1995 (10) TMI 220 - HC - VAT and Sales Tax

High Court clarifies burden of proof in tax cases under Tamil Nadu Sales Tax Act

National Iron Traders Versus State of Tamil Nadu

The Madras High Court ruled in a case involving reassessment under the Tamil Nadu General Sales Tax Act, 1959, where the Joint Commissioner revised the ... - Issues:1. Revision of assessment under the Tamil Nadu General Sales Tax Act, 1959.2. Tax liability on purchases from unregistered dealers.3. Burden of proof on the assessee regarding tax liability.4. Exemption for second sales under the TNGST Act, 1959.5. Correctness of orders passed by the Appellate Assistant Commissioner and Joint Commissioner.The judgment of the Madras High Court involved a case where the assessee, a dealer in iron scrap, was reassessed under the Tamil Nadu General Sales Tax Act, 1959, for purchases made from unregistered dealers. The Joint Commissioner revised the order passed by the Appellate Assistant Commissioner, holding the sales by the assessee as first sales and therefore taxable. The assessee contended that the burden of proof lay on the seller to pay taxes, not on the assessee. The Appellate Assistant Commissioner had granted second sale exemption for purchases from one of the unregistered dealers, Jayachandra Traders, based on the bills produced. The Court referred to precedents stating that the onus is on the Revenue to tax the first sale, not on the subsequent seller to prove tax payment by the first seller. The Court held that the Joint Commissioner erred in setting aside the Appellate Assistant Commissioner's order, restoring the original assessment. The appeal was allowed, and the order of the Appellate Assistant Commissioner was upheld, setting aside the Joint Commissioner's decision.In this case, the primary issue was the tax liability of the assessee on purchases from unregistered dealers. The Joint Commissioner revised the assessment, considering the sales as first sales and therefore taxable. The assessee argued that the burden of proof regarding tax liability should lie with the seller, not the assessee. The Appellate Assistant Commissioner had granted exemption for second sales based on the bills produced by the assessee. The Court referred to legal precedents emphasizing that the onus is on the Revenue to tax the first sale, not on the subsequent seller to prove tax payment by the first seller. The Court found that the Joint Commissioner erred in setting aside the Appellate Assistant Commissioner's order and restored the original assessment. Consequently, the appeal was allowed, and the order of the Appellate Assistant Commissioner was upheld.The Court analyzed the burden of proof in tax liability cases, stating that the onus is on the Revenue to tax the first sale, not on the subsequent seller to prove tax payment by the first seller. The Appellate Assistant Commissioner had granted exemption for second sales based on the bills produced by the assessee, indicating purchases from registered dealers. The Court held that the Joint Commissioner erred in setting aside the Appellate Assistant Commissioner's order and restoring the original assessment. The appeal was allowed, and the order of the Appellate Assistant Commissioner was upheld, emphasizing the burden of proof in tax assessments.---