Olympic Petroproducts Ltd. vs Commissioner,Trade Tax

Sudhir Agarwal, J.—Heard Sri Kunwar Saxena, learned counsel for the revisionist and learned standing counsel for the opposite party. The question of law, which has been raised and pressed before this court in this revision is:

Whether sale of ''unusable polyester yarn'' by assessee-revisionist in this case was taxable as a waste product under item 32 of Notification No. ST-II-5785/X-10(1)-80-U.P. Act XV/48-Order-81 dated September 7, 1981, as amended by Notification No. ST-II-1225/XI-9(94)/91-U.P. Act 15-48-Order-92 dated March 31, 1992 or it is taxable under entry 55 of the notification dated September 7, 1981.

The two entries read as under:

Amendment vide Notification No. ST-II-1225/XI-9(94)/91-U.P. Act 15-48-Order-92 dated March 32, 1992:

(4) in entry at serial No. 32, in column 4 for the words and figure ''eight per cent'' the words and figure ''four per cent'' shall be substituted, and

The dispute relates to assessment year 1993-94. The assessing authority made assessment u/s 21 of the U.P. Trade Tax Act and the Central Sales Tax Act in which the sale of polyester fibre yarn was treated as "waste product" and the assessee has been taxed at higher rate of four per cent + one per cent instead of two per cent treating it to be a "waste product" under entry 32 instead of entry 55.

Sri Kunwar Saxena, learned counsel for the revisionist, submitted that in the proceedings u/s 21, onus to prove that higher tax liability lie upon the Revenue but in the present case. Revenue did not adduce any evidence to demonstrate that disputed goods were not "yam" but "waste product" and therefore, the Tribunal in taking a view otherwise than what was contended by the assessee had committed manifest error. He placed reliance upon a decision of this court in Budh Prakash & Company v. Commissioner of Sales Tax [2004] 25 NTN 1117.

So far as the question of burden of proof is concerned, initial burden lies upon the Revenue in the proceedings u/s 21 for which, as a proposition of law, there cannot be any disagreement but then one has to understand distinction between "burden to proof" and "onus".

Section 101 of Indian Evidence Act, 1872 (hereinafter referred to as "the Act, 1872") talks of burden of proof, and says:

Burden of proof.--Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist.

When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.

The burden of proving a fact rests on the party who substantially asserts the affirmative of the issue and not upon the party who denies it; for a negative is usually incapable of proof. The provision is based on the rule, i.e., incumbit probatio qui dicit, nan qui negat. In Joseph Constantine Steamship Line Ltd. v. Imperial Smelting Corporation Ltd. [1941] 2 All. ER 165 (HL), Lord Maugham said:

... It is an ancient rule founded on considerations of good sense, and it should not be departed from without strong reasons...

A person who asserts a particular fact has to prove the same. Until such burden is discharged, the other party is not required to be called upon to prove his case. Whoever desires a court to give judgment, dependent on the existence of facts which he asserts, must prove that those facts exist. The distinction between "burden of proof and "onus" is that the former lies upon the person and never shifts but the "onus" shifts. Shifting of onus is a continuous process in the evaluation of evidence. For example, in a suit for possession, based on title once the plaintiff is able to create a high degree of probability so as to shift the onus on the defendant, it is then for the defendant to discharge his onus and in absence of such discharge by defendant burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of plaintiffs title.

The above distinction between "burden of proof" and "onus" of proof has been explained in Addagada Raghavamma and Another Vs. Addagada Chenchamma and Another, followed in R.V.E. Venkatachala Gounder Vs. Arulmigu Viswesaraswami and V.P. Temple and Another,

Section 102 of the Act, 1872 says that the burden of proof in a suit would lie on a person who would fail if no evidence at all were given on either side. Here it is not degree of proof but the onus to lead evidence, i.e., obligation to begin to prove a fact. The burden of proof as such has not been defined in the Act but looking to the substance and the context and spirit it can be said that burden to establish case, loosely, can be said to be burden of proof.

In the present case, the case set up by the assessee-revisionist was that "polyester fibre yarn" in question was not capable of use for the purpose of manufacturing zippers and therefore, the assessee admitted that it was a discarded unserviceable item and was sold as waste product. That being so, the revisionist himself having admitted that goods in question was not treated to be a yarn at the time of sale but "waste product", the Revenue rightly held that it was taxable on higher rate.

In my view, despite the fact that initial burden lie upon Revenue but the onus shifted upon the assessee to show that item in question, though shown by him as "waste product" yet for the purpose of tax liability, it will be covered by different entry wherein lessor rate of tax is chargeable. In the present case once it was admitted case of the assessee that goods in question were sold as "waste product", the same has rightly been taxed under item 32.

The question, formulated above, is answered against the assessee and in favour of the Revenue. The revision is accordingly dismissed.