2018 (1) TMI 340 - HC - VAT and Sales Tax

Sale and purchase or manufacture of articles - taxability under UP. Trade Tax Act, 1948 - Held that - there is no provision under the 1948 Act which raises a presumption rebuttable or conclusive against the assessee merely on the basis of a trader or dealer being found in possession of articles which may be eligible to be traded in. A presumption, conclusive or rebuttable must necessarily flow from a specifically embodied statutory provision. A careful reading of sub section (1) thereof establishes that if any facts are specially within the knowledge of the assessee, then in the course of assessment proceedings, the burden of proving those facts lies upon him. Similarly sub section (2) (b) which was also pressed into aid deals with the burden of proof in respect of existence of facts and circumstances on the basis of which the assessee claims exemption. Both under sub section (1) as well as sub section (2) (b), the burden stands placed or shifted upon the assessee in respect of special facts or circumstances upon which he claims exemption. These two provisions would clearly have no application in a case where the assessee was asserting that he was only processing the articles in question and not entering into any transaction of sale or purchase. There was not a shred of evidence, cogent or reliable to establish and prove that the revisionist was engaged in the sale or purchase of commodities - levy and imposition of tax cannot be sustained. Revision allowed.

Summary

Issues:
Assessment based on undisclosed transactions of sale and purchase under the UP Trade Tax Act, 1948.

Analysis:
The revision was filed against the Tribunal's judgment, which set aside the relief granted by the first appellate authority to the assessee, stating that it was not engaged in sale, purchase, or manufacture of articles under the UP Trade Tax Act, 1948. The Tribunal partially allowed the Department's appeal, restoring the assessing authority's order but reducing the tax amount. The assessment stemmed from a survey revealing various commodities on the premises, leading to the belief that the assessee was involved in sale and purchase activities. The assessing authority concluded that the assessee willfully did not disclose its liability under the 1948 Act, assessing it as engaged in manufacturing dal and other commodities.

The revisionist's counsel argued that the assessment was based on conjectures and lacked evidence of actual sale or purchase transactions. The revisionist maintained that it was only processing articles for individuals paying conversion charges, not engaging in taxable activities. The assessing authority and the standing counsel contended that the quantity of materials found on-site indicated regular sale and purchase transactions undisclosed to tax authorities. The Court emphasized the necessity of proving actual sale or purchase transactions to impose tax under the 1948 Act, rather than relying solely on the existence of commodities and machinery.

The Court highlighted that the Act did not provide for any presumption against the assessee based on possession of tradable articles. Section 12-A placed the burden of proof on the assessee regarding specific facts or exemptions claimed, not on disproving non-existent transactions. Referring to a Supreme Court decision, the Court reiterated that a presumption must be supported by legislative provisions, which were lacking in this case. As no evidence established the revisionist's involvement in sale or purchase activities, the levy of tax was deemed unsustainable. Consequently, the Court allowed the revision, setting aside the Tribunal's order and annulling the tax levy on the revisionist.