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of <h1>High Court shifts burden of proof to Revenue under Mysore Sales Tax Act</h1> The High Court ruled in favor of the petitioners, holding that the burden of proof regarding tax liability for transactions under the Mysore Sales Tax ... - Issues:1. Interpretation of section 5(4) of the Mysore Sales Tax Act, 1957.2. Determination of whether certain transactions constitute 'purchases' exigible to tax under the Act.3. Burden of proof on the assessees regarding the tax liability of the transactions.4. Application of the second proviso to section 5(7) of the Act.Analysis:The High Court was tasked with determining the correct interpretation of section 5(4) of the Mysore Sales Tax Act, 1957, specifically regarding the tax liability of certain transactions. The cases involved assessments of the petitioners to sales tax for different periods, focusing on whether the transactions in question were 'purchases' subject to taxation. The goods under consideration were hides and skins, declared goods under the Central Sales Tax Act, 1956. The Tribunal had to decide if the petitioners were indeed purchasers of these goods, with the dispute centering on whether the transactions were 'last purchases' or 'first purchases' for the respective periods.The Tribunal's decision was based on the belief that once it was established the petitioners were dealers who dealt with the goods, they had to prove the transactions were not taxable purchases. However, the High Court disagreed, stating that the burden lies with the Revenue to prove the tax liability of specific transactions. The Court emphasized that the Revenue failed to demonstrate that the disputed transactions were purchases, while the petitioners provided accounts supporting their claim of acting as selling agents. The Court highlighted that the law requires the Revenue to establish the transactions' taxability under section 5(4) rather than shifting the burden to the assessees.Drawing on a Full Bench decision of the Kerala High Court, the judgment clarified that the burden of proof falls on the Revenue to show that transactions are subject to tax. The Court rejected the Government Pleader's argument that the burden rests on the assessees to prove transactions are not taxable, emphasizing that the burden only shifts after establishing the transactions are purchases. The proviso to section 5(7) was interpreted to require assessees to prove transactions exempt from tax, not to presume all dealer transactions are taxable.Consequently, the High Court allowed the petitions, setting aside the tax imposed on the petitioners for transactions conducted as selling agents. The Assessing Authority was directed to modify the assessment orders accordingly, with the Revenue bearing the petitioners' costs. The judgment clarified the burden of proof regarding tax liability and emphasized the necessity for the Revenue to establish the taxability of transactions under the relevant provisions of the Act.
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