The Commissioner, Commercial Tax vs S/S. Krishna Collector, GMT Road

Ashwani Kumar Mishra, J.—This appeal was admitted, and notices were issued to the assessee. Service of notice upon the assessee has already been held to be sufficient, vide order dated 20th March, 2017. None has appeared for the assessee. The matter, accordingly, is taken up for hearing in the absence of the assessee.

Present revision by the revenue challenges the orders passed by the first appellate authority as well as the Tribunal, deleting the amount of tax on the turnover of Rs.20,98,400/-, in the absence of Form-F. The first appellate authority as well as the Tribunal were of the opinion that mere absence of Form-F would not be conclusive, and since the return of goods is substantiated by the assessee with reference to other materials, as such, the liability to pay tax upon such transaction would not arise.

It transpires that the assessee is engaged in the business of purchase and sale of readymade garments. For the relevant year 2010-2011, proceedings for assessment under the Central Sales Tax Act were initiated. The dealer received goods valued at Rs.9,25,530/-. At the beginning of the assessment year, there was a stock of Rs.26,21,878/-. The dealer has disclosed that the stock of Rs.20,98,400/- has been returned to the principal situated outside the State of U.P. To substantiate such claim, the dealer has produced Form S.T.38 issued by Haryana Sales Tax Department, GRR of M/s. New Manohar Transport Company, and GRR of M/s. Tara Chand Pal Transport Service. It is, however, not in dispute that such transfer of stock was not backed by any Form-F. The assessing authority disallowed the claim of assessee by relying upon the provisions of Section 6-A of the Central Sales Tax Act, 1956, readwith notification dated 10th July, 2009. The assessing authority was of the opinion that there exists a statutory presumption of sale, unless such transfer beyond the State was backed by Form-F. The assessee being aggrieved preferred an appeal, which has been allowed. For doing so, the appellate authority has relied upon the decision in M/s. Ambica Steels Ltd. v. State of U.P. and others, reported in 2009 NTN (Vol. 39) 296. Further reliance is placed upon a judgment in Shree Hanuman Rice Mill v. State of Orissa, reported in 1988 (70) STC 316. A second appeal preferred by the revenue has also been rejected while concurring with the opinion expressed by the first appellate authority.

Learned Standing Counsel submits that the view taken by the assessing authority was in consonance with the provision of Section 6-A, and there was no justification for the authorities to have taken a different view. It is submitted that the finding returned by the assessing authority has also not been reversed. It is also pointed out that Section 6-A was amended on 11th May, 2002, and a statutory presumption is drawn of sale in respect of stock transfer, which provision has completely been omitted from consideration. Learned Standing Counsel further submits that judgment of the Apex Court in M/s. Ambica Steels Ltd. (supra) does not lay down any proposition supporting the view taken by the first appellate authority and the tribunal.

Before proceeding further, it would be appropriate to notice the provision contained under Section 6-A(1) of the Central Sales Tax Act, 1956, after its amendment, which is reproduced:-

"Section 6-A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale.-

(1) Where any dealer claims that he is not liable to pay tax under this Act, in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be, and not by reason of sale, the burden of proving that the movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of dispatch of such goods and if the dealer fails to furnish such declaration, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of sale."

The provision is categorical and clear, inasmuch as any transfer of stock, which is not backed by Form-F, would be deemed for all purposes to have been occasioned as a result of sale. Prior to its amendment in the year 2002, such statutory presumption of sale was apparently not in existence, and therefore, any decision rendered prior to the year 2002 would not be of any avail for the present purposes. The judgment of Orissa High Court delivered in 1988 would thus have no applicability.

So far as the judgment in M/s. Ambica Steels Ltd. (supra) is concerned, it would be appropriate to reproduce the judgment itself :-

"Shri Sorabjee, learned senior counsel appearing on behalf of the assessee, on instructions, states that the appellant-assessee will submit itself to the re-assessment proceedings initiated vide Show Cause Notice (see Annexure P-2). He further states that the assessee will file Form "F" with the Authority concerned within ten weeks from today.

On expiry of the period of ten weeks the Assessing Officer will take up re-assessment proceedings which will be completed within a period of three months, thereafter.

At this stage, it may be mentioned that on the scope and applicability of Section 6A of the Central Sales Tax Act, 1956, there exists difference of opinion between the various Sales Tax Collectors in the country and therefore since the Appellant is now ready to file Form "F", we are directing the Assessing Officer not to impose penalty/interest, in the reassessment proceedings as one time waiver. Needless to add that waiver of penalty and interest shall be admissible only on Form "F" being furnished by the assessee within the prescribed period.

The appellant has deposited a sum of Rs.1,00,00,000/- (one crore) on 27th December, 2008, under protest vide letter of even date. It is made clear that the said amount shall be refunded to the assessee herein within a period of two weeks after the completion of re-assessment proceedings, subject to adjustment, if any, in the Duty assessed.

We are informed that certain State(s) within whose jurisdiction the transferee is located is/are not issuing "F" Forms. In such an eventuality it would be open to the Assessing Officer to complete re-assessment proceedings on its own merits after examining the transaction between the parties, keeping in mind the circumstance that the assessee is not in a position to obtain the "F" Form, for no fault of his.

Accordingly, this civil appeal is disposed of with no order as to costs."

Apex Court in the case of M/s. Ambica Steels Ltd. (supra) was dealing with a case of re-assessment, in which the assessee undertook to submit Form-F, and in such circumstances, the Hon''ble Supreme Court was pleased to observe that proceedings for penalty and interest shall not be drawn. The Apex Court further took note of the facts that some of the States were not issuing Form-F, necessitating observations in that regard. It is not the case here that Form-F was ever applied and was not issued. The observation made in Para-5 cannot be construed as an expression of opinion by the Apex Court by whittling down the provisions of Section 6-A of the Act. Once a statutory presumption is drawn regarding sale in the absence of Form-F, and the assessee has not been able to put forth any material, which may have been responsible for non-submission of Form-F, the first appellate authority and the tribunal were not justified in interfering with the order of assessing authority, holding the assessee liable to payment of tax. The question of law framed for consideration is answered, accordingly.

The revision, consequently, stands disposed of.