The presumptions in law have very vital role and
legislature has power to presume certain things under certain circumstances.
Section 6-A of the Central Sales Tax Act,1956 is
exercise of such power by the Parliament of India.
The section was inserted in Central Sales Tax Act
by CST (Amendment Act) 1972 with the following
object
"Central Sales tax is not leviable in respect
of transactions of transfer of goods from a head office or a principal to
branch or an agent or vice-versa as these do not amount to sales. This aids
evasion in that dealers try to show even genuine sales to third parties as
transactions of this type. Accordingly it is proposed to
provide that the burden of proving that the transfer of goods in such cases is
otherwise than by way of sale shall lie on the dealer who claims exemption from
tax on the ground that there was in fact no sale."
The situation has been changed by the Finance Act
2002, which inserted the words "and if the dealer fails to furnish such declarations, then the movement of
such goods shall be deemed for all purposes of this Act to have been occasioned
as a result of sale."
It has resulted in controversy that Form F has now
became mandatory and transaction of stock transfer or consignment sale duly
supported by the evidence of transportation and other documents will now be
taxable as sales if declaration in Form F is not furnished.
Section 6A of the Central Sales Tax Act, 1956
provides that where the dealer claims that he is not liable to pay tax in
respect of the goods sent as aforesaid to another State to his own place of business or to his
agent or to his principal, on the ground that the movement of goods was not by
reason of sale, then the burden of proving that the movement of goods was so
occasioned, is on the dealer. It may be noted that this section applies only in
those cases where the movement of good is to the place of business of the
dealer in another State or to his agent or principal in another State.
The section has no applicability where the goods
are sent to another State for purposes other than those enumerated in that
section and Section 6A, as of course its amendment in 2002, will apply, as
stated above, only when the goods are sent by a dealer to another State to the
dealer's own place of business or to his agent or where the dealer is an agent,
to the place of his principal.
In particular, nothing in this section will apply
when the goods are sent to another State, not by way of sale, to an independent
operator. However Circular issued by the
UP-CTT aggravates the situation in the State of Uttar Pradesh
M/S Ambica
Steels LTD. filed
writ petitions challenging the circular dated November 28, 2005 issued by the
Commissioner of Trade Tax,U.P. mentioning that under section 6A of the Central
Sales Tax Act, 1956 Form F is required to be filed in respect of all transfer
of goods which are otherwise than by way of sale including goods sent or
received for job work & returned of it.
Unfortunately petition filed by the M/S
Ambica Steel Ltd was dismissed and U.P. High Court while dismissing the
petition held that, section 6 of the Central Sales Tax Act, 1956 is the
charging section creating liability to tax on inter-State sales and by reason
of section 6A(2) a legal fiction has been created for the purpose of the Act
that transaction has occasioned otherwise than as a result of sale. Section 6A
puts the burden of proof on the person claiming transfer of goods otherwise
than by way of sale and not liable to tax under the Central Act. The burden
would be on dealer to show that movement of the goods had been occasioned not
by reason of any transaction involving any sale of goods but by reason of
transfer of such goods to any other place of business or to the agent or
principal, as the case may be, for which the dealer is required to furnish
prescribed declaration form. If the dealer fails to furnish such declaration,
by reason of legal fiction, such movement of goods would be deemed for all
purposes of the Act to have been occasioned as a result of sale. The submission
that the transactions, where the goods are sent for job work or received for
doing job work, do not amount to sale would depend upon the contract entered
into between the parties and would be the subject-matter of examination by the
assessing authority. Even otherwise, under section 2(g)(ii) of the Central Act,
transfer of goods used in execution of works contract is treated to be a sale. If
the petitioner claims that it is not liable to tax on transfer of goods from U.
P. to a place outside State then it would have to discharge the burden placed
upon it under section 6A by filing declaration in form F. It would be
immaterial whether the person to whom the goods are sent for or received after
job work is a bailee. The
requirement to file declaration in form F is applicable in cases of even goods
sent for job work and returned thereof.
Being aggrieved by the above decision the M/S Ambica
Steel Ltd filed Civil Appeal before the Hon’ble Supreme Court, it held that- Since the assessee has requested the filing of
declaration in Form F, the issue raised could not be decided on merits. However
the decision of Allahabad High Court stands and by virtue of decision filing of
form F is mandatory unless the issue is decided otherwise by Allahabad High
Court or Apex Court
Hence
declaration in Form F has become mandatory.