2016 (3) TMI 883 - HC - VAT and Sales Tax

High Court clarifies legal presumption on deemed sale under Assam Sales Tax Act

M/s Mukesh Carriers, Shri Naresh Kumar Singhania Versus The State of Assam, The Superintendent of Taxes, The Addl. Commissioner of Taxes, Assam,

The GAUHATI HIGH COURT interpreted Sub-Section 15(d) of Section 46 of the Assam General Sales Tax Act, 1993, regarding the legal presumption of deemed ... Adequate rebut of Legal presumption - Deemed sale drawn by the authorities under Section 46(15)(d) of the AGST Act - Whether convincing evidence is brought on record or not - Held that:- neither the Revisional Authority nor the Assessing Authority had carried out any such exercise to weigh the impact of the evidence, on the legal presumption. Tax becomes payable only when a taxable transaction is carried out but under the legal presumption a deemed transaction can also be made liable to tax under the AGST Act. The Assessing Officer and the Revisional Authority has not applied their mind to determine whether the petitioners have successfully rebutted the legal presumption drawn by the taxation authorities and the assessment to tax is supported only on the basis of the legal presumption. Therefore the authorities have failed to discharge the obligation under the ratio of Sodhi Transport Company vs. State of U.P. [1986 (3) TMI 303 - SUPREME COURT OF INDIA]. Matter remanded back Issues:1. Interpretation of Sub-Section 15(d) of Section 46 of the Assam General Sales Tax Act, 1993.2. Application of legal presumption of deemed sale under Section 46(15)(d) of the AGST Act.3. Rebuttal of legal presumption by producing evidence.4. Failure of authorities to consider evidence in rebutting legal presumption.5. Assessment of tax liability based on legal presumption without proper evaluation of evidence.Analysis:The judgment by the High Court of GAUHATI HIGH COURT involved the interpretation of Sub-Section 15(d) of Section 46 of the Assam General Sales Tax Act, 1993. The case revolved around the application of the legal presumption of deemed sale under Section 46(15)(d) of the AGST Act when the assessee fails to surrender the Transit Pass (T.P) within the stipulated time frame. The petitioners, in this case, challenged an assessment order based on the legal presumption that the goods were sold within the State of Assam due to the failure to surrender the Transit Pass. The transporter produced evidence to rebut this presumption, including certificates and affidavits confirming the delivery of the goods to the consignee in Meghalaya. However, the authorities failed to properly evaluate this evidence and upheld the assessment order.The High Court emphasized that tax liability arises only when a taxable transaction occurs, and a legal presumption of deemed sale can also be made liable to tax under the AGST Act. The Court noted that the authorities did not adequately consider whether the evidence presented by the petitioners successfully rebutted the legal presumption. The judgment highlighted the importance of weighing the impact of the evidence on the legal presumption before making an assessment. The Court found that the authorities did not apply their minds to determine if the legal presumption was rebutted and based the assessment solely on the presumption.As a result of the above analysis, the High Court quashed the impugned order and remanded the matter back to the authorities for a fresh revisional exercise. The Court directed the authorities to reconsider the worth of the documents produced by the petitioners to determine if they successfully rebutted the conclusion drawn by the authorities based on the legal presumption. The judgment allowed the petition accordingly, with no costs imposed on the petitioners.