Burden of proving outside sales rests on assessee when situs is disputed and sales are admitted.

Where sales are admitted but the assessee claims they were effected outside the taxing State, the burden lies on the assessee to prove the alleged outside situs. In the absence of any material showing that the transactions occurred at Bombay, and with no Bombay branch established, the assessing authority could draw an adverse inference from the failure to produce evidence. Section 10 of the Madras General Sales Tax Act was held not to shift the initial burden to the department merely because the situs of admitted sales was disputed. The turnover was therefore liable to tax in Madras.

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Issues: Whether the assessee, having admitted the sales but claimed that they took place outside Madras, bore the burden of proving that the transactions were not taxable under the Madras General Sales Tax Act.

Analysis: The sales were admitted, but the assessee produced no material to establish that they were effected at Bombay. In such circumstances, and in the absence of any branch at Bombay, the assessing authority was entitled to call upon the assessee to prove the alleged outside sales and to draw an adverse inference when no evidence was adduced. Section 10 of the Madras General Sales Tax Act was held not to place the initial burden on the department in a case where the existence of sales was admitted and only their situs was disputed. The Tribunal's view that the department had to prima facie prove that the sales took place within Madras was rejected.

Conclusion: The burden was on the assessee to prove that the sales were outside the State, and the turnover was liable to tax in Madras.

Ratio Decidendi: Where sales are admitted and the assessee asserts that their situs is outside the taxing State, the burden lies on the assessee to establish the outside sale, and failure to do so permits an adverse inference that the sales occurred within the State.

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