2015 (6) TMI 629 - HC - VAT and Sales Tax

Court sets aside tax demands on physically handicapped sole proprietor due to lack of evidence and burden of proof

Chhattar Singh and others Versus The State of Haryana and others

The High Court allowed the writ petition challenging tax demands on a physically handicapped sole proprietor. The court found the Department failed to ... Clandestine removal of goods - Duty demand - Held that:- No material is available on record to show that any enquiry was made through the vehicle owners or any material was confronted to the assessee-dealer. Further, in the absence of the same, we find that fastening of liability on the petitioners in the facts and cirumstances was uncalled for. - Revenue had failed to prima facie demonstrate with reference to any material on record that there existed some nexus of the petitioners to remove the alleged goods without payment of tax in accordance with law. Furthermore, the factum of the petitioners being exempted unit till November 3, 1988 was also not disputed. - Impugned order is set aside - Decided in favour of assessee. Issues:Challenge to orders dated July 19,1994, November 30,1994, February 7, 2000, and July 17, 2000 under articles 226/227 of the Constitution of India.Analysis:The petitioner, a physically handicapped individual and sole proprietor of a business, faced a tax dispute related to alleged unaccounted sales. The petitioner's business of oil extraction faced financial difficulties leading to closure in 1988-89. The assessing authority raised a tax demand based on unincorporated entries in the books of account, which the petitioner disputed. Despite appeals and remands, the demand was maintained, leading to a writ petition challenging the orders. The petitioner argued that the Department failed to establish a connection between the petitioner and the alleged transactions, citing a Supreme Court judgment on burden of proof. The court noted the absence of material showing inquiry into the transactions or confrontation of evidence to the petitioner, leading to the dismissal of liability on the petitioner due to lack of evidence.The court referred to the Supreme Court's judgment emphasizing the burden of proof on the party making claims, highlighting the need to establish the source and destination of disputed amounts. In this case, the Revenue failed to demonstrate any nexus between the petitioner and the alleged unaccounted sales. Additionally, the court noted that the petitioner operated as an exempted unit until November 3, 1988, further weakening the Department's case. Consequently, the court allowed the writ petition, setting aside the challenged orders dated July 19, 1994, November 30, 1994, February 7, 2000, and July 17, 2000, as they lacked legal basis. The court directed the return of the case record to the State counsel promptly.