Burden of proof for certificated purchases supports pro rata estimation of purchase tax when records are not established.

Where a recognised dealer failed to prove that purchases made against Form 15 certificates were used as declared, section 14(3) of the Bombay Sales Tax Act, 1959 placed the burden on the dealer to show that such purchases were not includible in turnover. If the transactions could not be individually identified and the burden remained undischarged, the taxable turnover had to be estimated on a rational basis. A pro rata method was held to be a fair and sustainable basis of estimation, because a presumption that all certificated purchases qualified for exemption would defeat the statutory burden and was not tenable.

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Issues: Whether, where a recognised dealer fails to establish that goods purchased against certificates in Form 15 were used in accordance with the declaration, purchase tax liability under section 14 of the Bombay Sales Tax Act, 1959, had to be computed on a pro rata basis or on a presumption favouring the dealer.

Analysis: Section 14(3) places the burden on the dealer to prove that the purchase price of goods obtained under a certificate under section 12 is not liable to be included in turnover of purchases. If the dealer cannot discharge that burden and the transactions cannot be individually identified, the turnover liable to tax must be estimated. A presumption that all certificated purchases were used for qualifying sales would place the dealer in the same position as if the statutory burden had been fully discharged and would undermine section 14(3). A pro rata method is a rational and fair basis of estimation and avoids the extreme result of taxing all purchases. The contrary presumption adopted by the Sales Tax Officer and restored by the Tribunal was not sustainable.

Conclusion: The pro rata basis was the correct method for estimating the turnover liable to purchase tax, and the Tribunal was wrong in rejecting it.

Ratio Decidendi: Where a statute casts the burden on the assessee to prove that certificated purchases are not taxable, failure to discharge that burden justifies estimation on a rational pro rata basis and not a presumption wholly in favour of the assessee.

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