1. The question for decision in these cases is whether the Mysore Sales Tax Appellate Tribunal, Bangalore, has correctly interpreted the scope of section 5(4) of the Mysore Sales Tax Act, 1957, (to be hereinafter referred to as the 'Act').
2. S.T.R.P. No. 27 of 63 relates to the assessment of the petitioners to sales tax for the half year ended 31st March, 1958, and S.T.R.P. No. 28 of 63 relates to their assessment to sales tax for the year ended 31st March, 1960. The dispute between the parties is whether the transactions impugned in these proceedings are 'purchases' exigible to tax under section 5(4) of the 'Act'. In order that those transactions may be exigible to tax for the half year ended 31st March, 1958, they should be 'last purchases', and for the year ended 31st March, 1960, they should be 'first purchases'. The goods with which we are concerned in these cases are hides and skins, which are declared goods within the meaning of that expression found in section 14 of the Central Sales Tax Act, 1956. The contention of the assessees is that they did not purchase the goods in question but they dealt with those goods only as selling agents for residential principals as well as non-residential principals. The issue before the Tribunal was whether the petitioners were 'purchasers' of the goods in question. Dealing with that issue, this is what the Tribunal observed :
'In support of their contention certain transactions in the period (five selected at random) as entered in the day book and ledger duly translated into English and certified by the learned counsel for the appellant have been filed before us. It could be seen therefrom that the personal accounts of suppliers are credited with the respective sales proceeds and buyers' account or calf skin or goat skin or sheep skin (sale value of) account debited what is styled as 'price difference' also being credited. Quantity supplied is also mentioned in the day book narration. But there is no period-war account sales rendered to the supplier-principals : there are no agreements and not even any correspondence in this period establishing or confirming the nature of the transactions as those of selling agency business.
There is thus, in the circumstances, no conclusive evidence placed before us in support of the contention that in that period the impugned turnover in question did not constitute the last purchase in the State, even as contemplated by section 5(4) of the Act as it then stood. It is therefore difficult to accept the contentions of the applicant in respect of the period.'
3. From the foregoing it is seen that the Tribunal was of the opinion that once it is establish that the petitioners who are 'dealers' had dealt with the goods in question, they have to establish that the transactions in question are not eligible to tax. This is clearly a wrong view of the law. The law as we understand it is that it is for the Revenue of establish that any particular transaction is eligible to tax and not vice versa. In these cases, the Revenue should have established that the transactions in dispute are purchase transactions. On the side of the Revenue, no evidence whatever has been led to show that the transactions in question are purchase transactions. On the other hand, the petitioners have produced their accounts in support of their claim that they dealt with the goods in question as selling agents. The entries in the account books seem to support the claim of the petitioners. The Tribunal has not rejected those entries as unreliable. On the other hand, the Tribunal felt that the evidence produced by the petitioners is not conclusive in character. In other words, the Tribunal proceeded on the basis that it was for the petitioners to conclusively prove that the goods in question were not purchased by them. This view, in our judgment, is not warranted by law. We are of the opinion that it is for the Revenue to establish that the transactions in question fall within the scope of section 5(4). Our conclusion on this point finds support from the Full Bench decision of the Kerala High Court in Haji P. K. Moidoo Bros. v. State of Madras ( 10 S.T.C. 1). That case across under the Madras General Sales Tax Act. Under the provisions of that Act, only 'sales' and 'purchases' are taxed under certain circumstances. Their is no liability to pay sales tax in respect of other business transactions carried on by a dealer. In the above case, the High Court held that there can be no sale without an actual transfer of the property in the goods by the seller to the purchaser. On the facts of that case the Court was of the opinion that the Revenue had not satisfactorily established that there was an actual transfer. The Court further held that the burden was upon the Department to establish that there was a 'sale' (which term includes 'purchase'). Hence, it was held therein that there was no liability on the part of the petitioners to pay sales tax in respect of the impugned transactions. In this case, we are not concerned with the other points decided in that case.
4. The learned Government Pleaded, relying on the second proviso to section 5(7) of the 'Act', contended that it is for the petitioners to prove that the transactions in question are not eligible to tax. That proviso reads thus :
'Provided further that in the case of an assessment made under sub-section (2), (3) or (4), the burden of proving that any sale or purchase effected by a cleared by a dealer is not liable to tax shall lie on the dealer.'
5. The contention of the Government Pleader is not correct. Before the proviso in question can come into operation, it must first be shown that the transactions in dispute are either 'sales' or 'purchases'. In the instant case, it must be shown that they are 'purchases'. Only if that fact is established, then the burden shifts on to the petitioners the prove that the 'purchases' in question are exempt from taxation. The burden placed on the assessees by that proviso is only to prove that the transactions which are otherwise eligible to tax are exempt from taxation for any reason, e.g., to prove that a purchase transaction is not a 'last purchase' or a 'first purchase' as the case may be. There is no presumption that all transactions put though by a 'dealer' are eligible to tax and consequently it is for him to prove that are not liable to taxed.
6. For the reasons mentioned above, these petitions are allowed and the tax imposed on the petitioners to the extent dealt with above is set aside. In other words, the petitioners are not liable to pay any tax on the transactions claimed by them as having been put through as selling agents. The Assessing Authority will accordingly modify the orders of assessments. Revenue to pay the costs of the petitioners. Advocate's fee Rs. 100 (One set).
7. Petitions allowed.