1997 (9) TMI 487 - SC - VAT and Sales Tax

Whether or not the presumption under section 3-AAA can be rebutted? Held that - Appeal dismissed. The arrogation of the authority to reject the assessee s application for blank forms by the Sales Tax Officer on the ground that the concerned transactions entered into by the assessee were by way of export of leather was improper and must be quashed. After the blank forms are issued to the assessee and duly filled up and submitted along with such proof as the assessee may adduce it shall of course be open to the assessing authority to satisfy itself as to whether or not the presumption under section 3-AAA stands rebutted.

Summary

Issues: Application for blank forms to rebut presumption under section 3-AAA, Rejection of application by Sales Tax Officer, Writ petition in High Court challenging rejection, Interpretation of section 3-AAA and Rule 12A(5), Disagreement among High Court judges, Appeal to Supreme Court.

In this case, the main issue revolved around the rejection of an application for blank forms by the Sales Tax Officer to rebut the presumption under section 3-AAA of the U.P. Sales Tax Act, 1948. The assessee applied for the form to challenge the presumption but the application was not processed, leading to a writ petition in the High Court. The Sales Tax Officer rejected the application, claiming the transactions were for export of leather. The High Court judges initially disagreed on the matter, prompting the case to be referred to a third judge who sided with allowing the writ petition. This disagreement formed the basis of the appeal to the Supreme Court.

The Supreme Court analyzed section 3-AAA, which establishes a presumption regarding certain sales. It states that sales to registered dealers not for resale or to non-registered dealers are deemed sales to consumers unless proven otherwise to the assessing authority. The provision allows for the presumption to be rebutted by the dealer providing a declaration from the purchasing dealer in the prescribed manner. Additionally, Rule 12A(5) empowers the Sales Tax Officer to issue blank forms if the requisition is deemed genuine and reasonable.

The Court emphasized that the Sales Tax Officer's role is limited to verifying the genuineness of the requisition for blank forms and cannot pre-judge the rebuttal of the presumption under section 3-AAA. The assessing authority must evaluate the filled forms and additional proof submitted by the dealer to determine if the presumption stands rebutted. The Court held that rejecting the application based on the nature of transactions was improper and ordered the quashing of such rejection. The authority can only assess the rebuttal of the presumption after the forms are filled and submitted by the assessee.

Ultimately, the Supreme Court dismissed the appeal, highlighting that the Sales Tax Officer's rejection of the blank form application was unwarranted. The Court clarified the proper procedure for evaluating the presumption under section 3-AAA and emphasized the importance of allowing the assessing authority to consider the evidence provided by the dealer before making a determination.