Sales tax burden of proof: taxing authority must prove levy ingredients; dealer need only prove claimed exemption.

A dealer under the Karnataka Sales Tax Act includes a person who regularly buys goods for use in the course of business, and rubber purchased for tyre retreading and consumed otherwise than by sale falls within the charging provision. On the burden of proof, section 6-A places on the dealer only the burden of proving an exemption or non-liability claimed by it; it does not require the assessee to disprove levy at the outset. The taxing authority must first establish the statutory ingredients for tax, including that the goods had not already suffered tax. The text states that the levy failed because the burden was wrongly shifted to the assessee, and the matter was remitted for fresh assessment.

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Issues: (i) whether the assessee, engaged in tyre retreading and purchasing rubber for that business, was a dealer liable to tax under section 6 of the Karnataka Sales Tax Act, 1957; (ii) whether the burden of proving that the purchased rubber had not suffered tax lay on the assessee or on the department.

Issue (i): Whether the assessee, engaged in tyre retreading and purchasing rubber for that business, was a dealer liable to tax under section 6 of the Karnataka Sales Tax Act, 1957.

Analysis: The definition of dealer in section 2(k) covers a person carrying on the business of buying goods for valuable consideration. The assessee regularly purchased rubber as part of its tyre-retreading business, and the rubber was consumed in that business otherwise than by sale. Applying the principle recognised in the cited sales tax precedent, a person purchasing goods for use in the course of business is within the statutory concept of dealer and may be brought to tax under the charging provision when the goods are consumed otherwise than by sale.

Conclusion: The assessee was a dealer and section 6 was attracted.

Issue (ii): Whether the burden of proving that the purchased rubber had not suffered tax lay on the assessee or on the department.

Analysis: Section 6-A places on the dealer only the burden of proving that a transaction or turnover is not liable to tax when exemption is claimed. It does not shift to the assessee the initial burden of establishing the ingredients necessary to justify levy under section 6. Those ingredients must be proved by the taxing authority. On the facts, the department led no evidence that the goods had not suffered tax, while the authorities wrongly placed that burden on the assessee.

Conclusion: The burden lay on the department to prove the ingredients of levy and to establish that the goods had not suffered tax.

Final Conclusion: The revision succeeded because the levy was sustained on an incorrect allocation of the burden of proof, and the matter was sent back for fresh assessment in accordance with law.

Ratio Decidendi: In proceedings under the sales tax law, the taxing authority must establish the statutory ingredients for levy, and section 6-A does not require the assessee to disprove liability at the threshold; the assessee bears only the burden of proving an exemption or non-liability claimed by it.

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