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TMI Blog1994 (9) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... odology of burden of proof contemplated under section 6A and in that view of the matter, it could not be stated to have been 'impliedly repealed'. (3) The burden of proof that movement of goods is only by way of branch transfer and not by way of inter-State sale is always upon the assessee-dealer and it never shifts. (4) The burden of proof so cast on the assessee-dealer is capable of being discharged either by the production of declaration in form 'F' and evidence for the despatch of goods or by adduction of evidence aliunde without the production of declaration in form 'F' and evidence for the despatch of goods. (5) Once the declaration in form 'F' and despatch of goods are produced by the assessee-dealer, it is however open to the assessing authority to make an enquiry as respects the particulars contained in the declaration in form 'F' to verify whether those particulars are true or not and to sift the evidence aliunde to come to a just and proper conclusion as to whether the transaction is a branch transfer or otherwise. (6) Once the enquiry contemplated under section 6A(2) of the Central Act is completed and a finding is recorded that the particulars contained in fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing contentions by way of written arguments: "1. The Central Sales Tax Act, 1956, is a legislation under entry 92-A, List I, Seventh Schedule to the Constitution of India. The power of the Union is only to levy tax on a sale or purchase taking place in the course of inter-State trade and commerce. The mere transfer of stocks to an agent or branch outside the State is not a sale. There is no legislation so far to tax the consignment of goods, to an agent or branch, though entry 92-B introduced by the Constitution (Forty-sixth Amendment) Act, 1982, enables a future legislation for the said levy on consignment transfer. 2.. A sale effected by an assessee-principal through his agent outside the State is purely a local sale in the State where goods are sold and within the power of the State Legislature under entry 54, List II (State List). The place of business of the agent is that of the principal. The provisions of the Central Act or the Rules framed thereunder cannot appropriately deal with matters relating to a State subject (i.e.), sales of a local character outside the State by the branch or agent. 3.. The burden placed on the assessee to show that the movement of goods t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishing of particulars to say that the movement of goods to the agent outside the State is otherwise a sale. 6.. Section 6A along with rules 12(5), 12(6) and 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957, read with the prescribed form F declaration, is a complete code relating to the transfer of stocks by the assessee to a branch or agent outside the State. The provisions provide for burden of proof, mode of discharge of the burden, enquiry by the assessing authority, and consequences of the declaration in form F being accepted. Section 10(a) provides for penalty for furnishing false declaration. Therefore, on the subject of transfer of stock by the principal to an agent, there is a special legislation by the Union. Rule 4(3A) of the Tamil Nadu Rules will have to give way as of no consequence in view of the special Union legislation on the subject. 7.. The enquiry contemplated under section 6A, read with the statutory form F declaration, terminates with delivery of the goods to the agent outside the State. The assessing authority may verify whether form F declaration is genuine and issued by the appropriate State, whether the agent is registered dealer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltra vires in so far as relating to the particulars prescribed therein. The delegated authority cannot whittle down or dilute the rights under the Act by rules of procedure which are difficult to obey. The particulars demanded in rule 4(3A) cannot be attributed to section 13(3) or section 13(4) of the Central Sales Tax Act. Any State rule has to be subject to the provisions of section 6A, rule 12(5), rule 12(6) and rule 12(7) since the State rules under section 13 are required to be subject to the provisions of the Act as well as the rules made by the Central Government." 4.. Though the learned Additional Government Pleader for Taxes, appearing for the respondents, did not dispute the correctness of contention Nos. 1 and 2, she however disputed the correctness of the other contentions, and contended that as the dealers are required to maintain the records as per section 40 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act"), and rule 26(5A) of the Tamil Nadu General Sales Tax Rules, 1959 (hereinafter referred to as "the Rules"), framed under the Act, as such, they will not be required to maintain any additional records under rule 4(3A) of the CST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment Pleader for Taxes that those notices were issued prior to the minutes in question issued by the Special Commissioner and Commissioner for Commercial Taxes, pursuant to the decision in appeal, and as such those notices will not be pursued. Similarly, it has also been brought to our notice that, after the decision under appeal, the assessment orders also are passed on re-opening the cases closed. Such cases will be considered at the relevant stage. 6.. We shall now take up the contentions raised by the appellants for consideration. As far as contention Nos. 1 and 2 are concerned, the correctness of the same are not disputed by the learned Additional Government Pleader for Taxes and we are also of the view that those submissions state the law as such correctly. The other contentions will be considered in the background of this legal position as set out in the aforesaid contentions 1 and 2. 6.1. Before taking up for determination the other contentions, it is necessary to advert to the provisions contained in section 6A of the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act"), which came to be inserted by Act 61 of 1972 with effect from April 1, 1973, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereto maintained and the manner in which any such form may be used and any such certificate or declaration may be furnished." Form F prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957 (for short "the Central Rules"), which is connected with section 6A of the Act, is also relevant to be noticed at this stage "FORM F Form of declaration to be issued by the transferee [See rule 12(5)] Serial No................... Name of the issuing State................... Office of issue................... Date of issue.................... Name and address of the person to whom issued................... along with his Registration Certificate No................... Date from which registration is valid................... Seal of the issuing authority To ................... (Transferor) Registration Certificate No. of the transferor.......... Certified that the goods transferred to me/us as per details below have been received and duly accounted for. Description of the goods sent................... Quantity or weight................... Value of the goods................... Number and date of invoice or challan or any other document under which go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontained in section 6A read with section 13(4)(e) of the CST Act, as such, it is beyond the rule-making power of the State Government. We have in the earlier portion of this judgment referred to the contention of the learned counsel for State that the records required to be maintained as per rule 4(3A) of the Rules are not in any way different from those required to be maintained by any dealer under section 40 of the Act and rule 26(5A) of the Rules, except to the extent what is contained in rule 4(3A)(d) of the CST (TN) Rules. 7.. A comparison of both the provisions would make this aspect clear. Section 40 of the Act relates to maintenance of up to date, true and correct accounts and records by dealers. Sub-section (1) thereof specifically requires every dealer to get himself registered under the Act and to keep and maintain up to date, true and correct accounts showing full and complete particulars of his business and such other records as may be prescribed in any of the languages specified in the Eighth Schedule to the Constitution or in English, showing such particulars as may be prescribed for different classes of dealers. Clause (a) of sub-section (2) thereof further enjoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tched on each occasion; (iv) Omitted by S.R.O. A-155/83 dated June 18, 1983. (v) Pattials, i.e., accounts rendered by the agents to the dealer from time to time, showing the gross amount of the purchases or sales, the deductions on account of commission and incidental charges and the net amount payable by the agent; (vi) The particulars of tax paid by the agent showing the date of payment, the amount of tax paid and the assessing officer to whom the payment was made and (vii) A record showing the particulars of all remittances received from each agent or made to each agent including the date, the amount and the mode of remittance. (b) Copies of the authorisation letters, consignment notes or despatch advices, as the case may be, sent to the agent on each occasion and a statement showing the description, quantity and value of the goods despatched to each agent on each occasion should be furnished to the assessing officer concerned simultaneously with the despatch of the authorisation letters or of the goods to the agent, as the case may be. (c) Every such dealer who claims exemption on the transactions effected through agents shall also furnish to the assessing authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lers to furnish any other information relating to his business as may be necessary for the purposes of the CST Act. Clause (d) thereof empowers the State Government to frame rules regarding the inspection of the books, accounts or documents required to be kept under the Act. As such, clause (d) of subsection (4) of section 13 is wide enough to enable the State Government to frame the rules, regarding maintaining of books, accounts or documents required for the purposes of the Act, as without prescribing to maintain such books, accounts or documents as may be required for the purposes of the Act, inspection of the same as contemplated is not possible. Added to this, clause (e) thereof empowers the State Government to frame the rules regarding maintaining of the records relating to the declaration prescribed under section 6A(1) of the CST Act. Therefore, it is not possible to hold that rule 4(3A) of the CST (TN) Rules falls outside the rule-making power of the State Government. 7.1. When a dealer is required to maintain all such records which are required to be maintained under sub-rule (3A) of rule 4 of the CST (TN) Rules, under sub-rule (5A) of rule 26 of the Rules, it is not pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulties or at any rate greatly relieves him from the burden to prove that the sale or purchase of goods has not taken place in the course of inter-State trade or commerce. Therefore, we hold that rule 4(3A) of the CST (TN) Rules is directory. 8.. It has been held by a Division Bench of the Kerala High Court in C.P.K. Trading Company v. Additional Sales Tax Officer, III Circle, Mattancherry [1990] 76 STC 211, with which we are in full agreement, as follows: "Under section 6A(1) of the Central Sales Tax Act, 1956, the burden is on the dealer to prove that the movement of the goods was occasioned not by reason of sale, but was occasioned by reason of transfer, of such goods by him to any other place of his business or to his agent or principal outside the State. The burden so cast on the dealer may be discharged by furnishing the declaration as prescribed (F forms) along with the evidence of despatch of such goods. Furnishing of the declaration (F forms) is not compulsive or mandatory. It is open to the dealer to discharge the burden of proof cast on him, in any other manner, by adducing other evidence. In cases where the dealer exercises the option of furnishing the declaration (F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A) of rule 4 of the CST (TN) Rules is directory and not mandatory; therefore, in the event of non-compliance with the said rule, the question of imposition of penalty does not arise. We have also held that rule 4(3A) of the CST (TN) Rules is directory as it only directs maintaining of certain records to show that the transfer of goods to a place in another State is not as a result of sale but it is otherwise than by way of sale. However, if a dealer files a declaration in form F and it is found to contain the particulars which are not true, the dealer has to face the consequence that would flow from section 10(a) of the CST Act and that is not a matter for consideration before us, because we are concerned with the validity of rule 4(3A) of the CST (TN) Rules. In the light of the findings recorded on contentions 3 and 4, nothing survives for consideration under contention No. 6. It is disposed of accordingly. 11.. As regards contention No. 7, we have already pointed out that as per sub-section (2) of section 6A of the CST Act, the enquiry has to be confined to find out the truth or otherwise of the particulars contained in form F; therefore, the other question raised in contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1962] 13 STC 292 (SC) considered the issue whether the transactions concerned therein amounted to sales in view of the agreements produced by the applicants therein. On construing the terms of those agreements, it was held that the agreements created a relationship of principals and agent and not of vendors and purchasers between the assessees and the merchants to whom the bidis were despatched. Such a question does not arise for consideration in the present case. 14.. In Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer, Rajahmundry [1968] 21 STC 312 (SC), the effect of Explanation III of section 2(1)(n) of the Andhra Pradesh General Sales Tax Act, 1957, is considered. It has been held that the said provision imposes tax only when there is a transfer of title to the goods and not where there is a mere contract of agency. It has also been further held that the question as to whether the transactions in any given case are sales or contracts of agency is a mixed question of fact and law and must be investigated with reference to the material which the dealer might be able to place before the appropriate authority, and that the question is not one which can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that the particulars mentioned in form F are true and no other material evidence is placed before the authority to support the stand of the dealer that the transfer of goods is otherwise than by way of sale, the decision or inevitable result would be that the transfer of goods is by way of sale in the course of inter-State trade or commerce, as such, it is exigible to sales tax under the CST Act. (ii) The enquiry required to be made under section 6A(2) of the CST Act is confined to find out the truth or otherwise of the particulars contained in form F and for this purpose other evidence if any produced by the dealer other than the particulars contained in form F is also to be considered. In the course of such enquiry, it is open to the authority to call for any other information in order to verify the truth or otherwise of the particulars contained in the declaration filed in form F. The "any other information" may be that which rule 4(3A) of the CST (TN) Rules require a dealer to maintain, except the one required under rule 4(3A)(d) or any other evidence relating to the issue, in order to adjudicate whether the particulars mentioned in form F are true. The copies of the bills ..... X X X X Extracts X X X X X X X X Extracts X X X X
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