2011 (5) TMI 886 - HC - VAT and Sales Tax

Whether the petitioner-firm is not entitled to carry business in form F to get any benefit under the provisions of section 6A of the Central Sales Tax Act, 1956 in respect of exemption of payment of tax? Held that - When an agent would make an application seeking issuance of form F, then the sale tax authority should first enquire whether he is going to transfer the goods from his principal or purchasing goods for sale. If the petitioner agent asks for transferring stock from his principal, then the authority should issue form F taking note of sub-section (3) of section 7 of the Act and other relevant provisions of the said Act. In view of the above, rejection of the prayer of the petitioner for issuance of form F is not required to be interfered with and accordingly the same is not interfered with.

Summary

Issues:
Petitioner's entitlement to form F under section 6A of the Central Sales Tax Act for exemption of tax payment.

Analysis:
The petitioner, a proprietorship firm, filed a writ petition to challenge the rejection of their request for form F by the Superintendent of Taxes. The petitioner sought the form to transfer goods from a dealer registered under the CST Act outside the State for selling in Tripura. The petitioner argued that the rejection based on the principal company not being registered in Tripura was incorrect, citing a Delhi High Court decision. The court noted that the provisions of the Central Sales Tax Act do not empower authorities to refuse issuing form F, as it is essential for transfer of goods. The court directed the sales tax authorities to provide the remaining form F required by the petitioner.

Furthermore, the petitioner contended that when transferring stock from a principal company as an agent, the sales tax authorities cannot refuse form F issuance but may request security deposit under section 7(3A) of the CST Act. The petitioner had already deposited the required security but was willing to provide additional security if deemed necessary.

The Government Advocate argued that the petitioner's application for 50 form Fs was not valid as it did not align with the provisions of section 6A of the CST Act. The court observed that the petitioner's misunderstanding of the law led to the incorrect application, emphasizing the distinction between stock transfer and sale.

The court referenced the Delhi High Court case of R.H. Enterprises, highlighting its differences from the present case and the importance of proper application for form F. While acknowledging the validity of the petitioner's argument regarding agent's entitlement to form F for stock transfer, the court decided not to interfere with the rejection of the petitioner's request at that stage.

In conclusion, the court held that the rejection of the petitioner's request for form F did not require intervention, emphasizing that sales tax authorities should consider applications for form F from agents transferring stock from principals outside the state in accordance with the law.

Therefore, the writ petition was disposed of with the above observations.