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Issues: (i) Whether reassessment for the earlier assessment years was valid in the absence of a conclusive finding under section 6A(2) accepting the correctness of form F and whether the disputed turnover could be treated as inter-State sales; (ii) Whether the alleged branch transfers were in substance inter-State sales; (iii) Whether the alleged consignment transactions with agents were genuine stock transfers or direct inter-State sales.
Issue (i): Whether reassessment for the earlier assessment years was valid in the absence of a conclusive finding under section 6A(2) accepting the correctness of form F and whether the disputed turnover could be treated as inter-State sales.
Analysis: The statutory scheme places the initial burden on the dealer to show that movement of goods was otherwise than by reason of sale, and the declaration in form F becomes decisive only when the assessing authority, after inquiry, accepts its correctness and passes an order under section 6A(2). Mere filing of form F, without such acceptance, does not by itself attract the conclusive presumption. Reassessment is not justified where the original order has already accepted the declarations, unless there is fraud, misrepresentation, jurisdictional error or similar limited ground.
Conclusion: Reassessment was valid only to the extent the original assessment had not accepted the declarations, but was not sustainable where the form F declarations had already been accepted; the assessee succeeded in part.
Issue (ii): Whether the alleged branch transfers were in substance inter-State sales.
Analysis: The factual material showed that, in respect of the branch movements, the goods were earmarked for identified buyers in other States, the price had been realised before despatch, and the branches merely raised invoices and effected delivery. In such a situation the branch is only a conduit, and the movement of goods is occasioned by prior contracts of sale. The existence of a stock-transfer invoice or the routing of movement through a branch does not change the true character of the transaction.
Conclusion: The alleged branch transfers were rightly treated as inter-State sales and the assessee was not entitled to relief on that turnover.
Issue (iii): Whether the alleged consignment transactions with agents were genuine stock transfers or direct inter-State sales.
Analysis: In the consignment dealings, the authority distinguished genuine agency consignments from disguised sales. Where the record showed a running account, post-despatch remittances, lack of exact correlation between advance amounts and particular consignments, and rendering of accounts consistent with agency sale, the transactions retained the character of consignment sales. However, for the Capital Enterprise transaction, the pattern of fixed pre-agreed price, advance remittance matching the goods, and artificial accounting supported the inference of an outright inter-State sale. The burden, once form F was filed, could be displaced only by definite material.
Conclusion: The assessee succeeded in respect of genuine consignment transactions except the Capital Enterprise turnover, which was correctly taxed as an inter-State sale.
Final Conclusion: The appeals were disposed of by sustaining tax on the branch-transfer turnovers and on the Capital Enterprise transaction, while granting relief on the remaining consignments and on the reassessed turnover where the original acceptance of form F operated in favour of the assessee.
Ratio Decidendi: Under section 6A of the Central Sales Tax Act, 1956, form F operates as conclusive proof only after the assessing authority accepts its correctness on inquiry, and a movement of goods is an inter-State sale when it is the direct result of a prior contract of sale, even if routed through a branch or described as a consignment.
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