Evidentiary burden in sales tax law upheld for proving prior taxation and first-purchase liability under the dealer's knowledge

Section 6-A(2) of the Karnataka Sales Tax Act was treated as a machinery provision that validly placed on the dealer the burden of proving prior taxation or that the dealer was not the first purchaser of declared goods. The provision was read as consistent with the general rule that facts within a party's special knowledge must be proved by that party, and rule 26(9)(a) was held intra vires the rule-making power. Challenges based on legislative competence, article 19(1)(g), article 286, and section 15 of the Central Sales Tax Act were rejected because the provision regulated evidentiary burden rather than creating an additional tax levy. The writ petitions failed and the impugned assessments and notices were sustained, subject to the limited time granted for objections in specified cases.

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Issues: Whether section 6-A(2) of the Karnataka Sales Tax Act, 1957 and rule 26(9)(a) of the Karnataka Sales Tax Rules, 1957 were valid, and whether section 6-A(2) rightly placed the burden on the dealer to prove that the goods had already suffered tax or that the dealer was not the first purchaser.

Analysis: Section 6-A(2) was treated as a machinery provision, not a charging provision. The provision was held to operate consistently with the general law on burden of proof, under which a party claiming exemption or special facts within its knowledge must establish them. Rule 26(9)(a) was held to fall within the rule-making power conferred by the Act and to be intra vires. The challenge based on legislative competence and article 19(1)(g) was rejected. The Court further held that section 6-A(2) did not authorise taxation of transactions outside article 286, nor did it offend section 15 of the Central Sales Tax Act, 1956, because it only regulated the mode of proof and the consequence of failure to prove prior taxation. The provision was construed as a permissible allocation of evidentiary burden to prevent tax evasion in cases of first sale or first purchase of declared goods.

Conclusion: Section 6-A(2) and rule 26(9)(a) were upheld, and the burden of proving prior taxation or non-liability under the first-sale first-purchase scheme was held to rest on the dealer, not on the Revenue.

Final Conclusion: The writ petitions failed, and the assessments and impugned notices were sustained, subject only to the limited time granted to file objections in the specified notice cases.

Ratio Decidendi: A fiscal machinery provision may validly shift the evidentiary burden to the dealer where the relevant facts lie specially within the dealer's knowledge, and such a provision does not violate constitutional or inter-State sales restrictions if it regulates proof rather than imposing an additional tax burden.

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