2014 (3) TMI 342 - HC - VAT and Sales Tax

Nature of transaction of sale - stock transfer or central sale - Power of authorities to go behind the Form F - Exemption on certain turnovers under section 6A of the CST Act - Tribunal on appreciation of the facts on records had come to the conclusion that the order of the Deputy Commissioner is totally based on surmises and conjectures and as a matter of fact the assessee was entitled to exemptions granted under section 6A of the CST Act. - Held that - Inasmuch as the Tribunal on appreciation of facts has found which facts are not challenged in the present tax revision case in our considered opinion within the scope of section 22(4) of the Act, there is no question of law that is required to be answered. In the light of the judgment of the Supreme Court in Ashok Leyland Ltd. Versus State of Tamil Nadu and another (and other appeals and a writ petition) 2004 (1) TMI 365 - SUPREME COURT OF INDIA , to the extent the Tribunal had recorded that the authorities can go behind the form F declarations is not correct law and the tax revision cases are liable to be dismissed. - Decided against Revenue.

Summary

Issues Involved:
1. Interpretation of turnover related to inter-State trade and commerce.
2. Burden of proof under section 6A of the CST Act on the assessee.
3. Examination of transactions by the revisional authority as per Supreme Court judgment.

Issue 1: Interpretation of Turnover Related to Inter-State Trade and Commerce:
The case involved tax revision cases filed by the State questioning the order of the Sales Tax Appellate Tribunal regarding turnovers related to inter-State sales. The Tribunal concluded that the disputed transactions were not inter-State sales but mere stock transfers to non-resident depot agents. The Tribunal found that the Deputy Commissioner failed to establish the transactions as inter-State sales with sufficient evidence. The Tribunal analyzed various aspects and determined that the turnovers were exempted under section 6A of the CST Act. The High Court upheld the Tribunal's decision, emphasizing that the findings were based on facts and not on questions of law.

Issue 2: Burden of Proof under Section 6A of the CST Act:
The assessee, a textiles manufacturer, was assessed under the Central Sales Tax Act. The assessing authority granted exemptions for certain turnovers under section 6A. However, the Deputy Commissioner revised the order disallowing exemptions for sales made through depots in different states. The Tribunal, on appeal, found that the Deputy Commissioner's decision lacked factual evidence to establish the turnovers as inter-State sales. The Tribunal highlighted that the burden of proof under section 6A lies with the assessee, and in this case, the appellant had provided documentary evidence supporting depot/branch transfers, not inter-State sales.

Issue 3: Examination of Transactions as per Supreme Court Judgment:
The Tribunal's detailed analysis revealed that the Deputy Commissioner's decision was based on surmises and conjectures without concrete evidence of inter-State sales. The Tribunal emphasized that the appellant had met the burden of proof under section 6A by filing necessary documents, including statutory Form F. The High Court concurred with the Tribunal's findings, stating that the authorities can investigate beyond Form F declarations to determine the nature of transactions. Citing a Supreme Court judgment, the High Court clarified that if a transaction does not fall within the definition of inter-State sale, it should be treated as a transfer of stock. The Court dismissed the tax revision cases, upholding the Tribunal's decision in favor of the assessee.

This judgment underscores the importance of factual evidence in tax assessments, the burden of proof on the assessee under the CST Act, and the authority's power to investigate transactions beyond formal declarations to determine the nature of sales.