Consignment transfer proof under CST Act turns on reliable evidence, while bogus documents can sustain penalty, reduced to disallowed turnover.

Under section 6A of the Central Sales Tax Act, a dealer must prove that the movement of goods was by way of consignment transfer and not inter-State sale, but Form F was not the only permissible mode of proof for the relevant period. The claim may be accepted or rejected on the totality of reliable evidence, including inter-State verification reports, though bare denials, cryptic reports, or unverified material are insufficient by themselves. Penalty under the State provision, as applied through section 9(2) of the CST Act, is justified where bogus documents are used to support a tax exemption claim, but it must be confined to the turnover ultimately sustained as disallowed.

---

---

Issues: (i) Whether the assessee had discharged the burden under section 6A of the Central Sales Tax Act, 1956 to prove that the disputed movement of goods was by way of consignment transfer and not inter-State sale; (ii) Whether the levy of penalty under section 7A(2)(i) of the Andhra Pradesh General Sales Tax Act, 1957, as applied through section 9(2) of the Central Sales Tax Act, 1956, was justified.

Issue (i): Whether the assessee had discharged the burden under section 6A of the Central Sales Tax Act, 1956 to prove that the disputed movement of goods was by way of consignment transfer and not inter-State sale.

Analysis: Under section 6A, the dealer bears the initial burden to prove that movement of goods was otherwise than by way of sale. For the relevant assessment year, filing of Form F was not mandatory, and the burden could be discharged by other satisfactory evidence. Inquiry reports from the other States could be relied upon, but bare denials by alleged agents or cryptic reports, without verification of records, were not sufficient to reject the claim in every case. Where the material showed non-existent dealers, wrong registration particulars, or direct purchase transactions, the claim was rightly rejected; where the reports were uncorroborated or incomplete, the assessee was entitled to relief.

Conclusion: The assessee succeeded in part on the assessment issue, and disallowance was confined only to the transactions supported by reliable adverse material.

Issue (ii): Whether the levy of penalty under section 7A(2)(i) of the Andhra Pradesh General Sales Tax Act, 1957, as applied through section 9(2) of the Central Sales Tax Act, 1956, was justified.

Analysis: Penalty was attracted where false documents were produced to support a tax exemption claim. On the facts, the production of bogus or unverified documents to evade tax justified penalty at three times the tax due. However, because the assessment relief altered the turnover sustained as disallowed, the penalty had to be recomputed accordingly and reduced to the extent of turnover that was ultimately allowed.

Conclusion: The penalty was sustained in principle, but it was reduced to match the turnover finally disallowed.

Final Conclusion: The assessee obtained substantial relief on the assessment and a consequential reduction in penalty, while the balance disallowance and corresponding penalty were upheld.

Ratio Decidendi: Under section 6A of the Central Sales Tax Act, 1956, Form F is only one mode of proof for the relevant period, and consignment-transfer claims must be tested on the totality of reliable evidence, with penalty under the corresponding State provision sustained only to the extent that bogus documents are proved to support the tax evasion claim.

---