2018 (1) TMI 340 - HC - VAT and Sales Tax

Court sets aside tax levy under UP Trade Tax Act, emphasizing proof of transactions over mere presence of goods.

M/s Jai Prakash Oil Mill Versus Commissioner Trade Tax, U.P. Lucknow

M/s Jai Prakash Oil Mill Versus Commissioner Trade Tax, U.P. Lucknow - TMI Issues:Assessment based on undisclosed transactions of sale and purchase under the UP Trade Tax Act, 1948.Analysis:The revision was filed against the Tribunal's judgment, which set aside the relief granted by the first appellate authority to the assessee, stating that it was not engaged in sale, purchase, or manufacture of articles under the UP Trade Tax Act, 1948. The Tribunal partially allowed the Department's appeal, restoring the assessing authority's order but reducing the tax amount. The assessment stemmed from a survey revealing various commodities on the premises, leading to the belief that the assessee was involved in sale and purchase activities. The assessing authority concluded that the assessee willfully did not disclose its liability under the 1948 Act, assessing it as engaged in manufacturing dal and other commodities.The revisionist's counsel argued that the assessment was based on conjectures and lacked evidence of actual sale or purchase transactions. The revisionist maintained that it was only processing articles for individuals paying conversion charges, not engaging in taxable activities. The assessing authority and the standing counsel contended that the quantity of materials found on-site indicated regular sale and purchase transactions undisclosed to tax authorities. The Court emphasized the necessity of proving actual sale or purchase transactions to impose tax under the 1948 Act, rather than relying solely on the existence of commodities and machinery.The Court highlighted that the Act did not provide for any presumption against the assessee based on possession of tradable articles. Section 12-A placed the burden of proof on the assessee regarding specific facts or exemptions claimed, not on disproving non-existent transactions. Referring to a Supreme Court decision, the Court reiterated that a presumption must be supported by legislative provisions, which were lacking in this case. As no evidence established the revisionist's involvement in sale or purchase activities, the levy of tax was deemed unsustainable. Consequently, the Court allowed the revision, setting aside the Tribunal's order and annulling the tax levy on the revisionist.