2007 (8) TMI 688 - HC - VAT and Sales Tax

Interpretation of the provisions of section 6A of the Central Sales Tax Act, 1956 - Held that - Under section 6A of the Central Act, the burden would be on the dealer to show that movement of the goods had been occasioned not by reason of any transaction involving 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 in the absence of which the transfer would be treated as sale. As the petitioners have claimed that they are not liable to furnish declaration form F in respect of the transaction in question and we have come to the conclusion that they are, in fact, liable. We direct the respective assessing authorities to accept the declaration form F of each of the petitioners if they file it within a period of three months from today and to grant exemption in accordance with law. Appeal dismissed.

Summary

Issues:
Challenge to circular letter dated November 28, 2005 issued by Commissioner of Trade Tax regarding form F requirement under section 6A of Central Sales Tax Act, 1956 for transfer of goods not by sale or for job work.

Analysis:
The court consolidated multiple writ petitions challenging the circular letter requiring form F for transfer of goods under section 6A of the Central Act. The leading petition involved a public limited company engaged in manufacturing and sale of iron products, sending goods for job work outside U.P. and receiving goods for conversion. The company claimed no sale was involved, hence form F was unnecessary. The Deputy Commissioner initiated assessment proceedings demanding form F, leading to the present challenge.

The petitioners argued that job work activities do not constitute sale, citing Indian Contract Act provisions on bailment distinguishing agency from bailment. They referenced legal precedents highlighting the difference between sale and work contracts. They contended that section 6 of the Central Act does not impose tax liability on job work, and section 6A applies to inter-State transfers, not job work transactions.

The Standing Counsel argued that section 6A mandates form F filing for goods transfer not subject to tax, including job work transactions. The court analyzed sections 6 and 6A, referencing the Ashok Leyland case, where the apex court clarified the burden of proof under section 6A. The court emphasized the necessity of form F for proving non-taxable transfers under section 6A.

The court concluded that the petitioners' claims of non-taxable transfers required form F submission as per section 6A. It noted that goods sent for job work fall under the Central Act's definition of sale, necessitating form F to prove non-taxable transfers. The court directed assessing authorities to accept form F submissions within three months, granting exemptions accordingly.

In summary, the court dismissed the petitions, emphasizing the obligation to submit form F for non-taxable transfers under section 6A. The court's decision was based on the legal interpretation of the Central Act's provisions and the necessity of form F to establish non-taxable transfers, particularly for job work transactions.