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TMI Blog2024 (8) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of that transaction and thus, the onus of establishing a claim of second sales falls solely upon the dealer making such claim. Section 10(2) specifically states that 'Notwithstanding anything contained in this Act or in any other law for the time being in force, a dealer in any of the goods liable to tax in respect of the first sale or first purchase in the State shall be deemed to be the first seller or first purchaser as the case may be of such goods and shall be liable to pay tax accordingly on his turnover of sale or purchase relating to such goods, unless he proves that the sale or purchase, as the case may be of such goods had already been subjected to tax under this Act.' In the present case, the dealer could well have produced the alleged vendors to support the claim of second sales. This was never done at any stage of the proceedings and hence of the categoric view that there is nothing to support the assessee's contention in this regard. In Govindan Co. [ 1974 (2) TMI 69 - MADRAS HIGH COURT ], there was an inspection of that assessee's premises. Clarifications were sought in regard to certain purchases and the explanation put forth by Govindan and Co., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,000.00/-. 3. Suspecting the above transactions and the claim of second sales, the assessing authority made a cross verification on 16.03.2001 with the Deputy Commercial Tax Officer, Jayankondam. The enquiry appears to have resulted in findings adverse to the petitioner and in the order of assessment, the officer states that the three persons who had been named as sellers by the petitioner did not exist, and the registration numbers furnished belonged to unconnected, third party dealers. 4. Hence, the authority arrives at the conclusion that the sellers were fictitious and bogus, proceeding to deny the claim of exemption on the ground of second sales. Penalty under Section 16(2) had been proposed and was confirmed in assessment. 5. At the stage of assessment, the petitioner had taken a stand that the purchases had formed part of the accounts and closing balance, that those goods had been sold during the next year i.e., 2001 - 02 and that such sales turnover had been duly verified and accepted by the Department. However, there was no claim of double taxation of the same turnover raised at any stage of the proceedings. 6. As against the order of assessment, an appeal was filed befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover of a dealer would fall solely upon the dealer. 10. We have carefully considered the rival submissions. The assessment in this case was originally made on a deemed basis accepting the returns filed. Enquiry commenced at the stage of regular assessment. We agree with the argument that even if the sellers had not been registered as dealers, the petitioner could still have claimed second sales exemption. However, the issue that arises is as to whether at all there was any first sale in this case. 11. Admittedly, the petitioner has not produced any material, barring invoices, to establish purchases from the alleged sellers. No attempt was made at any stage of the proceedings to produce the three entities who are stated to have effected sales to the petitioner. Moreover, the enquiry conducted by the respondents has established that the dealer registration numbers furnished by the petitioner belonged to other registered dealers and not the entities named as sellers by the petitioner. 12. In the aforesaid circumstances, the provisions of Section 10 of the Act stand attracted. Section 10(1) of the Act reads thus: Section 10. Burden of proof: - (1) For the purpose of assessment of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded but ought to have been allowed in their favour instead. The appeal was allowed in the following terms: 3. Though the order of the Tribunal is one upholding the remit order passed by the Appellate Assistant Commissioner, the learned counsel for the petitioners contends that the direction of the Tribunal that the petitioners are to prove that the twelve dealers from whom they purchased the goods were real persons and that they had in fact paid the tax on the iron and steel is not correct and that it is not the duty of the petitioners to prove that their sellers have in fact paid the tax on their sales. The learned counsel appears to be right in his submission that the petitioners who claimed exemption from tax on the ground that their sales are second sales are bound to show that there has been an anterior taxable sale and that they need not prove that tax had in fact been paid on those anterior sales. To claim the benefit of tax on the ground that their sales are second sales, the petitioners need not show that their sellers have in fact paid tax and it is enough for them to show that the earlier sales are taxable sales and that the tax is really payable by their sellers. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay of more than one year. 22. To reiterate, the assessee has not, at any stage of the proceeding, raised the question of double jeopardy or sought adjustment of the demand against the amounts already paid. This issue thus involves the factual question of whether at all there is double taxation which cannot be considered at this stage. 23. Coming to the levy of penalty, the petitioner submits that the return had been filed in Form 8(1), which required the accompanying financials to be audited by a Chartered Accountant. Since the financials had not been rejected, the disallowance of the exemption claim is based only on materials on record and there is hence no justification for the levy of penalty. 24. Section 16(2) states that penalty would be payable if there is wilful non-disclosure of assessable turnover by the dealer. Petitioner's argument is that the assessment is based on its own accounts. However, we are not in this matter concerned with either with suppression or non- disclosure of turnover but with wrongful claim of exemption. In the discussion supra, we have considered the claim of the petitioner and the basis of rejection of the same by way of concurrent orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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