1984 (6) TMI 209 - HC - VAT and Sales Tax

Court emphasizes evidence over form in tax case

The court ruled in a tax revision case under the Karnataka Sales Tax Act, 1957, where the petitioner claimed exemption based on being a subsequent ... - Issues:- Interpretation of section 5(4) of the Karnataka Sales Tax Act, 1957 regarding tax liability on the purchase of declared goods.- Validity of using form 32 as conclusive evidence of exemption from tax liability.- Burden of proof on the assessee to show exemption from tax liability.- Adequacy of evidence provided by the assessee to establish non-liability to pay tax.- Proper consideration of evidence by the assessing authority in determining tax liability.Analysis:The judgment pertains to a tax revision under section 23(1) of the Karnataka Sales Tax Act, 1957, challenging an assessment order regarding the purchase of groundnut seeds. The petitioner claimed exemption based on being the subsequent purchaser in the State, supported by form 32 declarations from sellers. However, the assessing authority found a portion of the purchase to be from inter-State transactions, making the petitioner liable to pay tax under section 5(4) of the Act.The court emphasized that the mere production of form 32 does not automatically absolve the assessee from tax liability if they are the first purchaser. The burden of proof lies with the assessee to demonstrate exemption from tax liability, requiring additional credible evidence beyond form 32. The judgment cited precedents highlighting the obligation of the dealer to prove exemption eligibility, especially when dealing with declared goods subject to single-point levy.The assessing authority's reliance on cross-verification without due consideration of the evidence provided by the assessee was criticized. The court noted that the authorities failed to properly scrutinize the purchase bills submitted by the assessee, which could have supported their claim of not being the first purchaser. The judgment stressed the importance of a thorough assessment based on all available evidence to prevent unjust tax imposition on the assessee.Ultimately, the court allowed the revision petition, quashing the tax levy on the groundnut purchase turnover. The assessing authority was directed to reevaluate the assessment, giving the assessee an opportunity to present additional evidence to establish the sellers' tax liability. The judgment underscored the necessity for fair consideration of all evidence and prompt action against sellers misusing form 32 declarations to evade tax obligations.