2006 (7) TMI 586 - HC - VAT and Sales Tax

Summary

Issues:
Claim of exemption on stock transfer under the Central Sales Tax Act, 1956 - Burden of proof on the assessee to show transfer of goods other than by way of sale - Requirement of form F declaration as proof - Reliability of RG 24 register and delivery notes as evidence of stock transfer.

Analysis:
The case involved the question of whether the assessee, a company engaged in the manufacture of aluminium oxide granules, was entitled to claim exemption on stock transfer under the Central Sales Tax Act, 1956. The dispute arose regarding the turnover of Rs. 75,77,525 claimed as stock transfer to a closed branch at Visakhapatnam. The assessing authority disallowed the claim due to lack of proof for the transfer and movement of goods to the factory and evidence for crossing check-posts.

The appellate authorities also rejected the claim, emphasizing the mandatory requirement of form F declaration to prove that the transactions were not by way of sale. They relied on the decision in Ashok Leyland Ltd. v. State of Tamil Nadu, which stated that the initial burden of proof lies with the dealer to establish the movement of goods was due to transfer and not sale. The Tribunal concurred with this view, leading to the filing of a revision petition.

The counsel for the assessee argued against the mandatory nature of form F declaration, citing precedents. They contended that other evidence, such as the RG 24 register and delivery notes, supported the claim of stock transfer. However, the court held that the burden of proof rested on the assessee to demonstrate transfer other than by sale. The form RG 23A and RG 24 documents presented were deemed insufficient to establish the movement of goods from Kerala to Visakhapatnam as required by the Act and Rules.

The court concluded that the assessee failed to provide reliable evidence to show the stock transfer, and all fact-finding authorities unanimously found the burden under section 6-A of the Central Sales Tax Act was not met. Consequently, the revision petition was dismissed, upholding the decisions of the lower authorities. The judgment highlighted the importance of complying with the specific provisions of the Central Sales Tax Act and Rules for claiming exemptions and proving stock transfers.