1973 (3) TMI 116 - SC - VAT and Sales Tax

Supreme Court clarifies burden of proof for dealers in inter-State trade under Central Sales Tax Act

The Commercial Tax Officer, Bangalore Versus Sri Venkateswara Oil Mills and Another

The Supreme Court addressed the interpretation and application of the Central Sales Tax (Amendment) Act, 1969, emphasizing the burden of proof on dealers ... Whether the assessee had collected sales tax on the turnovers in question and consequently he could not take any assistance from rule 38 of the Mysore Sales Tax Rules, 1957? Held that:- Allow these appeals, set aside the orders of the High Court as the legislative intention is clear and beyond doubt. The law gives a further opportunity to the assessees whose assessments are sought to be reopened to satisfy the assessing authorities that they had not collected tax in respect of the turnovers in question. Rule 38 of the Mysore Sales Tax Rules must be read with section 10 of the Amendment Act. If so read, it is clear that the assessing authorities before reassessing the dealers should afford them reasonable opportunity to satisfy them that they have not collected tax. Issues:Scope and effect of the Central Sales Tax (Amendment) Act, 1969; Jurisdiction of Sales Tax Officers to reopen assessments based on the Amendment Act; Burden of proof on dealers regarding tax collection; Interpretation of Rule 38 of the Mysore Sales Tax Rules in light of the Amendment Act.Analysis:The Supreme Court considered a series of appeals concerning the Central Sales Tax (Amendment) Act, 1969, focusing on the interpretation and application of the amended provisions. The Amendment Act aimed to address a previous judicial decision and tax sales in inter-State trade or commerce. The Court noted that the Amendment Act provided a mechanism for dealing with sales tax issues between 1964 and 1969, emphasizing the burden of proof on dealers regarding tax collection.The Sales Tax Officers sought to rectify assessments based on the Amendment Act, leading to challenges by the respondents. The High Court initially ruled in favor of the respondents, stating that the Sales Tax Officers lacked jurisdiction to reassess without clear mistakes on record. However, the Supreme Court disagreed, emphasizing the need to consider the amended law's provisions when rectifying assessments, rather than solely relying on the original law in force during the assessments.The Court highlighted the importance of Section 10 of the Amendment Act in providing dealers with an opportunity to demonstrate non-collection of tax on specific turnovers. It clarified that Rule 38 of the Mysore Sales Tax Rules should be read in conjunction with the Amendment Act, requiring assessing authorities to allow dealers a fair chance to prove non-collection of tax before reassessing.Ultimately, the Supreme Court allowed the appeals, overturning the High Court's orders and dismissing the writ petitions. The Court emphasized the legislative intent behind the Amendment Act, ensuring dealers have a chance to prove non-collection of tax before reassessment. The decision provided clarity on the application of the Amendment Act and the burden of proof on dealers in such cases, setting a precedent for future assessments under similar circumstances.