Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ACCOUNTING STANDARDS :: due date for vat payment :: TDS :: VAT RATES :: Central Excise rule to resale the machines to a new company :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India
News Headlines »
 How to link your Aadhaar and PAN details to file income-tax returns
 How to calculate capital gains tax on property sold at less than stamp value?
 Return Filing - Under GST, this is how you will file tax returns from July 1
 Income tax filing FAQs part 1
 Filing Income Tax Returns? Things To Keep In Mind As Deadline Approaches
 Filing of online return for 4th quarter of 2016-17- extension of period thereof.
 New tax accounting standards may reduce leeway for infrastructure companies
 GST – CONCEPT & STATUS – As on 01st May, 2017
 Govt extends VAT deadline, relief for developers
 Income Tax Appellate Tribunal Rules, 2017
 Got your Form 16? You should file income tax returns early to enjoy benefits

Burden of proving exemption is on claimant
July, 12th 2006

One of the principles on which there have been many controversial exchanges between Revenue and the assessees is burden of proof. 
Burden of proof is on different persons on different occasions. However, it is one of the accepted principles of interpretation that if an importer or manufacturer or income tax payer or assessee in general claims an exemption, it is he who should prove that the exemption is admissible to him. 
The reason why so many cases on this issue have travelled to the Supreme Court is that on both sides, that is, Revenue and the assessee, there have been unwillingness to accept this fundamental tenet of interpretation. 
In one of the very interesting judgements in the case of P.A. T.C. Nair vs State of Tamil Nadu AIR 1985 SC 1644, the three judges of the Supreme Court could not reach an unanimous conclusion. The issue was whether coconut is vegetable or not. Vegetables were exempted from sales tax. 
While two judges said that it is not a vegetable, the third observed that it was not categorically possible to conclude whether it is a vegetable or not. However, the burden of proof being on the claimant and he having not been able to discharge his burden of proof, coconut cant be taken as a vegetable. 
In another judgement of the Supreme Court, which is so often quoted by others, in the case of Mysore Metal Industries vs Collector of Customs 1988 (36) ELT 369 (SC), the apex court held that the burden is on the party which claims the exemption to prove the facts that entitled it to exemption and if it is not able to discharge its burden, it cannot be entitled to the exemption. 
This has also been reiterated in the cases of Motiram Tolaram vs Union of India 1999 (112) ELT 749 (SC) and Collector of Customs vs Presto Industries 2001 (129) ELT 321 (SC). 
In the case of Tata Oil Mills vs Collector of Customs 1989 (43) ELT 183 (SC), the issue was about the admissibility of an exemption relating to central excise to soap manufacturer who used rice bran oil. 
The claimant argued that the rice bran oil was first processed in another factory and then used in his factory for making soap. Revenue rejected it on the ground that the rice bran oil was not used as such in his factory. 
The Supreme Court said that it is true that the burden of proof is on the claimant but in an exemption where the intention is to promote the use of rice bran oil, the discharge of the burden should not be interpreted so strictly as that would disentitle the exemption against the purpose for which it is issued. 
So the Supreme Court allowed the exemption even if this was an indirect discharging of burden of proof. This judgement shows the liberal approach of the Supreme Court in accepting the discharge of the burden of proof on the part of the claimant. 
While the main theory remains that the burden of proof has to be discharged by the claimant of the exemption, once the basic fact is established, the interpretation should be liberal in consonance with the intention of the notification. 
The conclusion is that it is a well settled principle of interpretation that if an importer or manufacturer or any other assessee claims that a particular exemption is admissible to him, then it is he who is in a better position to prove that it is in fact what he claims it to be. 
However, Revenue also should accept his discharge of the burden of proof with a certain amount of liberal approach so that the exemption is not denied invariably particularly when it is an exemption for a the purpose of promotion of certain economic or social purpose.

Sukumar Mukhopadhyay

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions