Sodhi Transport Co v State of Uttar Pradesh

Facts

Transporters carrying goods through Uttar Pradesh from one outside State to another challenged Section 28-B of the U.P. Sales Tax Act, 1948 and Rule 87. The scheme required drivers to obtain a transit pass at the entry checkpost and surrender it at the exit checkpost. If the pass was not surrendered, it was presumed that the goods had been sold within U.P., rendering the transporter liable to sales tax. The petitioners, who claimed they were mere carriers and not dealers, contended the provision created an arbitrary, conclusive presumption and exceeded the State's competence.

Issues

• Whether the presumption raised under Section 28-B on failure to surrender the transit pass is rebuttable or conclusive.
• Whether Section 28-B and Rule 87 are within the State's legislative competence under Entry 54, List II.
• Whether the provisions violate Article 301 and the freedom of trade under Article 19(1)(g).

Arguments

The petitioner-transporters argued the provision created an unfair conclusive presumption that taxed non-dealers, exceeded legislative competence and impeded inter-State trade. The State argued these were merely machinery provisions to prevent tax evasion and that the presumption was rebuttable, allowing the transporter to lead evidence showing the goods were not sold within the State.

Held

The Court upheld the provisions, holding that the presumption was rebuttable and not conclusive. Relying on the definition of "shall presume" in Section 4 of the Evidence Act, it held the Court must regard the presumed fact as proved "unless and until it is disproved," so the affected party may always displace it by evidence. A presumption is not itself evidence but merely makes out a prima facie case; a rebuttable presumption only indicates the party who must go forward with evidence, and once that party adduces evidence fairly tending to show the real fact, the purpose of the presumption is exhausted. Because the transporter had a genuine opportunity to rebut the presumption by proving the goods were not sold in U.P., the machinery provision was valid and did not amount to levying a tax the legislature could not otherwise levy.

Ratio decidendi

When a statute directs that a Court or authority "shall presume" a fact, it creates a rebuttable presumption under Section 4 of the Evidence Act that merely shifts the burden of going forward with evidence; the presumed fact stands proved only "unless and until it is disproved," and such a provision is not unconstitutional where the affected person has an opportunity to displace the presumption by leading evidence.

Significance

A leading authority distinguishing "may presume," "shall presume" and "conclusive proof," and the classic statement that a presumption is not evidence but only fixes the burden of going forward. It is widely cited for the constitutional validity of statutory rebuttable presumptions and has been consistently followed. Under the Bharatiya Sakshya Adhiniyam, 2023 the same threefold scheme is retained: "shall presume" is defined in Section 2(1)(h) of the BSA in identical terms ("regard such fact as proved, unless and until it is disproved"), so the principle continues to govern statutory rebuttable presumptions under the new code.

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