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TMI Blog2025 (2) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the Financial Years 2007-08 and 2008-09. 2. The issue that had arisen for consideration before the State Tribunal was whether it was obligatory on the part of the appellant to supply declaration in Form-F to support its case that in transfer of promotional products such as Physician's Samples (samples of Abbott-brand drugs), as well as 'Brand Reminders' (pens, newsletters, product brochures with Abbott branding) free of cost to depots or branches of the appellant located in other States or for supply of promotional products free of cost to the medical representatives of the appellant posted in other States, sales in the course of inter-State trade had not taken place. 3. The State Tribunal allowed the appeals filed by the appellant in part. The appellant was required to produce declaration in Form-F to support that sales had not taken place in the course of inter-State transfer of promotional items to the depots or branches of the appellant in other States. In respect of transfer of promotional items to the medical representatives, the State Tribunal observed that if the appellant raises a plea that the medical representatives cannot issue a declaration in Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order and they are: "6. We have consciously heard rival submissions. There are two aspects. One is regarding "C" forms and other is regarding "F" forms as per appeal memo. While arguing the case, learned Advocate Mr. Banhatti, has withdrawn aspect regarding levy of tax as per rate under Local Act on sales not supported by declarations in Form "C". He has argued the case only in respect of transfer of goods from the State of Maharashtra to other states. According to him, these are being promotional items transferred to employees and depots situated in different states all over India, not for sale and ultimately there is no possibility of sale of such items. Hence, declarations in Form "F" are not required. We have perused assessment order, first appeal order, appeal memo and contention from both sides. It is undisputed fact that, appellant has purchased stationary items and branding items as well as manufactured pharmaceutical products for free distribution to medical practitioners. All these items are collectively called promotional items which are transferred from the State of Maharashtra to employees and depots situated in different states of the country. Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances, we do not think that, there is any difficulty for the dealer to discharge the burden by obtaining F forms from their own branches and submit it before assessing officer." (emphasis supplied) 10. In respect of the transfer of promotional products from the State of Maharashtra to the medical representatives of the appellant in other States, the State Tribunal recorded the following findings: "12. We do agree with one of the contentions of the appellant that, there are transfer of goods to medical representative, who are employees in other states, where there are no depots or branches. In such cases, goods receiving employees are not legally in a position to issue declarations in form "F". It is practical difficulty of the appellant. Burdon of proof cannot be discharged as expressed in Section 6A. ***** 13. Similar, are the facts in the present case. Employees of the appellant called medical representative not being registered dealer in other states are not in a position to issue declarations in Form "F". Therefore, it would be open to assessing authority to complete the assessment proceedings on its own merits after examining the transactions between HO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make laws with respect to matters enumerated in List I of the Seventh Schedule. Entry 92A of List I empowers the Centre to legislate on taxes on the sale or purchase of goods where such sale or purchase takes place in the course of inter-State trade or commerce. The CST Act has been enacted in exercise of the powers conferred under article 246A read with Entry 92A of List I of the Seventh Schedule of the Constitution. In line with the Constitutional scheme of taxation, central sales tax can only be levied by law on the event of "sale or purchase of goods"; (ii) Section 6 of the CST Act has been formulated as the charging section for the levy central sales tax. Under the statutory scheme, as well as the Constitutional Scheme, the taxable event which triggers the levy of central sales tax is the event of "sale of goods". In order for a transaction to be leviable to central sales tax, the following jurisdictional conditions are required to be fulfilled (i) there must be a "sale of goods" in the course of inter-State trade or commerce; and (ii) such sale of goods must be made by a "dealer". In the absence of both the aspects being cumulatively fulfilled, the levy of central sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The appellant has to provide Form-F to the assessing authority, and failure to do so, will make the deeming provision operational; (v) Even when goods have been sent to medical representative of the appellant in other States, the appellant is required to produce Form-F; and (vi) The Courts cannot legislate and neutralize the provision of section 6A of CST Act which mandates production of Form-F to prove non sale transaction. In this connection, reliance has been placed on the judgment of the Supreme Court in Ambica Steels. 14. The submissions advanced by the learned counsel for the appellant and the learned counsel for the State of Maharashtra have been considered. 15. Under article 246(1) of the Constitution, Parliament has the exclusive power to make laws with any of the matters enumerated in List 1 of the Seventh Schedule. Entry 92A of List 1 of the Seventh Schedule deals with taxes on the sale or purchase of goods, where such sale or purchase takes place in the course of inter-State trade or commerce. This entry was inserted by Constitution (Sixth Amendment) Act, 1956. The Central Sales Tax Act, 1956 was, accordingly, enacted. 16. It would appropriate examine se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods shall be deemed for all purposes of this Act to have been occasioned as a result of sale. (2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under sub-section(1) are true, he may, at the time of, or at any time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale. *****" (emphasis supplied) 17. Section 3 of the CST Act is contained in Chapter II and deals with "when is a sale or purchase of goods said to take place in the course of inter-State trade or commerce". It provides that a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase occasions the movement of goods from one State to the other. 18. Section 6 of the CST Act is contained in Chapter III and deals with "inter-State sales tax". Sub-section (1) of section 6, in particular, deals with "liability to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) Cycle Reports (called 'sample invoices') which provide a break-up of the items in the consignment for each medical representative in the receiving State. The said documents carry the name and address of the medical representative, the quantity of material to be delivered to each medical representative and the cost of such material. The promotional products are distributed by the medical representatives free of cost to the medical professionals. 21. The contention of the learned counsel for the appellant is that the transfer of promotional products are not capable of being sold and, in fact, have not been sold and, therefore, such a transfer would not amount to "sale" as defined in section 2 of the CST Act. Elaborating this submission, learned counsel pointed out that the taxable event for levy of central sales tax under the charging provisions of section 6 of the CST Act is that a "sale" has been effected by a dealer in the course of inter-State trade and as the jurisdictional condition constituting a "sale" is not fulfilled, central sales tax cannot be demanded from the appellant. 22. This submission of learned counsel for the appellant overlooks the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the burden of proving that movement of the goods was so occasioned would be on the dealer, and for this purpose he has to submit to the assessing authority a declaration duly filled and signed by the Principal Officer of the other place of business in Form-F and if the dealer fails to furnish such declaration, then the movement of such goods shall be deemed for all purposes of the CST Act to have been occasioned as a result of sale. Section 6A, therefore, provides for the only manner in which a dealer can substantiate that transfer of goods was otherwise than by way of sale and that is by furnishing a declaration in Form-F. It is not a case of the appellant that movement of goods had not taken place from the State of Maharashtra to other States. The contention is that the movement of goods was not by reason of sale in the course of inter-State trade or commerce. It was, therefore, imperative for the appellant, in terms of section 6A of the CST Act, to have furnished the declaration in Form-F. 25. The Bombay High Court in Johnson Matthey Chemicals India Pvt. Ltd. vs. The State of Maharashtra through the Government Pleader, High Court, Mumbai and others [2016 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Supreme Court are reproduced below: "Interpretation of section 6-A of the Central Act 72. A statute, as is well-known, must be interpreted having regard to the text and context thereof. Mischief Rule may also be applied in a given case. 73. While construing a statute, the object of the Act must be taken into consideration. (See Killick Nixon Ltd. v. CTI: (2003) 1 SCC 145) 74. Section 6-A of the Act although provides for a burden of proof, the same has to be read in the context of Section 6 of the said Act. Section 6 provides for liability to pay tax on inter-State sales. Any transaction which does not fall within the definition of 'sale' would not be exigible to tax, the burden whereof would evidently be on the assessee. We have noticed hereinbefore that whereas prior to the amendment in Sub-section (1) of Section 6A the dealer had an option of filing a declaration in Form-F; after such amendment, he does not have such option, insofar as in terms of the amended provision, if the dealer fails and/or neglects to file such a declaration, the transaction would be deemed to be an inter-State sale. It is to be noticed that for the aforementioned purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deeming fiction contained in sub-section (1) of section 6A will come into play and the movement of goods shall be deemed for all purposes of the CST Act to have been occasioned by reason of sale in the course of inter-State trade or commerce. 28. The contention of the learned counsel for the appellant is that sale had not taken place in the transfer of the promotional products from the State of Maharashtra to other State. The appellant had, therefore, necessarily to file a declaration in Form-F, in the absence of which it shall deemed that the transfer of goods was occasioned as result of sale. 29. The State Tribunal has given an option to the appellant to produce the declaration in Form-F to support its case that sale had not taken place in the transfer of the promotional products to the depots of the appellant in other States so that the assessing authority can examine and pass an order. In respect of the transfer of the promotional products to the medical representatives who are not registered dealers in other States, the State Tribunal has left it open to the assessing authority to complete the assessment proceedings on its own merit after examining the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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