High Court emphasizes burden of proof on assessee for stock transfers under Central Sales Tax Act

Jaypee Cement Ltd. Versus Commissioner of Trade Tax, UP., Lucknow

Jaypee Cement Ltd. Versus Commissioner of Trade Tax, UP., Lucknow - [2009] 20 VST 177 (All) Issues:
Assessment of stock transfers as inter-State sales under the Central Sales Tax Act, 1956 for the assessment year 2002-03.

Detailed Analysis:

The case involved a revision under section 11 of the U.P. Trade Tax Act, 1948 against the Tribunal's order relating to the assessment year 2002-03 under the Central Sales Tax Act, 1956. The applicant, engaged in the business of cement manufacture and sales, had a factory in Rewa and depots in Bareilly and Kichcha. The assessing authority rejected the claim of stock transfers due to non-production of loading invoices, treating them as inter-State sales. The Joint Commissioner allowed the appeal, but the Commissioner of Trade Tax filed an appeal before the Tribunal. The Tribunal remanded the matter back to the assessing authority for a fresh assessment, doubting the claimed stock transfers based on seized documents and the lack of proper verification. The Tribunal emphasized the burden on the assessee to prove stock transfers under section 6A of the Central Act and the necessity of producing loading invoices and stock registers for verification.

The Tribunal found that relevant documents like loading invoices and stock registers were not produced by the applicant to prove the stock transfers. The assessing authority had also failed to summon these necessary documents for verification. The Tribunal's decision to remand the case back to the assessing authority for further examination was based on the lack of crucial evidence to substantiate the claim of stock transfers. The Tribunal highlighted the importance of producing all required documents to establish the correctness of stock transfers under the U.P. Trade Tax Rules, 1948.

The High Court upheld the Tribunal's decision, stating that the burden lies on the assessee to prove the claim of stock transfers. The Court emphasized the necessity of producing loading invoices and stock registers for examination to judge the correctness of the transactions. The Court rejected the argument that the Tribunal should examine the documents itself, stating that the assessing authority is more appropriate for such examination. The Court dismissed the revision, affirming the Tribunal's decision to remand the case for further inquiry by the assessing authority to properly adjudicate the matter based on the relevant documents required to establish the validity of the stock transfers.