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Issues: Whether the Revenue had proved that the assessee had effected a local sale within Madras of 80 Honda portable generators so as to justify levy of tax and penalty under the Tamil Nadu General Sales Tax Act, 1959.
Analysis: The assessment rested principally on the delivery challans and the inference drawn from them, but the record also contained the transport documents, gate pass, freight and octroi bill, carrier's confirmation, and the contemporaneous statement and affidavit indicating that the goods were taken back to Delhi and delivered to Perfect Power Systems. The Court found that the consignor and consignee in the principal transport document were Perfect Power Systems, that there was no reliable material showing that the assessee had taken delivery of the goods in Madras, and that the Revenue had not discharged the burden of proving a taxable local sale. In the absence of cogent proof that the assessee had effected a sale within Tamil Nadu, the levy could not stand.
Conclusion: The issue is answered in favour of the assessee. The finding of local sale and the consequential assessment and penalty were unsustainable.
Ratio Decidendi: Where the materials relied on by the Revenue do not satisfactorily establish that the assessee effected a sale within the State, the burden remains on the Revenue to prove the taxable transaction, and an assessment based only on inference cannot be sustained.
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