2022 (7) TMI 4 - HC - VAT and Sales Tax

Exemption from Sales Tax - goods sold for defence organization through various dealers - benefit of exemption under 29-B of List-A of list of Goods exempted from Orissa Sales Tax of Tax rates under Orissa Sales Tax Law - HELD THAT - As rightly interpreted both by the ACST and the Tribunal, in order to claim exemption from payment of sales tax, the burden was on the dealer to show that goods had been sold to Defence Service Installations located inside Orissa for resale to Military installations and personnel. Factually, the Assessee was unable to produce evidence in support of sales to the value of Rs.1,11,73,805 which satisfied the requirement of the above Entry 29-B. In other words, while for the remaining sales made to defence personnel or defence organizations for which proof was produced by the Assessee, the deduction as claimed was allowed, the sales to the aforementioned three individuals was not treated as sales to Defence Service installations. The requirement of Entry 29-B is that the dealer should have sold the goods to Defence Service installations and at the highest to Defence personnel and not to individuals who may or may not have further sold it to Defence personnel or Defence Services installations - In that view of the matter, the Court is unable to find any error having been committed either by the ACST or the Tribunal that calls for any interference. The question framed is answered in favour of the Department and against the Assessee. The revision petition is dismissed.

Summary

Issues:
1. Interpretation of Entry 29-B of List-A of the Rate Chart under the Orissa Sales Tax Act 1947.
2. Claim for deduction of sales to Defence Organizations.
3. Burden of proof on the dealer for claiming exemption from sales tax.
4. Disallowance of deduction by the Sales Tax Officer.
5. Dismissal of further appeal by the Tribunal.

Analysis:
1. The petition arose from an order dismissing the Assessee's appeal against the Sales Tax Officer's assessment. The main question was whether the goods sold for defense organizations through dealers would be exempted under Entry 29-B of the Orissa Sales Tax Law.

2. The Assessee, engaged in the business of Indian made foreign liquor (IMFL), claimed deductions for sales to Defense Organizations. The Sales Tax Officer disallowed the deduction due to lack of evidence. The Assessee appealed, and the Asst. Commissioner allowed the deduction partially based on proof provided for some sales.

3. The Tribunal dismissed the Assessee's further appeal, stating that the goods disallowed were not sold to Defense Organizations but to individuals. The burden of proof for claiming exemption from sales tax was on the dealer to show sales to Defense Service Installations for resale to Military installations and personnel.

4. The Court upheld the decisions of the Asst. Commissioner and the Tribunal, emphasizing the requirement to prove sales to Defense Service Installations. The Assessee failed to provide evidence for certain sales, leading to their disallowance as deductions.

5. The Court rejected the Assessee's argument that sales were made to individuals who could further sell to Defense personnel, stating that the goods should be sold directly to Defense Service installations or personnel. The revision petition was dismissed, and the interim order was vacated, with amounts paid to be set off against tax liability.