Professional service receipts cannot be treated as sales turnover unless a taxable sale nexus is first established.

Professional service receipts earned from exporters were held not to be includible in sales turnover under the Kerala General Sales Tax Act because sales tax applies only to a taxable sale or transfer of property in goods, not to service income by itself. The dealer had produced income-tax returns, assessment orders, exporter correspondence and MPEDA certificates to show that the receipts arose from a separate service activity. Although the statutory burden under Section 12 requires the dealer to disprove taxability, that reverse burden arises only after foundational facts connect the receipt to the sales tax net; unexplained receipts cannot be treated as turnover merely because they are unexplained. The assessments and connected orders were set aside and the matter was remitted for fresh consideration.

---

---

Issues: Whether receipts from professional services rendered to exporters could be included in sales turnover under the Kerala General Sales Tax Act, and whether the assessee had discharged the burden of proof under Section 12.

Analysis: Sales tax can be levied only on a transaction of sale, and professional services by themselves do not constitute a sale or transfer of property in goods. The assessee had produced materials such as income-tax returns, assessment orders, exporter correspondence and MPEDA certificates, which were relevant to show that the receipts arose from a separate service activity. Although Section 12 places the burden on the dealer to prove that a transaction is not taxable, that burden operates only after the foundational facts bringing the receipt within the sales tax net are shown. The approach applicable in income-tax matters cannot be mechanically applied to sales tax, because unexplained receipts are not, by that fact alone, taxable as sales turnover.

Conclusion: The inclusion of the commission receipts in sales turnover was unsustainable, and the assessee was entitled to reconsideration on the materials produced.

Final Conclusion: The assessments and the connected orders were set aside and the matter was sent back for fresh consideration on the existing and additional materials.

Ratio Decidendi: For sales tax purposes, the Revenue must establish a nexus between the receipt and a taxable sale transaction; a mere unexplained receipt or professional income cannot, without more, be treated as sales turnover, and the reverse burden under the statute applies only once the basic taxable framework is attracted.

---