Source: Allahabad High Court

Why in News?

Justice Piyush Agrawal observed that the Burden of Proof to prove a claim for a tax concession is on assesee in the original proceedings and department in reassessment proceedings.

• Allahabad High Court gave this observation in the case of M/S Amrit Steels v. Commissioner Commercial Tax.

What is the Background of M/S Amrit Steels v. Commissioner Commercial Tax Case?

• The revisionist made central sale to one M/s Yash Traders, Rajasthan and claimed concession rate.
• The said claim was stated to be covered by 23 invoices to the tune of Rs. 2,11,47,201/-.
• The Assessing Authority, at the time of framing the assessment order, sought a verification to which a 2 report was submitted that only one transaction having bill no. 45 for a sum of Rs. 2,75,094/. has been disclosed by the purchasing dealer.
• On getting the said information, the Assessing Authority, while passing the assessment order accepted the one sale made to the said party & granted concession but imposed higher rate of tax on other 22 sales.
• Aggrieved against the said order, the applicant preferred appeals up to the Tribunal, which has been dismissed.
• Hence, a revision was preferred before the HC.

What were the Court’s Observations?

• The Allahabad HC stated that “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”.
• The court further said that “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”.

What is Concession on Tax?

• About:
  • A tax concession typically refers to a reduction, allowance, or exemption granted by a government in the amount of taxes that an individual or business entity is required to pay.
  • These concessions are often implemented to achieve specific policy objectives, stimulate economic activity, or provide relief to certain groups or industries.
• Burden of Proof (BOP):
  • The burden of proving a claim for a tax concession typically rests with the taxpayer.
  • When a taxpayer asserts a claim for a tax benefit or concession, it is their responsibility to provide sufficient evidence and documentation to support that claim.
  • This principle is in line with the general legal principle that the person making a claim has the burden of proving it.
• Shifting of BOP:
  • The burden of proving that the claim for a tax concession is wrong shifts upon the revenue department in reassessment proceedings only when the assesee or taxpayer proves his claim in original proceedings.

What are the Landmark Cases Involved in the Case?

• M/s I.T.C. Ltd. v. Commissioner of Central Excise, New Delhi and another (2004):
  • The Supreme 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.”
• Star Paper Mills Limited v. Commissioner of Sales Tax (1991):
  • The Allahabad HC observed a matter where the onus of proving claim for concession can be shifted to the revenue department.