The assessing authority must verify the genuineness of transactions covered by Form 25 declarations and consider the registration status of purchasers. The burden of proof lies on the dealer to establish exemption eligibility.

Radhakrishna Menon, J.

T.R.C.No.12/90 arises from the order of the Tribunal, and relating to the assessment for the assessment year 1983-84 whereas T.R.C. 13/90 relates to the assessment year 1984-85.

2. The short question arising for consideration is: Does Form 25 declaration, produced by the assessee, conclusively prove that the purchaser of pepper from the assessee is the last purchaser within the meaning of S.5(t) of The K.G.S.T Act, for short 'The Act'.

3. During the year 1983-84, the assessee, it is submitted, had sold 200 quintals of pepper of the value of Rs.2,20,000/- to one Janatha Enterprises, Tellicherry covered by one Form 25 declaration. The dealings, the assessee had had with Janatha Enterprises, Tellicherry, Jyothi Traders, Tellicherry and Bhaskar Traders Kalpetta during the yar 1984-85, according to the assessee, are covered by the respective Form 25 declarations produced by him before the assessing authority. The assessing authority was not satisfied with the genuineness of the transactions covered by Form 25 declaration and therefore issued pre-assessment notice to the assessee calling upon him to submit his explanation as regards the objections (noted hereunder) raised therein.

(a) though Janatha Enterprises had the registration for the year 1983-84, it never had any transactions during that period and that it is so can be seen from the nil return filed by it.

(b) during the year 1984-85 both Janatha Enterprises and Jyothi Traders, were not having the requisite registration.

(c) Bhaskara Traders did not have any transaction in hill produce and therefore it must be held that Bhaskara Traders had not purchased any such goods from the assessee.

4. The assessee filed his objections within the stipulated time. We shall now reproduce relevant portions from the said objections. The following pertains to the assessment proceedings for the year 1983-84:

"We are ready to pay the tax on the local sales of pepper to Surag Traders as per Bill No. 115. But we have serious objections in disallowing exemption on the local sales of Black pepper to Janatha Enterprises, Tellicherry as per Bill No.1 and 5 for Rs.2,20,000/-. The reason stated by you for disallowing exemption is that no such dealer in Hill Produce. As per the K.G.S.T. Act and Rules local sales to a registered dealer within the State and obtaining Form 25 declaration is eligible for exemption from tax. Our sales is to a registered dealer under K.G.S.T. Act. So we are eligible for exemption. It is not our duty to verify whether a dealer is entitled to do business in a particular commodity. It is your duty to check it and take action against them. Moreover, the Registration Certificate issued to them would not show any specific-article to dealt by them"

The objections relating to the year of assessment 1984-85 read•-

"In the case of Bhasker Traders, Kalpetta we invite your kind attention to the fact that they are registered dealers under K.G.S.T Act. It is not correct to say that they are not dealers in Hill Produces. They have purchased goods worth Rs.7,14,561.87 from us. That itself shows that they are dealers in Hill Produces.

Moreover we invite your kind attention to another important fact that the above said Bhasker Traders have despatched pepper to outside state on 26-6-85 and 1-7-85 for which evidence will be there in Feroke Check-post records. Please verify the same. Now also you say that they are not dealers in Hill Produce? If so we shall have some legal points. asper R.32(14)a dealer in the state, shall if he is not liable to tax on such goods by reason of he is not being the last purchaser in the state obtain declaration in Form 25 from the person to whom h3 has sold the goods. In compliance with this rule we have obtained Form 25 declarations from M& Bhaskar Traders ....In the case of Jyothi Traders, Tellicherry we submit that it is not correct to say that they have not stopped business with effect from 31-3-1984. 'the first and best evidence for thi