Whether burden of proof is on assessee to prove that his case comes within the parameters of the exemption clause?

66. To sum up, we answer the reference holding as under:

66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.

66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue.

66.3. The ratio in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] is not correct and all the decisions which took similar view as in Sun Export case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564] stand overruled.

67. The instant civil appeal may now be placed before the appropriate Bench for considering the case on merits after obtaining orders from the Hon'ble Chief Justice of India.

Reportable

Supreme Court of India

Commnr. Of Customs (Import), ... vs M/S. Dilip Kumar And Company on 30 July, 2018

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Distinction between dissolution of firm and death of person in case of taxation

 Learned counsel for the revenue, however, strongly relied
upon M/s. Murarilal Mahabir Prasad and others v. Shri B.R.
Vad and others, (1975) 2 SCC 736, a case arising under the
Bombay Sales Tax Act, 1953. Since this judgment has been
relied upon as the sheet anchor of the revenue’s case, it is
important to deal with it in some detail.
23. The question that arose in the aforesaid case was
whether a dissolved firm could be re-assessed to sales tax in
respect of its pre-dissolution turnover. By a two to one (2:1),
decision, this Court held that the Bombay Act contained the
necessary provisions to re-assess such a dissolved firm in
respect of its pre-dissolution turnover. The majority judgment
referred to the definition of “dealer” in the Bombay Act of 1953
and referred to this Court’s judgment in State of Punjab v. M/s
Jullunder Vegetables Syndicate (supra). We find that the
majority judgment of this Court relied heavily on the fact that
dishonest persons may dissolve a firm in order to escape
liability to assessment of taxes legitimately due from them but
which have escaped assessment. In paragraph 19, the
majority held:
“It is plausible that a distinction ought to be made
between the death of an individual and the
dissolution of a firm. Human beings, as assessees,
are not generally known to court death to evade
taxes. Death, normally, is not volitional and it is
understandable that on the death of an individual,
his liability to be assessed to tax should come to an
end unless the statute provides to the contrary. With
firms it is different, because a firm which incurs
during its existence a liability to pay sales-tax may,
with a little ingenuity, evade its liability by the
voluntary act of dissolution. The dissolution of a firm
could therefore be viewed differently from the death
of an individual and the partners could be denied
the advantage of their own wrong. But we do not
want to strike this new path because the Jullundur
case (supra) and the two cases which follow it have
likened the dissolution of a firm to the death of an
individual. Let us therefore proceed to examine the
other provisions of the 1953 Act.”

It then went on to quote Section 15(1) of the Bombay Sales Tax
Act, 1953 and then arrived at this conclusion:
“22. Section 15(1) contains an important clause that
action thereunder can be taken by the Collector
after giving a notice to the assessee under Section
14(3) of the Act within the prescribed period. Once
such a notice is given, the Collector gets the
jurisdiction to assess or re-assess the amount of tax
due from the dealer and all the provisions of the Act
"shall apply accordingly as if the notice were a
notice served under" Section 14(3). Section
14(3) speaks of the power of the Collector to assess
the amount of tax due from the dealer after giving
notice to him, if the Collector is not satisfied that the
returns furnished are correct and complete. The
jurisdiction to assess or reassess which is conferred
 by section 15(1) is thus equated with the original
 jurisdiction to assess the dealer under section 14.
By this method, the continuity of the legal
personality of the assessee is maintained in order to
enable the assessment of turnover which has
escaped assessment. It is no answer to a notice
under section 15 that the partners having dissolved
the firm, the assessment cannot be reopened. It
puts a premium on one's credulity to accept that
having created a special jurisdiction to assess or
reassess an escaped turnover, the Legislature
permitted that salutary jurisdiction to be defeated by
the device of dissolution. The argument of the
appellants really comes to this: suppress the
turnover, evade the sales-tax, dissolve the firm and
earn your freedom from taxation.”

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5802 OF 2005
SHABINA ABRAHAM & ORS. … APPELLANTS
VERSUS
COLLECTOR OF CENTRAL EXCISE
& CUSTOMS ...RESPONDENT

R.F. Nariman, J.
Dated;July 29, 2015.

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Madhya Pradesh HC: Magistrate has no jurisdiction to release vehicle on supratnama which is seized for default of payment of motor vehicle tax

Jurisdiction cannot be assumed where none existed. No one then can say that it is there. Intention of statute is to secure payment of tax.

26. What thus, emerges can be summed up as under :-

(a) Taxation Authority or any officer authorised by state Government in this behalf can seize and detain a motor vehicle on "reason to believe" that there is fault or default in payment of amount of tax Under Section 16(3) of Adhiniyam. Even authorised officer, be it a Police Officer, has to operate under Adhiniyam and not Code.

Applicability of certain provisions of the Code for search or seizure is a matter of manner and procedure and does not render Section 451/457 of the Code operative in such cases.

(b) Application for release of the vehicle when seized and detained, lies to aforesaid authority and such authority is empowered to release on satisfaction that no tax is due in terms of Section 16(4) of the Adhiniyam. The "Object of Tax" is not liable to be frustrated.

(c) Aggrieved person can file an appeal Under Section 20 of the Adhiniyam on deposit of amount in question.

(d) Except Sections 451 and 457 of the Code, no other provision is shown to exist for the purpose. But Section 451 of the Code gets attracted only "when property is produced before any Criminal Court during any inquiry or trial" and is concerned with "proper custody of such property pending conclusion of the inquiry or trial". Section 457 of the Code comes into play when seizure is by a Police Officer who reports to a Magistrate under the Code. It empowers the Magistrate to make an order respecting disposal or delivery "to the person entitled to the possession thereof". On seizure Under Section 16(3), Section 451 is inapplicable till stage of inquiry or trial in a Criminal Court and Section 457 of the Code cannot be invoked unless seizure is by a police officer and is reported under the Code and some one is "entitled". Person in arrear and in error is not prima facie "entitled." These two Sections, thus, do not apply till requisite conditions are shown to be satisfied. At the infant stage, recourse to Criminal Court is impermissible. Hence, only Section 16(4) and Section 20 of Adhiniyam held to be efficacious are applicable. This power cannot be usurped by any Criminal Court.

(e) "Statutory Forums" have to be approached. Resort to Section 451 or 457 of the Code is thus, impermissible. The Criminal Court thus, does not possess jurisdiction to entertain prayer for interim release of the vehicle and grant relief under the Code. Section 19 or Rules do not indicate existence of jurisdiction of Criminal Court in case of action Under Section 16(3) of the Adhiniyam.

27. Despite Section 16(4) and 20 of Adhiniyam, the Non-applicant resorted to Forum under the Code and the Criminal Court held the prayer irrecusable and granted relief of release of the vehicle under umbrella of Brahmanand's case (supra). The non-applicant, thus, shaped the case under the Code on assumption that "jurisdiction was there" on the pattern assumed by the great British explorer, George Mallory. Once he was asked as to why did he want to climb Mount Everest? To that question he had replied "Because it is there". Now we resolve the conflict and conclude that "Criminal Court has no jurisdiction in the light of Section 16(4) and 20 of the Adhiniyam for interim release of motor vehicle seized and detained by the specified authority Under Section 16(3) on Supratnama and/or surety as was done in this case". SEIZURE IS FOR TAX.

Madhya Pradesh High Court

State Of M.P. vs Rakesh Kumar Gupta on 21 April, 1998

Equivalent citations: 1998 (2) MPLJ 249

Author: A Tiwari

Bench: R Shukla, A Tiwari, N Jain

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