Burden of proof for tax-paid purchases rests on the dealer; reassessment can proceed where denial by sellers warrants verification.

Where reassessment under section 21 of the U.P. Trade Tax Act was based on departmental information that the selling dealers denied the transactions, the Tribunal was not justified in quashing the proceedings or in setting aside the first appellate authority's remand for further verification of bills and G.Rs. The fact of tax-paid purchases was specially within the dealer's knowledge, so section 12A placed the burden on the assessee to prove the claim and the circumstances for relief. Mere vouchers or audited accounts did not discharge that burden when the dealer did not respond before the assessing authority and the selling dealers disputed the sales. The remand order was restored.

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Issues: (i) Whether the Trade Tax Tribunal was justified in quashing the reassessment proceedings under section 21 of the U.P. Trade Tax Act, 1948 and setting aside the order of remand passed by the first appellate authority; (ii) whether, in relation to the claim of tax-paid purchases, the burden of proof lay on the dealer under section 12A of the U.P. Trade Tax Act, 1948.

Issue (i): Whether the Trade Tax Tribunal was justified in quashing the reassessment proceedings under section 21 of the U.P. Trade Tax Act, 1948 and setting aside the order of remand passed by the first appellate authority.

Analysis: The reassessment was founded on information that the selling dealers had denied the alleged sales. The first appellate authority had only remanded the matter for further enquiry, while the Tribunal proceeded to allow the appeal outright without examining whether the remand for verification of bills and G.Rs. was necessary. The Tribunal also failed to address the effect of the departmental material indicating that the transactions required investigation.

Conclusion: The Tribunal was not justified in quashing the proceedings under section 21 or in setting aside the remand order.

Issue (ii): Whether, in relation to the claim of tax-paid purchases, the burden of proof lay on the dealer under section 12A of the U.P. Trade Tax Act, 1948.

Analysis: The fact whether the purchases were tax-paid was specially within the knowledge of the dealer. Section 12A places the burden on the assessee to prove such facts and to establish the circumstances attracting exemption or relief. Mere possession of vouchers or audited accounts did not discharge that burden when the selling dealers had denied the transactions and the dealer had not responded to the notice before the assessing authority.

Conclusion: The burden of proving that the purchases were tax-paid lay on the dealer, and that burden was not displaced by the material relied upon before the Tribunal.

Final Conclusion: The revision was allowed, the Tribunal's order was set aside, and the remand order of the first appellate authority was restored, with both questions answered in favour of the Department.

Ratio Decidendi: Where the existence of tax-paid purchases is a fact specially within the assessee's knowledge, section 12A places the burden on the assessee to prove it, and a tribunal should not annul reassessment proceedings where departmental information prima facie negates the claim and further verification is warranted.

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