The burden of proof lies on the petitioner to establish the agency relationship and the absence of evidence or supporting accounts can lead to the court upholding penalties for unaccounted sale of goods.

The petitioner is challenging Ext.P10 order of the Commissioner of Commercial Taxes confirming penalty of Rs.75,800/- levied under Section 45A of the KGST Act for unaccounted sale of goods effected by the petitioner which led to evasion of tax. The petitioner is a dealer in electrical goods and also plastic furniture. The case of the Department is that the petitioner purchased plastic chairs from Nilkamal Plastics Ltd., Mumbai and sold the same to Holy Trinity School, Kanjikode in Kerala which was not accounted as local sales nor tax paid by the petitioner. Therefore, a penalty of Rs.75,800/- was imposed on the petitioner treating the entire transaction as unaccounted sales. The petitioner’s contention is that the petitioner acted as an agent of the manufacturer and there was no purchase and resale of the articles by the petitioner. On the other hand, the Department proceeded on the presumption that the petitioner purchased the articles in his own account and resold the goods to the school. There is also a finding by the authorities below that the manufacturer’s ledger account shows direct sale to M/s.Vijaya Electricals, that is the petitioner’s concern.

2. At the time of hearing, counsel for the petitioner, relying on the invoice, lorry receipt and other documents produced, contended that the goods are directly sent by the Manufacturer to Holy Trinity School, Kanjikode. The petitioner’s contention is that the transaction is an agency transaction and not a purchase and sale as assumed by the Departmental Officers. The Government Pleader on the other hand, contended that the petitioner’s case of agency was not proved with any acceptable evidence. According to him the petitioner is a dealer in plastic chairs and sales are in his own account. On going through the impugned orders and other records I find that the petitioner has not produced any evidence to substantiate the claim of agency. Explanation 5 to Section 2(xxi) of the Kerala General Sales Tax Act give rise to a presumption of two sales even in the case of agency. The said section is extracted hereunder.

“Notwithstanding anything to the contrary contained in this Act or any other law for the time being in force, two independent sales or purchases, shall, for the purposes of this Act, be deemed to have taken place,

(a) When the goods are transferred from a principal to his selling agent and from the selling agent to the purchaser, or

(b) When the goods are transferred from the seller to a buying agent and from the buying agent to his principal, if the agent is found in either of the cases aforesaid,

(i) to have sold the goods at one rate and to have passed on the sale proceeds to his principal, at another rate, or

(ii) to have purchased the goods at one rate and to have passed them on to his principal at another rate, or

(iii) not to have accounted to his principal for the entire collections or deductions made by him in the sales or purchases effected by him on behalf of his principal, or

(iv) to have acted for a fictitious or non-existent principal:

Provided that the deduction or addition, as the case may be, of the commission agreed upon and specified in the accounts and incidental charges incurred by the agent which are specified in the accounts and which the assessing authority considers legitimate shall not be deemed to be a difference in the rates referred to in sub clauses (i) and (ii).”

It is admitted that the petitioner paid the purchase consideration to the supplier. The petitioner claims to have acted as an agent. However, there is no agreement or correspondence to indicate that the petitioner is appointed as an agent either for one transaction or on a regular basis. If the petitioner claims to be an agent, it is for the petitioner to prove the same with evidence. I find that the burden to prove his case is on the petitioner and he has not discharged that burden. The petitioner should have produced the agency agreement or other authorisation and should have