Taxability and burden of proof: non-production of documents cannot replace proof that the purchase occurred within the State.

Liability under the relevant entry arose only if the department proved that the last purchase of manganese ore occurred within Andhra Pradesh. The correspondence showed purchase from the Tumsar party, but it did not establish that the purchase took place within the State, and shipment or export through Visakhapatnam Port was not enough to fix the situs of purchase. Although an adverse inference could be drawn from non-production of documents, the department still had the burden to prove the taxable event. A finding of taxability based on no evidence was therefore unsustainable, and the presumption from missing records could not by itself establish liability.

---

---

Issues: Whether the finding that the dealer was the last purchaser of manganese ore within the State of Andhra Pradesh could be sustained when the department relied on the assessee's failure to produce documents and the available correspondence did not a purchase within the State.

Analysis: The liability under entry 1 of the Second Schedule attached only if the last purchase within the State was established. The correspondence relied upon, including the petitioner's letter and related exchanges, showed that the ore was purchased from the Tumsar party, but it did not show that the purchase took place within Andhra Pradesh. Mere shipment through Visakhapatnam Port or export through that port did not by itself establish the situs of purchase. Although an adverse inference may be drawn from non-production of documents, the ultimate burden remained on the department to prove the taxable event. In the absence of any material from which even an inference could be drawn that the purchase occurred within the State, the assessee's failure to produce documents could not substitute for proof.

Conclusion: The finding that the petitioner was the last purchaser within the State of Andhra Pradesh was unsustainable as it was based on no evidence, and the adverse presumption from non-production of documents could not by itself establish taxability.

Ratio Decidendi: An adverse inference from an assessee's non-production of documents cannot replace the department's burden to prove the taxable event, and a finding of taxability based on no evidence is invalid.

---