2014 (5) TMI 456 - HC - VAT and Sales Tax

Allowability of Second Exemption - Whether Tribunal was right in affirming the allowance of second sales exemption in respect of 50% of the turnover ordered by the Appellate Assistant Commissioner (CT) when there was no further evidence of movement of goods in addition to the fact that some dealers were non-existent and registration cancelled in respect of some dealers - absence of evidence of movement of goods and dealers non-existent and registration cancelled - Held that - For the purpose of second sales, it is enough for the assessee to produce the particulars that the purchase was made from the dealer and in such event the burden had been discharged. When the assessee has not produced any material to show that the purchases have been made and the goods had suffered tax that too from the registered dealers, the reliance placed on the above judgment cannot be accepted - Inasmuch as the assessing authority as well as the first appellate authority factually found that the purchases were effected by the assessee from non-existing dealers and their registration certificates were cancelled prior to such purchases, the first appellate authority as well as the Tribunal cannot come to a different conclusion contrary to the materials to hold that the dealers had valid registration certificates on the date of purchase by the assessee - To this extent, the findings of both the first appellate authority and Tribunal are perverse - When once it is found that there were no materials to show that the purchases were made from the dealers with valid registration certificates, the only course open to the authorities is to deny the exemption as to the second sales Decided in favour of Revenue.

Summary

Issues:
Challenging order of Tamil Nadu Sales Tax Appellate Tribunal regarding second sales exemption.

Analysis:
1. Factual Background: The case involved tax revision petitions by the Revenue against the Tamil Nadu Sales Tax Appellate Tribunal's order. The dispute arose from alleged purchases made by the assessee from non-existing dealers for the assessment years 1989-90 and 1992-93.

2. Assessment and Appeals: The assessing authority found purchases from non-existing dealers and cancelled registrations, leading to revised assessment orders with penalties. The Appellate Assistant Commissioner found some purchases to be second sales from local dealers, granting exemptions and reducing penalties.

3. Tribunal's Decision: The Revenue challenged the Appellate Assistant Commissioner's orders before the Tribunal. The Tribunal upheld the exemption on 50% turnover as second sales, based on the registration certificates of the dealers provided by the assessee.

4. Court's Analysis: The High Court analyzed the case, noting that purchases were indeed made from non-existing dealers without valid registration. The Court criticized the presumption made by the lower authorities regarding 50% of turnover being second sales, stating it lacked material evidence.

5. Burden of Proof: The Court addressed the burden of proof under Section 10 of the Tamil Nadu General Sales Tax Act, emphasizing that the onus is on the assessee to prove the genuineness of transactions, especially when dealing with non-existing dealers.

6. Judicial Precedent: The Court dismissed the applicability of a previous judgment cited by the assessee, highlighting the distinction in factual circumstances where purchases were not proven to be from registered dealers.

7. Conclusion: Ultimately, the Court allowed the tax revision petitions, ruling in favor of the Revenue. It emphasized that without concrete evidence of purchases from dealers with valid registrations, the exemption for second sales could not be granted. The substantial question of law was answered against the assessee, leading to the allowance of the revision petitions without costs.