2005 (6) TMI 530 - HC - VAT and Sales Tax

Summary

Issues Involved: Jurisdictional infirmity, non-exercise of power under Section 6-A(2) of the CST Act, consideration of materials by the assessing authority, mandatory nature of F forms, burden of proof, scope of Section 6-A, and evidentiary requirements for stock transfer.

Issue-wise Detailed Analysis:

1. Jurisdictional Infirmity and Non-Exercise of Power under Section 6-A(2) of the CST Act:
The petitioner challenged the assessment order (Exhibit P7) issued by the third respondent under the CST Act for the assessment year 2000-01. The challenge was based on the argument that the order was vitiated by jurisdictional infirmity due to the non-exercise of power under Section 6-A(2) of the CST Act. The petitioner contended that if an order under Section 6-A had been issued, it would have concluded the assessment.

2. Consideration of Materials by the Assessing Authority:
The petitioner argued that the assessment order was issued without considering the materials submitted, including various documents such as lorry receipts, goods consignment notes, excise invoices, and sales tax declarations. The court observed that the assessing authority failed to exercise its jurisdiction properly by not objectively assessing the materials provided by the petitioner.

3. Mandatory Nature of F Forms:
The court discussed the amendment to Section 6-A by Act 20 of 2002, which made the submission of F forms mandatory for claiming exemption on the ground that the inter-State movement of goods was not due to a sale. The court referred to the case of Vijayamohini Mills v. State of Kerala, which held that the production of F forms was not compulsory before the amendment. However, post-amendment, the submission of F forms became mandatory.

4. Burden of Proof:
The court reiterated that the burden of proof lies on the dealer to show that the movement of goods was due to a transfer and not a sale. This burden can be discharged by submitting F forms and other relevant evidence.

5. Scope of Section 6-A:
The court elaborated on the scope of Section 6-A, emphasizing that the assessing authority must conduct an inquiry to verify the truthfulness of the particulars in the F forms. The authority has wide discretionary power to require the dealer to produce relevant documents to substantiate the claims made in the F forms.

6. Evidentiary Requirements for Stock Transfer:
The court examined the case of Esab India Ltd. v. State of Kerala, where it was held that in the absence of documents proving physical transfer of goods, the claim of stock transfer could be disallowed. However, the court clarified that this decision should not be interpreted to exclude other relevant materials for proving stock transfer.

Conclusion:
The court quashed the impugned assessment order (Exhibit P7) and directed the assessing authority to reconsider the matter afresh, taking into account all materials submitted by the petitioner. The authority was instructed to act fairly and reasonably, and to make a final decision within three months. No order as to costs was made.