Research › Search › Judgment

Allahabad High Court · body

2008 DIGILAW 1353 (ALL)

COMMISSIONER, TRADE TAX, U. P. v. GARG STEELS.

2008-07-16

PRAKASH KRISHNA

body2008
JUDGMENT PRAKASH KRISHNA, J. - Heard the learned standing counsel for the applicant. None is present on behalf of the dealer - opposite party. An affidavit of service has been filed by the Department. It is held that the dealer - opposite party is sufficiently served. The above revision is directed against the order dated June 8, 2000 passed by the Trade Tax Tribunal in Appeal No. 747 of 1999 relevant to the assessment year 1989-90. The present revision arises out of proceedings initiated by the Department against the dealer - opposite party under section 21 of the U.P. Trade Tax Act, 1948. The dealer - opposite party is a trader and deals in sale and purchase of iron and steel. For the relevant assessment year, i.e., 1989-90 it disclosed the purchases of iron and steel worth Rs. 5,51,55,913 as tax-paid purchases in U.P. All the purchases were made from three dealers. During the original assessment proceeding the assessing officer accepted the account books and treated the aforesaid purchases as tax-paid purchases made within the State of U.P. Thereafter, the necessary information was sent to the respective assessing officers to verify the aforesaid purchases as claimed by the dealer - opposite party. According to the dealer - opposite party, it has made the purchases from M/s. Kanpur Ispat Udyog, Arya Nagar, Kanpur, Mohit Steels, Kuly Bazar, Kanpur and from M/s. Anupam Steels, Bans Mandi, Allahabad. The assessing authorities of these traders informed the assessing officer of the dealer - opposite party that these dealers have not made any such sales to the dealer - opposite party. A notice under section 21 of the U.P. Trade Tax Act was issued to the dealer - opposite party. The dealer - opposite party in spite of service of notice failed to appear and participate in the reassessment proceeding. The assessing officer by the order dated January 6, 1999 found that the turnover of the dealer - opposite party has escaped the assessment inasmuch as the disclosed purchases made by the dealer - opposite party were not tax-paid purchases. It consequently levied trade tax to the tune of Rs. 14,40,000. Feeling aggrieved by the said order, an appeal before the Deputy Commissioner (Appeal) 1st, Ghaziabad was filed being Appeal No. 198 of 1999. It consequently levied trade tax to the tune of Rs. 14,40,000. Feeling aggrieved by the said order, an appeal before the Deputy Commissioner (Appeal) 1st, Ghaziabad was filed being Appeal No. 198 of 1999. The said appeal was allowed by the first appellate authority and the matter was restored back to the assessing officer to make further enquiry as provided for in the order. The first appellate authority was of the view that enquiry should be made with regard to the bill and G.Rs. available with the dealer - opposite party. A second appeal against the said order was filed before the Tribunal. The Tribunal by the order under revision has allowed the appeal and set aside the proceeding under section 21 of the Act. The following two questions of law have been framed in the revision : "1. Whether, on the facts and in the circumstances of the case, the Trade Tax Tribunal was legally justified to quash the order passed under section 21 of the U.P. Trade Tax Act ? 2. Whether, on the facts and in the circumstances of the case, the proceeding under section 21, Tribunal was legally justified to hold, that reassessment proceeding based on change of opinion as exemption was wrongly allowed ?" The contention of the learned standing counsel for the Department is that there is an error apparent on the face of record in the order of the Tribunal. The Tribunal at the most could have set aside the direction given by the first appellate authority and should have restored back the matter to the first appellate authority to decide the dispute on merits. Instead the Tribunal has straightway allowed the appeal filed by the dealer - opposite party. He further submits that on merits also the burden was upon the dealer - opposite party to establish that the purchases made by him were tax-paid purchases. The dealer - opposite party has failed to discharge that burden. The Tribunal was not justified in setting aside the reassessment order. Considered the aforesaid submission of the learned standing counsel and I find sufficient force therein. The subject-matter of the appeal before the Tribunal was as to whether on the facts of the present case the remand order passed by the first appellate authority for making further enquiry was necessary or not. The Tribunal without addressing to that issue has straightway allowed the appeal. The subject-matter of the appeal before the Tribunal was as to whether on the facts of the present case the remand order passed by the first appellate authority for making further enquiry was necessary or not. The Tribunal without addressing to that issue has straightway allowed the appeal. If the Tribunal was of the view that no further enquiry was required, the Tribunal should have restored back the matter to the first appellate authority to decide the appeal on merits. The Tribunal was also not justified to set aside the reassessment proceedings under section 21 of the Act having found that on enquiry it was revealed that no such sales were made by the selling dealer to the applicant. The initial burden which laid upon the Department to establish that these purchases were not tax-paid purchases, was discharged. It was for the dealer to establish that the purchases made by him were tax-paid purchases. The Tribunal was very much influenced from the fact that the dealer - opposite party has got purchase vouchers and its account books have been audited. But these facts by themselves coupled with the fact that such transactions have been denied by the selling dealers, do not absolve the dealer - opposite party. The facts remain that no reply to show-cause notice was filed, before the assessing officer by the dealer. The information which came in possession of the Department subsequent to the assessment order is required to be verified and investigated. The information was sufficient to negate the claim of the dealer - opposite party, prima facie at least. It is in the special knowledge of the dealer as to where from it made the purchases and he is required to establish it, as provided by section 12A of the Act. Section 12A of the Act provides that in any assessment proceeding, when any fact is specially within the knowledge of the assessee, the burden of proving that fact shall lie upon him. It further provides that in particular, the burden of proving the existence of circumstances bringing the case within any of the exceptions, exemption or relief mentioned in various sections of the Act shall lie upon the assessee and the assessing authority shall presume the absence of such circumstances. It further provides that in particular, the burden of proving the existence of circumstances bringing the case within any of the exceptions, exemption or relief mentioned in various sections of the Act shall lie upon the assessee and the assessing authority shall presume the absence of such circumstances. In this view of the matter, the burden of proof on the facts of the present case lies upon the assessee itself to establish that the purchases made by it were tax-paid purchases and the commodity being taxable at single point, no further tax should be levied. The dealer - opposite party obviously is claiming exemption on the ground that his purchases were tax-paid purchases and therefore he has to discharge the burden of proof by showing that the iron and steel purchased by it were tax-paid purchases. The first appellate authority by passing the order of remand, as a matter of fact, had afforded another opportunity of hearing to the dealer - opposite party to prove its contention by producing the relevant material. The Tribunal has placed reliance upon certain decisions of this court in Mohd. Ishaq v. Commissioner of Sales Tax [1982] UPTC 432, Punjab Tyres v. Commissioner of Sales Tax [1983] 52 STC 238; [1982] UPTC 408 and Commissioner of Sales Tax v. Mala Ram [1987] UPTC 471. In none of the aforesaid decisions, the attention of the court was drawn to the provisions of section 12A of the U.P. Trade Tax Act. In the cases of Mohd. Ishaq [1982] UPTC 432 and Punjab Tyres [1982] UPTC 408, the court took the view that a positive finding has to be recorded by the Department that the dealer had made sale of the commodity after importing it. In both these cases the commodity was taxable at the hands of the manufacturer or at the point of import. In absence of any such finding, the court took the view that burden did not lay on the assessee to establish that the commodity sold by him was not imported. The decisions laid therein are on the facts of those cases. The other aspect of the case is that section 12A was not brought to the notice of the court; for the same reason the decision given in the case of Commissioner of Trade Tax v. Malaram [1987] UPTC 471 is also not applicable to the facts of the present case. The other aspect of the case is that section 12A was not brought to the notice of the court; for the same reason the decision given in the case of Commissioner of Trade Tax v. Malaram [1987] UPTC 471 is also not applicable to the facts of the present case. The Tribunal was not justified in setting aside the order passed by the first appellate authority. In view of the above discussion, I find that the Tribunal was not justified to quash the order passed under section 21 of the U.P. Trade Tax Act. The order of the Tribunal is set aside and the order of the first appellate authority is restored back. In the result, the revision succeeds and is allowed. Both the questions of law as framed in the revision are answered in favour of the Department and against the dealer - opposite party. No order as to costs.