Burden To Prove Concession Rightly Claimed Upon Assesee In Original Proceedings, Burden Shifts Upon Department In Reassessment Proceedings: Allahabad High Court

The Allahabad High Court has recently held that the burden to prove that concession has been rightly claimed is upon the assesee in the original proceedings. However, the Court held that in reassessment proceedings, burden shifts upon the Department to prove that assesee had wrongly claimed concession.

Distinguishing the decision of Allahabad High Court in Star Paper Mills Limited Vs. Commissioner of Sales Tax relied on by the Assesee-Revisionist, Justice Piyush Agrawal held

“When the reassessment proceedings are being initiated, the burden is shifted to the Revenue, but in the original proceeding, the onus is upon the dealer to discharge beyond doubt the claim so made.”

Assesee-Revisionist made central sale to a dealer in Rajasthan and claimed concession rate vide Form – C which was covered by 23 amounting to Rs. 2,11,47,201/-. At the stage of framing the assessment order, Assessing Authority sought verification sale tax authorities at Rajasthan. A report was submitted stating that only one transaction of Rs. 2,75,094/- had been disclosed by the purchasing dealer. Consequently, in the assessment order concession on only one sale was accepted, the rest were charged at a higher rate. Tribunal rejected the appeal by the assesee.

Counsel for Assesee-Revisionist contended he has no control over the purchasing dealer as to whether he has shown its purchases in its books of account or as to how the goods are being used subsequently. It was stated that once Form-C had been issued and accepted by the Rajasthan Authorities, as it had been stamped by them, the validity cannot be doubted.

Counsel for Department argued that the assesee had failed to show that the sales were covered by Form-C. It was contended that in regular proceedings the onus is on the assesee to prove that the concession of tax rate has been rightly claimed. Here, the assesee had failed to discharge the burden.

The Court held that in original proceedings, once the Authority had informed the assesee that only one purchase could be verified, the onus was on the assesee to prove that he had rightly claimed concession.

“The onus is upon the dealer to prove its case beyond doubt when the dealer is claiming concession rate of tax. The said onus has not been discharged by the revisionist.”

The Court placed reliance on M/s I.T.C. Ltd. v. Commissioner of Central Excise, New Delhi and another, wherein the Apex Court held that “the Assessing Authority is competent to scrutinize the certificate to find out the contents to be genuine and he is competent to inquire about the contents of the certificate to satisfy himself that the goods purchased are verifiable and once the truth of declaration on verification was not found to be correct, the benefit cannot be granted.”

Accordingly, the Court dismissed the revision.

Case Title: M/S Amrit Steels v. Commissioner Commercial Tax [SALES/TRADE TAX REVISION No. - 377 of 2022]

Case Citation: 2023 LiveLaw (AB) 371

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