

(2) The burden of proving that the dealer has not received fair market price on any transaction shall lie on such dealer;

(3) The burden of proving the genuineness of the transport of goods using the documents prescribed in Sec. 29 shall lie on such dealer.

Sec. 71(2) of the erstwhile Foreign Exchange Regulation Act places the burden of proof upon an accused or a procedee when foreign exchange acquired has been used for the purpose for which permission to acquire it was granted. In respect of any criminal action it is used to get the confession statement from the accused. In the complaint it is to be proved that the same has been obtained voluntarily. The Supreme Court in 'Vinod Solanki V. Union of India' - [2009 -TMI - 31939 - SUPREME COURT] held that the initial burden to prove that the confession was voluntary in nature would lie on the department. 

In tax matters also the burden of proof lies either on the department or assessee which may be decided on the facts and circumstances of the case. In 'Dewsoft Overseas Private Limited V. Commissioner of Service Tax, New Delhi' - [2008 -TMI - 31292 - CESTAT NEW DELHI] the franchisee service was disputed under Sec. 65(105) (zze) the taxable service in relation to the franchise. The tribunal found that there is no dispute that the first, second and third conditions are satisfied. The appellant contended that no evidence has been produced by the Revenue that fourth condition is also satisfied, i.e., the franchisee is under an obligation not to engage in providing similar services identified with any other person. The Revenue's contention on this point is that the appellant, either during the investigation or during the adjudication proceedings have not produced any evidence to show that the franchisees were not providing similar services of other franchisors and in view of this, conclusion in this regard has to be drawn against the appellant.   The tribunal held that if the Revenue wants to subject a person to service the burden of proving that the agreement between that person and his client is a 'franchisee agreement' within the meaning of this terms as defined under Sec. 65(47) of the Finance Act, 1994 would be on the Revenue. If the appellants were not coming forward with the information with reference to condition No. 4, it was possible for the Revenue to conduct enquiry with the franchisee for ascertaining as to whether in terms of their agreement with the appellants, they are under an obligation not to engage in providing similar services identified with any other person. But no such enquiry has been conducted. In this case the tribunal held that the burden of proof lies on the department to satisfy the conditions of the definition of the term 'franchisee'.

 In 'KMS Coach Builders V. Commissioner of Central Excise, Bangalore' - [2008 -TMI - 30614 - CESTAT BANGLORE] the appeal arises from the order-in-appeal by which the Commissioner (Appeals) rejected the refund claim under the provisions of unjust enrichment. The appellant contended that they had collected service tax. However the tax was not required to be paid by them and hence filed refund claim. The appellant could not produce any evidence of duty passed on to the service receiver. The tribunal held that the burden of proof is on the appellant. He has not produced any evidence to discharge the burden of unjust enrichment. The tribunal further held that the amount collected ought to have been deposited to the Government.

In 'Chandra Shipping & Trading Services V. Commissioner of Central Excise & Customs, Vishakapatnam - II' - [2009 -TMI - 32497 - CESTAT, BANGALORE] the tribunal found that the ST 3 returns and also the CENVAT credit returns have been filed regularly by the appellant. The Board's circular allows deduction on account of reimbursable expenses and where lump sum is charged 85% deduction can be claimed on account of reimbursable account. The CHA apart for taking commission spends money on account of several statutory levies and charges which have to be paid to various other agencies.   The tribunal held that it would not be correct to charge service tax on these amounts.  There is no evidence with the department that the appellant had not spend these amounts. The Department has to verify the correctness of the particulars given in the returns. The Department has not done that. Therefore the allegations that the appellants have not spent these amounts on reimbursement and have not made payment towards tax on input service are not sustainable. The appellants have stated that the service tax on input services have been paid from out of their own account maintained with the input service providers. These facts could have been verified by the Revenue. In the absence of verification the tribunal has to give the benefit of doubt to the appellant. It is for the department to prove the allegations with solid evidence. The burden of proof is always on the department.

In 'Vinod Solanki V. Union of India' (supra) the Supreme Court held that Sec. 71(2) of FERA places the burden of proof upon an accused or a procedee only when the foreign exchange acquired has been used for the purpose for which permission to acquire it was granted and not for mere possession thereof. The Parliament, therefore, advisedly did not make any provision placing the burden of proof on the accused/procedee.

In 'Kiran Fashions V. Union of India' - [2009 -TMI - 32644 - GUJARAT HIGH COURT] the High Court held that in the appeal filed by the appellant before the tribunal, the primary onus is always on the appellant and the tribunal is not expected and cannot on its own undertake to discharge that onus by calling upon the other side to produce the evidence in support of the appeal.

The law speaks of 'Reverse burden' also. The general law is that burden of proof is on the state. The provisions relating to reverse burden must be construed having regard to the nature of the statute.