Rebuttable statutory presumption in trade tax law defeated by sale documents, making tax demand and penalty unsustainable.

The rebuttable presumption under Section 28-B of the U.P. Trade Tax Act applies when a transit pass is not surrendered, but it operates only as a rule of evidence and can be displaced by clear material showing the presumed fact is untrue. Sale invoice, delivery challan and subsequent sale documents identifying the vehicle by chassis and engine numbers showed transfer outside Uttar Pradesh, and this was treated as sufficient to rebut the presumption of intra-State sale. In the absence of independent material supporting the department, the levy of tax and penalty under Section 15A(1)(g) could not be sustained.

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Issues: Whether the levy of tax and penalty under Section 28-B and Section 15A(1)(g) of the U.P. Trade Tax Act, 1948 could be sustained when the vehicle and its movement were supported by sale and delivery documents showing sale outside the State and the statutory presumption of sale within the State was rebutted.

Analysis: Section 28-B creates a rebuttable presumption of sale within the State if the transit pass is not surrendered at the exit check-post. That presumption is only a rule of evidence and can be displaced by material fairly and reasonably showing that the presumed fact is not the real fact. On the record, the sale invoice, delivery challan, and subsequent sale documents identified the vehicle by chassis and engine numbers and showed its transfer outside Uttar Pradesh before the relevant hire purchase arrangement. The evidence led was treated as clear and convincing and sufficient to rebut the statutory presumption. The Court also accepted that, in the commercial context of the transaction, the hirer was the person in practical control and ownership for the purpose of the disputed levy, and no independent material supported the department's case.

Conclusion: The tax demand and the penalty were unsustainable; the presumption under Section 28-B stood rebutted and the assessee succeeded.

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