"(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 oc-casioned by reason of transfer of such goods by him to any other place of his business or 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 the authority may, for suf-ficient cause, permit, a declara-tion, 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 despatch 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.

"(2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer U/ss.(1) are true, he may, at the time of, or at any time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall be deemed for the purposes of this Act to have been occasioned otherwise than as a result of sale.

"Explanation — In this Section, ‘assessing authority’, in relation to a dealer, means the authority for the time being competent to assess the tax payable by the dealer under this Act."

Above provision has to be read with sub-rule (5) of Rule 12 of the Central Sales Tax (Registra-tion and Turnover) Rules, 1957 providing for issue of declaration in Form F against despatches of goods to another State which sub-Rule has been as under.

"Provided that a single declara-tion may cover transfer of goods, by a dealer, to any other place of his business or to his agent or principal, as the case may be, effected during a period of one calendar month.

"Provided further . . . . . . . (Not reproduced)

"Provided also . . . . . . . . . (Not reproduced)"

The Bench, in its present judgement (delivered on January 7, 2004) has vide para 9 referred to the earlier judgement dated February 20, 1997 as under :

(a) S. 6A does not create conclusive presumption as contended on behalf of the assessee.

(b) An order of assessing authority accepting Form F, whether passed during the assessment or at any point earlier thereto, forms part and parcel of the order of assessment.

(c) Its amenability to the power of reopening and revision depends upon the provisions of the concerned sales tax enactments by virtue of the operation of S. 9(2) of the Central Act.

(d) It is not possible to accept that an order u/s.6A(2) has an independent existence.

(e) An order refusing to accept Form F may or may not be appealable independently depending upon the provisions of the State sales tax enactments, but it is certainly capable of being questioned if an appeal is preferred against the order of assessment.

(f) If order accepting Form F is sought to be reopened, it can be done as part of reopening of assessment or may be done independently, which would depend upon the language of the relevant provisions of the concerned State Acts.

(g) It is permissible to reopen an assessment accepting Form F as true, even though such a reassessment necessarily leads to revision/modification of the assessment order.

(h) If the reopening is confined to the order accepting Form F as true, the enquiry shall be confined to the matters relevant thereto. In that case, it was noticed that the assessments were sought to be reopened only in respect of the turnover relating to sales of vehicles to State Transport Undertakings and not turnover relating to persons other than State Transport Undertakings.

(i) In the facts of the case, the question as to whether the power had been exercised validly or not did not call for consideration. If the assessing authority decided against the appellants, it would be open to the assessee to file appeal(s) directly before the Tribunal (in order to shorten the litigation and in the interest of justice). If and when the Tribunal decides against the appellants, it shall be open to the appellants to approach the Supreme Court.

So far, provisions of S. 6A and Rule 12(5) were understood as above.

Ss.(1) of S. 6A was amended by Central Sales Tax (Amendment) Act, 2001 in force since 11-5-2002, whereby at the end of Ss.(1) the following was added, namely :

‘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.’ Such amended sub-section is reproduced at the beginning.

The above underlined provision is the subject of interpretation by the 3 Judges’ Bench of the Supreme Court vide its judgement delivered on January 7, 2004.

In para 40, the Court has observed as under :

"40. Prior to amendment of S. 6A of the Central Act, filing of Form F was optional. The dealer was, thus, entitled either to file such form or not to file the same. Only because such form is not filed, the same would not mean that the dealer was prohibited from raising a plea that no stock of transfer from his Head Office to Regional Offices or Regional Sales Offices has taken place. It was entitled to plead that by reason of such transactions which are intra-organisation, sale was not occasioned by movement of goods. The question which was required to be posed and answered by the assessing authority was, thus, required to be confined only to the fact as to whether any sale has occasioned by movement of goods or not. In other words, an exception had been made to the concept of inter-State sale invoking the provisions of the Central Act would be when such movement of goods was by way of transfer of stock in terms whereof no tax under the Central Act was payable. Indisputably determination of such a question at the hands of the assessing authority was required for arriving at a finding of fact as to whether the Central Sales Tax or the local sales tax would become payable." (underlined words are inappropriate. Sale occasions movement and not vice versa).

In para 42, the Court has observed :

"The liability to tax on inter-State sale as contained in S. 6 is expressly made subject to the other provisions contained in the Act. Ss.(2) of S. 9, on the other hand, which is a procedural provision starts with the words ‘subject to the other provisions of this Act and the rules made there-under.’ S. 6A provides for exception as regard the burden of proof in the event a claim is made that transfer of goods had taken place otherwise than by way of sale. Indisput-ably, the burden would be on the dealer to show that the movement of goods had occasioned not by reason of any transaction involving sale of goods, but by reason of transfer of such goods to any other place of his business or to his agent or principal, as the case may be. For the purpose of discharge of such burden of proof, the dealer is required to furnish to the as-sessing authority of within the prescribed time a declaration duly filled and signed by the principal officer of the other place of business or his agent or principal. Such declaration would contain the prescribed particulars in the prescribed form obtained from the prescribed authority. Along with such declaration, the dealer is required to furnish the evidence of such despatch of goods by reason of Act 20 of 2002. In the event, if it fails to furnish such declaration, by reason of legal fiction, such movement of goods would be deemed for all purposes of the said Act to have occasioned as a result of sale." (Amendment by Act 20 of 2002 does not provide for furnishing of evidence of despatch of goods which was already there, it provided for consequence of not furnishing the declaration).

Implicit in the above observa-tions is that wherever there was inter-State movement of goods, the same would be presumed to involve inter-State sale subject to tax u/s.6 of the Central Sales Tax Act, unless the dealer pro-duced valid F form declaration to claim immunity, as provided in S. 6A. This was for the reason that all inter-State sales are exigible to tax without any threshold limit. In para 78, the Court has observed :

"It is also to be borne in mind that no presumption when movement of goods has taken place in the course of inter-State sales, may be raised in the case of standard goods but the same is not conclusive. It is only one of the factors which is required to be taken into consideration along with others. In a case, however, where the purchaser places order on the manu-facturer for manufacturing goods which would be as per his specifications, a presump-tion that agreement to sell has been entered into may be raised."

In support of the above proposi-tion, the Court has referred to a large number of cases, which were held to take place in the course of inter-State trade not by the mere application of the above proposition but on the particular facts of the case by the application of the principles laid down by the Supreme Court as to when a transaction can be deemed to take place in the course of inter-State trade.

Before the Bench, limited issue for enquiry was about burden of proof in the matter of acceptance of F Form declarations and not when a sale could be deemed to take place in the course of inter-State trade or commerce or when a presumption could be made. After the observations of the Bench, assessing authorities would be reluctant to accept F Form declarations as the same could not be rejected once accepted, except in the case of fraud or collusion, according to the Bench, there being no provision to file appeal against it. How arduous could be the exercise to be carried out by the assessing authority before acceptance of F Form declaration on the basis of the same being true, enquiry to be made about the statements having been made in the F Form declaration by the person issuing the same. The Bench has stated that there could be no appeal against ac-ceptance of F Form declarations though the same would be part of the assessment. What about non-acceptance of F Form declarations before the assessing authority ? No appeal could be preferred by the assessee dealer ?

S. 6 of the Central Act is the charging section providing for levy of Central Sales Tax on inter-State sales of goods. Unless, therefore, there is a sale of goods which is established to have taken place in the course of inter-State trade or commerce, no tax could be levied under the Central Act. Burden to prove whether a particular transaction is a sale that has taken place in the course of inter-state trade or commerce is on the assessing authority as observed by the Supreme Court in Commissioner of Sales Tax v. Suresh Chand Jain, (1988 76 STC 45). There is no presumption that a given trans-action is a sale of goods vide Madras High Court in T.P.S.R Factory Pvt. Ltd. v. Dy. Commercial Tax Officer, 1967 20 STC 419. Neither the State Legislature nor the Central Legislature has any legislative jurisdiction to levy tax on mere branch transfers of the goods. Such transactions cannot be treated as sale at all, vide Bombay High Court in Varun Polymol Organises Ltd. v. State of Maharashtra, 1995 97 STC 55 Bom. If in the absence of F Form declaration inter-State movement of goods, whether or not against a sale, has to be deemed to be an inter-State sale, exigible to tax u/s.6 of the Central Act, such levy would be deemed to be a tax on inter-State consignment of goods for which law referred to in Article 269(3) of the Constitution has yet to be enacted by the Parliament.

The expressions ‘subject to the other purposes contained in the Act, or ‘for the purpose of this Act’ or ‘for all purposes of this Act’, it is respectfully submitted, have not been construed in the proper context of the various provisions of the Act and the Rules thereunder.