1992 (2) TMI 354 - HC - VAT and Sales Tax

Court clarifies requirements for claiming tax deduction under Central Sales Tax Act

State of Orissa Versus Ghewarchand Kamal Kumar

The Court held that the mere filing of 'C' forms by the dealer-assessee was insufficient to prove the inclusion of the tax component in the sale price for ... - Issues:Interpretation of section 8-A of the Central Sales Tax Act, 1956 regarding deduction from turnover based on inclusion of tax component in sale price as proven by filing 'C' forms.Analysis:The case involved a dispute regarding the application of section 8-A of the Central Sales Tax Act, 1956, and whether the filing of 'C' forms by the dealer- assessee was sufficient to prove that the tax component had been included in the sale price, thus entitling the dealer to deduction from the turnover. The Tribunal held in favor of the assessee, stating that the filing of 'C' forms indicated that the sales tax component was included in the turnover, even if not separately shown in the bills or accounts. The Revenue argued that the onus was on the assessee to prove the inclusion of the tax component in the sale price. The Court referred to previous judgments emphasizing that the sale price includes the sales tax component and provided a detailed analysis of section 8-A and its application.The Court examined the provisions of section 8-A of the Central Act, which allows for deductions from the turnover of a dealer to avoid levying tax on the tax amount itself. The section provides a formula for deduction when the Central sales tax component is not separately deducted. The Court highlighted that the formula does not apply if the tax amount has already been deducted from the sale prices. The judgment referenced legal definitions of 'price' and 'turnover' to clarify the inclusion of the tax component in the sale price. The Court emphasized that the burden of proof lies with the assessee to demonstrate the inclusion of the tax component in the sale price to claim the deduction under section 8-A.In this case, the Court found that the assessee did not present concrete evidence to establish that the tax component was included in the sale price. The Tribunal's conclusion based on the filing of 'C' forms was deemed presumptuous as it was not the assessee's explicit stand before the lower forums. The Court emphasized that the assessee must provide material evidence to prove the inclusion of the tax component in the sale price. The judgment highlighted that the mere filing of 'C' forms is not sufficient to prove inclusion without supporting evidence. The Court concluded that the Tribunal's decision was incorrect and remitted the matter back for fresh consideration, emphasizing the need for proper substantiation by the assessee to claim the deduction under section 8-A.In conclusion, the Court answered the reference by stating that the Tribunal's reliance on the filing of 'C' forms alone was not adequate to prove the inclusion of the tax component in the sale price. The judgment underscored the importance of providing concrete evidence to support the claim for deduction under section 8-A and directed the Tribunal to reconsider the matter in light of the legal principles outlined in the judgment.