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TMI Blog2024 (11) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1982-83, the accounts were called for and verified by the Assessing Officer. It was found that the dealer has effected sales of Iron and Steel for a sum of Rs.78,10,319.64 as per their accounts for the assessment year 1982-83. Since the dealer claimed exemption on the entire sales as second sales, the relevant records were verified. 3. The assessee had claimed purchase from 5 entities and on verification, it was found that there was no such dealer in existence and the documents produced were fictitious and bogus one. Since the assessee was not able to prove that the purchases were second sales, the Assessing Officer assessed the dealer under the Act for the assessment year 1982-83 by rejecting the claim of second sales in respect of the purchases made from those 5 firms. 4. Since the return was not filed, penalty was also levied under Section 12(5) of the Act. The assessee preferred an appeal before the Appellate Assistant Commissioner (CT)-I in A.P.No.424/87 and by order dated 02.08.1989, the appeal came to be dismissed confirming the assessment by observing that the exemption claimed on the purchases which are made from spurious dealers cannot be accepted. 5. Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the sale bills as TNGST.96184/76-77 related to one Tvl.Oriental Central Industries and further enquiry revealed that no such dealers had effected business at any point of time in the above place. 12. In respect of the purchases made from one Tvl.Yasmeen Steel Traders for a sum of Rs.59,12,211.58 with TNGST.661389/80 also revealed that there was no such dealer in that address. Further, in respect of the other purchases made from Tvl.Mahalakshmi Engineering Works with TNGST 23146, Tvl.Alamelu Industries and Tvl.General Steel Suppliers, all have been verified and found that there are no such dealers and the documents are all in a fictitious name and the TNGST noted in the bills are all bogus ones in the name of non-existing bogus dealers. 13. As there was no proof that the purchases made from those parties suffered tax at an earlier stage, the Assessing Officer passed an order of assessment dated 17.08.1987 by rejecting the claim of second sale and brought all those purchases to tax. The total turnover for the assessment year 1982-83 was determined to Rs.78,10,319.64 and the same was assessed for tax at 4% single point to the tune of Rs.1,40,464/-. 14. In the appeal preferred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard, we had an occasion to deal with a similar issue in W.P.No.34665 of 2007 dated 07.08.2024 [M/s.MKR Cashew Exports Vs. The Secretary, Tamilnadu Sales Tax Appellate Tribunal (MB)] where the dealer was not able to prove the factum of first sale to claim the exemption on the ground of second sale, as the burden of proof was on the assessee to prove the transaction. The relevant portion of the said order is extracted hereunder:- "11. Admittedly, the petitioner has not produced any material, barring invoices, to establish purchases from the alleged sellers. No attempt was made at any stage of the proceedings to produce the three entities who are stated to have effected sales to the petitioner. Moreover, the enquiry conducted by the respondents has established that the dealer registration numbers furnished by the petitioner belonged to other registered dealers and not the entities named as sellers by the petitioner. 12. In the aforesaid circumstances, the provisions of Section 10 of the Act stand attracted. Section 10(1) of the Act reads thus: Section 10. Burden of proof: - (1) For the purpose of assessment of tax under this Act the burden of proving that any transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The appeal was allowed in the following terms: "3. Though the order of the Tribunal is one upholding the remit order passed by the Appellate Assistant Commissioner, the learned counsel for the petitioners contends that the direction of the Tribunal that the petitioners are to prove that the twelve dealers from whom they purchased the goods were real persons and that they had in fact paid the tax on the iron and steel is not correct and that it is not the duty of the petitioners to prove that their sellers have in fact paid the tax on their sales. The learned counsel appears to be right in his submission that the petitioners who claimed exemption from tax on the ground that their sales are second sales are bound to show that there has been an anterior taxable sale and that they need not prove that tax had in fact been paid on those anterior sales. To claim the benefit of tax on the ground that their sales are second sales, the petitioners need not show that their sellers have in fact paid tax and it is enough for them to show that the earlier sales are taxable sales and that the tax is really payable by their sellers. Therefore, the direction given by the Tribunal that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 975] 35 S.T.C. 50. It was held therein that if an assessee claims exemption from tax on the ground that his sales are second sales, he is bound to show that there was an earlier taxable sale though it was not necessary for the assessee to prove that the earlier sale had actually suffered tax. This was also the view expressed in Imperium Traders v. State of Madras [1975] 36 S.T.C. 6. The learned counsel relied on an unreported judgment in T.C.Nos.295 and 296 of 1964 dated 10th July, 1967 Mehaboob and Company v. Government of Madras, in support of his contention that it is for the department to show that the sale effected by him is a taxable sale and not a second sale. We are unable to agree that that decision in any way helps the learned counsel. The ratio of the judgment, in our opinion, is that in order to make a transaction liable, it must be proved to be a sale and if once it is proved to be a sale, it is for the assessee to prove that that sale is exempt because every transaction of sale is liable to tax under Section 3(1) of the Tamil Nadu General Sales Tax Act. We are, therefore, of the opinion that the burden of proving that there was an earlier taxable sale was on the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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