Holding

Sales tax is levied only on the sale of goods; professional services do not constitute a sale, so the commission is not taxable under the Kerala General Sales Tax Act, 1963.

Summary

Haleema Zubair, proprietor of two businesses – Tropical Traders (a dealer in ceramic tiles) and Poseidon Food Company (which rendered inspection and certification services to exporters) – was assessed under the Kerala General Sales Tax Act, 1963. The Assessing Authority added a commission of Rs 45,80,168 received by Poseidon Food Company to the turnover of Tropical Traders and levied sales tax on it. The First Appellate Authority and the Sales Tax Tribunal held that the commission was not taxable, but the Tribunal later reversed, stating the assessee failed to discharge the burden of proof under Section 12. The High Court upheld the Tribunal’s view. On appeal, the Supreme Court held that sales tax can be imposed only on the sale of goods; professional services are not sales and therefore the commission is not liable to sales tax. The burden of proof under Section 12 was not discharged, and the order was set aside, with the matter remitted to the Assessing Authority.

Issues considered

The nature of the commission received for professional services – whether it constitutes a "sale" under the Kerala General Sales Tax Act, 1963.
Whether the burden of proof under Section 12 of the Act lies on the assessee and whether it was discharged.
Whether the appellant qualifies as a "dealer" within the meaning of Section 2(viii) of the Act for the professional services.
The applicability of sales tax versus service tax on the commission income.

Legislation cited

Kerala General Sales Tax Act, 1963s. 12, s. 2(viii)

Subjects

sales taxprofessional servicesburden of proofdealer definitionKerala General Sales Tax ActSection 12commission incomeassessmentservice taxincome tax

Judgment

[2008] 15 S.C.R. 352

A HALEEMA ZUBAIR, TROPICAL TRADERS ~-
v.
STATE OF KERALA
(Civil Appeal No. 6707 of 2008)

B NOVEMBER ·19, 2008

[S.B. SINHA AND. CYRIAC JOSEPH, JJ.)
y

. it
Kerela General Sales Tax Act, 1963 - ss. 2(viii) and 12
- Levy of sales tax - Burden of proof - Assessee proprietor
c .of two concf!]rn - One concern dealer of certain goods and
other rendering professional services - Assessment order -
Professional income by second concern added to the sales
turnover from the bus.iness of first concern, for levy of sales
tax - Upheld by tribunal and High Court - Sustainability of
D - Held: Not sustainable - Sa/es tax is leviable on sale of
goods - Profe~sional service rendered does not constitute
sale of goods - Assessee produced income tax returns 1
showing payment of income tax on professional income as
also other documents and Assessing officer and High Court
E noticed the same - Case of assessee that it discharged the '~

burden of proof by producing documents - High Court erred
in considering the same - Hence, matter remitted to the
Assessing Authority.

F Appellant-assessee was proprietress of two
concerns. The concern TP Traders is a dealer in ceramic i
tiles and concern Mis. PF Company renders professional
services to various exporters of inspection and
certification of quality of items sought to be exported. TP
Traders disclosed the total turnover of business for
G payment of sales tax. The Assessing Authority included
the receipt of commission by Mis. PF Company in the
I·
taxable turnover for purpose of payment of sales tax and
passed assessment order. The receipt of commission

H
352
"
HALEEMA ZUBAIR, TROPICAL TRADERS v. STATE OF 353
KERALA

--·I was not supported and proved by documentary A
evidence. Appellant challenged the order on the ground
tHat the services so rendered ·was not a 'sale'. It produced
certain documents. First Appellate Authority ·held that the
receipt of commission was not liable 'to tax and excluded
the· sa'me. In appeal, the tribunal held that. the assessee B
was 'unable to discharge.the burden of proof in terms of
s. 12 C>fthe Kerela General Sales Tax Act, 1963, thus the
First Appellate Authority was r1ot justified in deleting the
receipt of commission from the turnover.· Appellant filed
revision petition which was dismissed. Review c
application was also dismissed. Hence the present
appeal.
Allowing the appeal, the Court
HELD: 1.1. The Kerela General Sales Tax Act, 1963 o
is a taxing statute. The jurisdicUon of an assessing
authority, therefore, is confined to assess tax on taxable
turnover. Its primary duty is to ascertain as to whether the
figures furnished by the assessee are correct or not.
[Para 12) [359-D] E
1.2. Assessment of sales tax must be on sale of
goods. There is no bar in law for the same assessee to
carry out different businesses. The business carried out
by her of ceramic tiles involving transactions o·f sales 'and
purchase has no connection with the professionai F
services rendered by her to the exporters. [Para 13] [359-
E] .

1.3. The sine qua non or the condition precedent for
passing of an order of assessment is transaction of sale. G
Professional service rendered does not constitute sale.
Such a professional service rendered by a person
attracts service tax, which is a different nature of tax.
[Para 14) [359-F]
Bharat Sanchar Nigam Ltd. and Anr. v. Union of India H
354 SUPREME COURT REPORTS [2008] 16 S.C.R.

A and Ors. 2006 (3) SCC 1, referred to. +---
1.4. Section 12 of the Act places t~e burden on the
assessee. The said provision would-be attracted subject
to the condition that first; a transaction of sale has·_ taken
place; secondly that one ot the parties thereto is a dealer.
B A provision relating to. "reverse burden",· must be
construed having·regard to the nature. of the statute; as .,
the general law is that the burden of proof would be on
the State. [Paras 16 and 17] [360-F; 361-B] ·

c Cooperative Company Ltd. v. Commissioner of Trade
Tax, U.P. 2007 (4) SCC 480, referred to.

1.5. The business activities relating to transaction of
Mis. PF Company unless otherwise proved cannot bring
the appellant within the purview of definition of 'dealer'.
D If she was not a dealer, the professional fees earned by
her would not be exigible to payment of sales tax; only
because the appellant happens to be the proprietress of -\
Mis. TP Traders also. [Paras 19 and 20] [363-E, F]

E 1.6. Both the assessing officer as also the High Court
had noticed not only the payment of income-tax during
the relevant assessment years but also the certificates
issued by Marine Products Export Development
Authority and other documents. The High Court did not
F take into consideration the contention of the appellant. ,.,-
that .by prod·uction of such· documents the burden of
proof, if any, has been discharged by her. Furthermore·
for attracting Section 12 of the Act the foundational facts
'
must be established ..High Court committed· a serious.
G. error in so far as it failed to draw a distinction between
the assessment under income tax and assessment ·under
sales 'tax. Whereas i'ncome tax is levied OIJ income under
.,. #> r" 1': .• • • ""' ' ' •• • ~ ' I-
the Income· Ta>c' Act irrespective· of the sources from·
which such an income had been derived, sales tax is
levied on.ly on the quantum of sales and,. t~erefore,
H
HALEEMA ZUBAIR, TROPICAL TRADERS v. STATE OF 355
KERALA

element of transaction of sale is pre-requisite for levy of A
sales tax. Thus, the impugned judgment cannot be
sustained and is set aside. The matter is remitted to the
assessing authority to consider the matter afresh on the
basis of the materials placed by the appellant. [Paras 21,
22, 24 and 25] [363-G-H; 364-A-C; 365-C-D] B

Girdhari Lal Nannelal v. The Sales Tax Commissioner;
M.P. 1996 (3) SCC 701, referred to.
Case Law Reference:
2006 (3) sec 1 Referred to. Para 14
c
2001 (4) sec 480 Referred to. Para 16
1996 (3) sec 101 Referred to. Para 23
CIVIL APPELLATE JURISDICTION : Civil Appeal No. D
6707 of 2008.

From the final Judgment and Order dated 4.8.2006 of the
. High Court of Kerala at Ernakulam in ST Revision No. 74 of
2004 & RP No. 274 of 2007. E

Puneet Bali, Hittan Nehra, Vibhav Jain and S.S. Jauhar for
the Appellant.

P. V. Dinesh for the Respondent.
F
i The Judgment of the Court was delivered by

S.8. SINHA, J. 1. Leave granted.

2. Appellant, Haleema Zubair, is an assessee under the
Kerala General Sales Tax Act, 1963 (for short 'the Act'). She G
is said to be the proprietress of two concerns, - one known as
Mis. Tropical Traders and another .Mis. Poseidon Food
Company.

3. The said Topical Traders is a dealer in ceramic tiles. H
356 SUPREME COURT REPORTS [2008] 16 S. C.R.
j
j

A The business of Mis. Poseidon Food Company was to render ~--
services to various exporters as rega·rds inspection and
certification of quality of the items sought to be exported. The
total turnover for ·the purpose of payment of sa·1es tax was
disclosed ·on the basis of the business carried out in the name
B of Mis. Tropical Traders. Whereas the taxable turnover was
shown ~s 28,20,474.97, an addition of Rs.45,80, 168.09 thereto
was niade oy the Assessing Authority assessing a_ sum of
Rs.3,58,87,960.97 by way of total turnover. The order of
assessment proceeded on the basis that receipt shown as
c commission amounting to Rs.45,80, 168.09 from M/s. Poseidon
Food Company is not supported and proved by any
-
documentary evidence. Appellant contended that the services
so rendered is not a 'sale' and thus, the said order of (
•
assessment is wholly illegal arid without jurisdiction.
-o 4. An appeal was preferred thereagainst. Before the I
appellate authority the appellant produced income-tax returns,
orders of assessments passed by the income-tax officer, orders
1
placed by the exporters and the certificates granted by Marine
Products Export Development Authority (MPEDA), Cochin.
E
5. By reason of an order dated 24th October, 2000 the
first appellate authority upon noticing that the assessee had ~
~
produced copies of the certificates issued by the MPEDA, t
Cochin and copies of letters issued by various parties
requesting the appellant to inspect the goods to be exported,
F ,..,
h~ld that the professional services rendered to the exporters
"\a
involving skill and knowledge did not constitute any 'transfer of
property'. It was held that the levy of tax· on the receipt of
r-
commission for the sum of Rs.45,80, 168.09 was not in order.
The appellate authority for the purpose of assessment of tax ,I
G r
reduced the additional income which was added by the taxing .
I

authority in the taxable turnover from 5 % to 2% %.
i-
6. Aggrieved by and dissatisfied therewith both the
parties preferred appeals before the Sales Tax Appellate
H Tribunal in terms of Section 12 of the Act.
HALEEMA ZUBAIR, TROPICAL TRADERS v. STATE OF 357
KERALA [S.B. SINHA, J.]
_.-.;,
7. By ah order dated 20th February, 2003, the Tribunal A
held as under :-

"We are afraid that the first appellate authority has not
correctly understood the legal position involved. The
observation of the first appellate authority that the sale for B
valuable consideration alone is exigible to tax does not
'1 appear to be correct. As per Section 5(1 )(iii) of the KGST
Act the consideration received in the case of transfer right
to use any goods for any purpose is exigible to tax. We
also notice that by a strange reasoning the first appellate
authority shifted the burden of proof regarding the taxability
c
of the disputed receipt to the assessing authority, contrary
to the provisions of Section 12 of the KGST Act, as per
which the burden of proving that any transaction of a dealer
is not liable to tax shall lie on the dealer. We do not think
that the assessee was able to discharge this burden of D
proof as enjoined under Section 12 of the KGST Act. From
-t the available materials on record the first appellate authority
was therefore, not justified in deleting the receipt of
Rs.45,80, 168/- from the turnover of the assessee. It follows
that the order of the assessing authority in this regard as E
has also to be restored thereby allowing the State appeal
to that extent."

8. Revision petition filed thereagainst by the appellant has
been dismissed by the High Court by its order dated 4th F
' -..,>
August, 2006, stating :-
( '
"Even though Section does not provide a presumption that
such unexplained amount represents sales turn over, we
_j
have no doubt in our mind that the Assessing Officer is free
to consider what exactly is the nature of receipt. If it is a G
~ net credit in the form of an income, it may even be possible
...
for the officer to take it as income gross up the turn over
(sic) as representing unaccounted sales and assess the
same. In this case, the officer has taken the amount as
-I unaccounted sales, which is probably the minimum H
358 SUPREME COURT REPORTS [2008] 16 S.C.R. r'
A damage that could be caused to the petitioner by virtue of
Section _1.2 of the Act. lri. other words·,-cwe ·uphold this
addition as a necessary consequence of the petitioner's
failure t6 explain the re'ceipt.in this acco.unt.''1 ' ·~: . '
~ ·_. ..-- • ·•. """ , r·1r-~r ~· ·1 ~-~~··-: . I t' t ..i*

B. 9.. A. review application filed. thereagainst· has· also been
dis.mi.ssed_,byian order.. d.ated 221)d March, 2007'.: : ·
' - '• • ', '..... • ' ~· ' ., ' ~ \ " .iot. •

·· 10. 'Mr. B~ll, learned counsel appearing on behalf of the
appellant urged·: ·, ·~ · · ~· · " f', • ' '· • : t. • ·' ·

c . (i) The learned Tribunal· as also the High Court
committed a serious error in so far as they failed to '•
take into consideration that the appellant having
f ' ,1- f.:'" · < ., I ": .. {""" • f I ' I ' !, 1
·~ '-; t • ."\ ~~ ~ .
r
produced documents to ·show that.two sister
con'cerns of the appellant had'been carrying o'Ut two ,,
I

o.· different bu.si~esses, the income derived by one
(
c9ul<;ll1·q~..ha:-:~ b~~I1c~dd,~d1-t9Jh~eA~le~. tur.noy:er,
~l!~g~gh~,h~·?.us,i~~~~ of,~ti1~i9tn,yr;~~foes. not ?ccasion r
any sale. · · -}.
1 .a:\••rlt"sti-:-t'~- it~P' tifpri~ ·~ !1.-'7: -tri ,n~t.~~· tw· 2:'v
·.(ii) .. Although.burden . of,proof1in terms.ofSection"'.12,of
E fh.e)\'7;t is.on
.the as~essee bLlth.aving:reg_a,rd io .the l)iiii
,. a.uthentic documents p~oduced by.the ~ppellant, the
.same
must be .held to have' been discharged.
I 1; r'. !i - \,,_. .·c-·1 ;r .,, ~r. t.r1.,....t 'J. Qj'\lt :.~·, ,,r·~~
l )

(iii) fhe orders oftheJearned Tribunal,as well- as the )
t , ·-' · ... , I· •• • ,
'
F. .. - . . r• • Hig~ Col;l~.ar~.mC!n,ifestly erroneous in s.o far as t~ey
failed
. . to; take.
~ . into consideration - the :distinction
·. -. . _, . . ' Q-
between an order of assessment under the Income
Tax Act and the one.under the Sales Tax Act.
•i'
·''
G . . 1-1nfy,1.r:. pinesh, !e~rned cour:isel appea,ring on;behalf of.the r
. ·respondent,. however, would draw.our.attention to the averments I
· made . jn.ttie review.application.which is to .t~e following effect:
"' ' - . . •f • ..- • ~ . . . : . ,., , ' : . •
11
9: lh this connection, the petitioner is also producing a list
bf' pers6h~/export~rs/imp,orters .'troni whom commission
H .~as r~c~iveq du!lng the perigd from ~1.4..1988 to 31.. 3.1988
HALEEMA ZUBAIR, TROPICAL TRADERS v. STATE OF 359
KERALA [S.B. SINHA, J.]

aggregating to Rs.45,80, 168.09. The above document A
~-'• , ..
conclusively supported the petitioner's case that the sum
of Rs.45,80, 168.09 is not liable to be assessed to Sales
Tax. The petitioner was unable to bring the above
documents and evidence before this Hon'ble Court at the
time of hearing of the Sales Tax Revision due to reasons 8
~ beyond control. The dismissal of Sales Tax Revision would
result in great hardship and prejudice and unbearable
....,
financial burden for the petitioner."

to submit that the said documents do not appear to have been
filed before the asse~sing authority and, thus, admittedly the
c
appellant could not discharge the burden of proof cast upon her
in terms of Section 12 of the Act.

12. The Act indisputably is a taxing statute. The jurisdiction
of an assessing authority, therefore, is confined to assess tax D
on taxable turnover. Its primary duty is to ascertain as to whether
the figures furnished by'the assessee are correct or not.

13. Assessment of sales tax must be on sale of goods.
There is no bar in law for the same assessee to carry out
E
different businesses. If the contention of the appellant is correct,
the business carried out by her of ceramic tiles involving
transactions of sales and purchase has no connection with the
professional services rendered by her to the exporters.

14. The sine qua non or the condition precedent for F
>-. --...> passing of an order of assessment is transaction of sale.
Professional service rendered does not constitute sale. Such
a professional service rendered by a person attracts service
tax, which is a different nature of tax, as has been held in Bharat
Sancher Nigam Ltd. and another v. Union of India and others, G
[ (2006) 3 sec 1 J, stati.ng :-
~
..) "84. As we have said Article 366(29-A) has no doubt
served to extend the meaning of the word "sale" to the
.
extent stated but no further. We cannot presume that the
H
360 SUPREME COURT REPORTS [2008] 16 S.C.R.

A constitutional amendment was loosely drawn and must
· proceed on the basis that the param~ters of "sale" were
<;:arefully defined. But having said that, it is sufficient for the
pLJrposes of this {udg-ment to find, as we 'do, that a
telephone service is nothing but a service. There is no
B sales element apart from the obvious one relating to the
handset, if any. That and any other acce.ssory supplied by -I-
the service provider in our opinion remain to be taxed r' \

under the State sales tax laws. We have given the reasons
earlier why we have reached this conclusion.". '
i
C 15. It is· true that in terms of Section 12 of the. Act th~
burden is on the assessee. The said provision reads thus :-

"12. Burden of proof. - (1) The burden of proving that any
transaction of dealer is not liable to tax under this Act shall
D lie on such dealer.
(2) Th~ burden of proving that the dealer has not received
~:,\>t;fairJmarket-:price on any transaction shall lie on such
--., r,"~, ·tdeciler, .:::i:->a.:~~'kcl. s1 i.:.! . .
, :"i ;(1;; ?i tni)·.;iqof.: 0n: !o r~c·1J;1:...• 1:'00 ~ir·t .. '-
E .- ,; :,(3).Tbe.burden. of provingJhe genuinenes.s o.f the transport
~· :;··.o'f oocis
11
Js'in°'ffi.e 'aobu'roent~·-.· re~~Hb.ie.a Jrf~ection 2.e.
0

'ifL 1l1•1 V~••Jl,'~•c;fi11·.:.ogli'. r.1:>._: ~··-it-ll~·'l''.! B'!tO ;::o<:-11•·;:'.' .' C"\..':J_l.,<I•~.'.
shall .he on such dealer.. . .
Gl::iJJU._j.A~ J l l . 1:: ':::;>I•'(• 'r.~·s:)nt-. i?':::\.J1•:':82 lb 1.J1~~::ffJ1'~
. .• ,
r
I..--
.
~
~
>

~·
'

G "16. In absence of any stipulatibH~made:in--tR€c'bntra~Foi
t
~

.saJ~ fp[ th~rp,yrp_p~e. qf.l~~Y- ~f115c~Je~}~.~ ~v?tr~rv~!~~· the -'}_
"-
.RevenueAuthor.rt1e$ .;..r
-·. ~~!• ~::.
must arrive
V'~i\.'\J i :.jf
;:J
at a fmd11:1g_asJowhether
}.\!"
•, ,·' JJ. ;i1 ; 1 ·.1~_,.1· :.~ 1i;1.~ 1 ! •'")\/ ~•-i,~

· :,fH~f~:-.~.~~.~~~n, .aJly ~rtiP 11,E?~,;9R~S!''?i?~Pt!r':3,~§f~fo.~W~en
of proof wherefor would be on the Revenue: Cons1derat1on
H
HALEEMA ZUBAIR, TROPICAL TRADERS v. STATE OF 361
KERALA [S.S. SINHA, J.] · ,·}

of (sic - for) a part of goods may be held to be a condition A
precedent for constituting a sale, but therefore each case
must be judged on its own facts."

17. Section 12 of the Act, however, places the burden on
the assessee. The said provision would be attracted subject 8
to the condition that first, a transaction of sale has taken place;
secondly that one of the parties thereto is a dealer.

18. A dealer has been defined in Section 2.(viii) to mean-

"(viii) "dealer" means any person who tarries on the c
business of buying, selling, supplying or distributing goods,
executing works contract, transferring the'right to use any
goods or supplying by way of or as part of ~my service, any
goods directly or otherwise, whether' for cash or for
deferred payment, or for commission remuneration or other
1
o
valuable consideration and includes: •

(a) xxx xxx xxx
' ~,' ).

(b) a casual trader;
E
(c) a commission agent, a broker or a delcredere agent
or an auctioneer or any other mercantile agent, by whatever
name called, who carried on the business of buying, selling,
supplying or distributing goods [executing works contract,
transferring right to use any goods :~r supf>Jyjng by way of F
or as part of any service, any gq<jds]. ?r:i~ behalf of any
principal; .., :.. '" ' ' 4
·-

-. ·. ' ri , 'r \'.• r · .
(d) a non-resident dealer or an agent of 'a ·non-resident
1
dealer, or a local branch of- a ·firm or.c·ompany of
association of body of persons ;iv~e~~.~r i~~9,rpo~ated or not G
situated outside the State; , • ' ;- ' · ...
L~ (--.., ·1 s ,- '1 Ir ..; I'~ I \' ·: ~~ ~ ~ '

(e) a person who, whether-in the course of business or not,
sells; , •:, ·. j·
',.
H
''
362 SUPREME COURT REPORTS [2008] 16 S.C.R.

A :,~:~ . -~~ (i), -~~9~.~_Pt~9ucec(:bY_ hif11 by rp_anufa~~u_re,
. ;• , agriculture,
• _...J . ._ _..
' •.; ...
horticulture
I_...,.-...~;_,......;-;_; ..,\.... 1.._.
l
or otherwise;
...,·,'.~....
or ... · "''°"! • <N 'f<tl •

1
""'i.., <.;; :(ii}'ttees which'grov/sporitaneously·and which are
• r"' agreed to be sev~red before sale or un_der the
, .

B
~·- . - contracf sale;. '',-
... .__ ._.
', ... . . " ..
I
of -}~ ~ ~ :'.," -;' ' _ j t • -

,(f) a. perspn who whether in the ·course of business or not:
~
1
.... i • 4 "" v ~, ..,, ,:, - o." ... I

1
,. ' • ', JI '(f) 'transfers any goods, including c.ontrolled goods
whether in pur~?nce of a contrac:;t or not, for cash-
c or -·
deferred pay'ment or other' valuable
'.!.
consideration;
\.Ii. ' '\, -

(2) transfers property in goods (whether as goods
l or in some other form) involved in. the execution of
1a works contract· :·, ' '' ' ' ' I.
D
(3) delivers .any goods. on hire-purchase or any
system of payment by instalments; ~

(4) transfers the right to use any goods for any
E purpose (whether or not for a specified period) for
.cash;. deferred .payment. or other valuat:>le
consideration; . . ..

(5) supplies, by way.of or as part of any service or
in any other manner whatsoever, goods, being.food
F . or ~ny:other articles.for human consumption or any
. drink "(whether or, not intoxicating), where .such
supply or service is.for cash, deferred payment or
other valuable consideration);

G Explanation.-(1) A society (including a cooperative
society, club or firm or an association or body of persons,
whether incorporated or not) which whether or not in the
course of business, buys, sells, supplies or distributes
goods from to its members for cash or·fOr,deferred or
H payment, or for commission, retriuneration or other
HALEEMA ZUBAIR, TROPICAL TRADERS v. STATE OF 363
KERALA [S.B. SINHA, J.]
~ '-
valuable consideration, shall be deemed to be a dealer for A
the.purposes of this Act;

Explanation.-(2} The Central Government or a State
Government,. which, whether or not in the course of
business, buy, sell, supply or distribute goods, directly or B
...... otherwise, for cash or for deferred payment, or for
1 commission, remuneration or other valuable consideration,
shall be deemed to be a dealer for the purposes of this
Act.

(g) a bank or a financing institution which, whether c
in the course of its business or not, sells any gold
or other valuable article pledged with it to secure
any loan, for the realization of such loan amount;

Explanation 1.-Bank for the purposes of this clause D
includes a Nationalised Bank or a Scheduled Bank or a

• Co-operative Bank;

Explanation II. - Financing Institution means a financing
institution other than a bank."
E
19. The business activities relating to transaction of M/s.
Poseidon Food Company unless otherwise proved cannot bring
the appella~t within the purview of definition of 'dealer'.

- -,.J 20. If she was not a dealer, the professional fees earned
by her would not be exigible to payment of sales tax; only
because the appellant happens to be the proprietress of M/s.
F

Tropical Traders also.

21. Both the assessing officer as also the High Court had
noticed not only the payment of income-tax during the relevant G
;1-
~
assessment years but also the certificates issued by MPEDA,
Cochin and other documents.

The High Court did not take into consideration the
contention of the appellant that by production of such H
364 SUPREME COURT REPORTS [2008] 16 S.C.R.

A documents the burden of proof, if any, has been discharged by
her.

Furthermore for attracting Section 12 of the Act the
foundational facts must be established.

B 22. The High Court furthermore committed a serious error
in so far as it failed to draw a distinction between the
assessment un9er income tax and assessment under sales tax .
. Whereas income tax is levied on income under the Income Tax
Act irrespective of the sources from yvhich such an income had
C been derived, sales tax is levied only on the quantum of sales
and, therefore, element of tr~nsaction of sale is pre-requisite
for levy of sales tax.

23. This aspect of the matter has been considered by this
0 Court in Girdhari Lal Nannelal V. The Sales Tax
Commissioner, M.P. [ (1996) 3 SCC 701 ] wherein it was held:-

"7. The approach which may be permissible for imposing
liability for payment of income-tax in respect of the
unexplained acquisition of money may not hold good in
E sales tax cases. For the purpose of income-tax it may in
appropriate cases be permissible to treat unexplained
acquisition of money by the assessee to be the
assessee's income from undisclosed sources and assess
him as such. As against that, for the purpose of levy of
F sales tax it would be necessary not only to show that the
source of money has not been explained but also to show
the existence of some material to indicate that the
acquisition of money by the assessee has resulted from
transactions liable to sales tax and not from other sources.
G Further, whereas in a case like the present a credit entry
in respect of Rs. 10,000 stands in the name of the wife of
the partner, no pre~umption arises that the said amount
represents the income of the firm and not of the partner or
l1is wife. The fact that neither the assessee-firm nor its
H partner or his wife adduced satisfactory material to show
HALEEMA ZUBAIR, TROPICAL TRADERS v. STATE OF 365
KERALA [S.B. SINHA, J.]

the source of that money would not, in the absence of A
anything more, lead to the inference that the said sum
represents the income of the firm accruing from
undisclosed sale transactions. It was, in our opinion,
necessary to produce more material in order to connect
the amount of Rs. 10,000 with the income of the assessee- B
firm as a result of sales. In the absence of such material,
the mere absence of explanation regarding the source of
Rs. 10,000 would not justify the conclusion that the sum in
dispute represents profits of the firm derived from
undisclosed sales. " c
24. For the reasons aforementioned the impugned
judgment cannot be sustained which is set aside accordingly.

25. The appeal is allowed. The matter is remitted to the
assessing authority to consider the matter afresh on the basis D,
of the materials placed by the appellant, namely - income tax
returns, orders of assessment, certificates issued by MPEDA,
.;. Cochin etc. The other documents filed by the appellant before
the revisional authority may also be taken into consideration.
The State, if so advised, may also file additional documents. E,
No costs.

N.J. Appeal allowed.

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