2015 (9) TMI 302 - HC - VAT and Sales Tax

Benefit of Exemption as per notification Use of Handmade paper in manufacturing - Tribunal vide impugned order reversed decision of Appellate Authority in which authority stated that onus of establishing that assessee does not come within exemption notification is with Department and as Department proceeded to hold that assessee does not come within exemption notification assessment orders exempting revisionist are bad Held that - who seeks to contend that he is entitled to benefit of exemption, onus is upon him to establish that he is covered by exemption notification Exemption to unit was available only if it had used as raw material handmade paper for manufacturing Revisionist not only made no attempt to establish same, did not even make any assertion, at any point of time, that it has used, in fact, handmade paper for manufacturing May be such paper is worst than handmade paper, but same cannot be equated with handmade paper In said circumstances, Tribunal cannot be faulted Revision applications dismissed Decided against Assesse.

Issues:
1. Scope of interference in revision applications regarding sales tax liability.
2. Compliance with registration requirements for sales tax.
3. Exemption under a specific notification dated 22nd February, 1997.
4. Assessment based on purchase of machine-made papers.
5. Onus of establishing exemption eligibility on the assessee.
6. Requirement of using handmade paper or papier mache for exemption.
7. Lack of evidence or assertion regarding the use of raw materials.
8. Tribunal's decision on the assessment orders and exemption eligibility.

Issue 1: Scope of interference in revision applications regarding sales tax liability
The High Court found no scope of interference in the revision applications. The revisionist, a registered unit with specific authorities, had complied with necessary requirements for registration and manufacturing stationery items. Despite initially being exempted from paying sales tax, a subsequent survey revealed discrepancies leading to assessment orders. The Appellate Authority's decision to remit the matters back to the Assessing Officer was challenged by the Sales Tax Department, leading to the Tribunal's involvement.

Issue 2: Compliance with registration requirements for sales tax
The revisionist had registered with appropriate authorities for sales tax purposes and had been selling stationery items to various customers. However, the assessment was triggered when the revisionist's turnover reached taxable levels, necessitating registration with the Sales Tax Authorities and payment of sales tax to the State's Sales Tax Department.

Issue 3: Exemption under a specific notification dated 22nd February, 1997
The revisionist claimed exemption under a notification dated 22nd February, 1997. Initially, the Assessing Authority accepted this claim, but a subsequent survey revealed discrepancies leading to assessment orders for multiple years. The Appellate Authority's decision to require fresh assessment orders was based on the onus of establishing exemption eligibility.

Issue 4: Assessment based on purchase of machine-made papers
During the survey, transactions involving the purchase of machine-made papers were identified. However, there was no assertion or evidence that the revisionist had purchased handmade paper. The Tribunal upheld the assessment orders based on the lack of evidence regarding the use of raw materials.

Issue 5: Onus of establishing exemption eligibility on the assessee
The High Court emphasized that the burden of proving eligibility for exemption rested on the revisionist. Exemption was available only if specific raw materials like handmade paper or papier mache were used for manufacturing. However, the revisionist failed to establish or assert the use of such materials, leading to the dismissal of the revision applications.

Issue 6: Requirement of using handmade paper or papier mache for exemption
To qualify for exemption, the revisionist needed to demonstrate the use of handmade paper or papier mache as raw materials. However, there was no evidence or assertion supporting such usage. The revisionist's acceptance of purchasing machine-made papers undermined the claim for exemption based on specific raw materials.

Issue 7: Lack of evidence or assertion regarding the use of raw materials
Despite the availability of exemption for using specific raw materials, the revisionist did not provide any evidence or assertion regarding the use of handmade paper or papier mache in manufacturing stationery items. The absence of such evidence weakened the revisionist's claim for exemption.

Issue 8: Tribunal's decision on the assessment orders and exemption eligibility
The Tribunal's decision to uphold the assessment orders was deemed appropriate by the High Court. Given the lack of evidence supporting the revisionist's claim for exemption and the purchase of machine-made papers, the Tribunal's judgment was upheld, resulting in the dismissal of the revision applications.

This comprehensive analysis of the judgment highlights the key issues involved, the legal principles applied, and the reasoning behind the High Court's decision regarding the revision applications and exemption eligibility for sales tax.

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