2016 (2) TMI 543 - HC - VAT and Sales Tax

Validity of Trade Circular No. 2T of 2010 and Section 6A of CST Act affirmed with emphasis on 'F' forms

Johnson Matthey Chemicals India Pvt. Ltd. Versus The State of Maharashtra, The Commissioner of Sales Tax, The Joint Commissioner Sales Tax, The Deputy Commissioner of Sales Tax

Johnson Matthey Chemicals India Pvt. Ltd. Versus The State of Maharashtra, The Commissioner of Sales Tax, The Joint Commissioner Sales Tax, The Deputy ... Issues Involved:1. Validity of Trade Circular No. 2T of 2010.2. Applicability of Section 6A of the CST Act to interstate movement of goods returned after job work.3. Legality of assessment orders and Tribunal's order.4. Requirement of furnishing 'F' forms for interstate job work transactions.Detailed Analysis:1. Validity of Trade Circular No. 2T of 2010:The petitioner challenged the validity of Trade Circular No. 2T of 2010, arguing that it is ultra vires Section 6A of the CST Act and should be set aside. The court examined the circular and previous related circulars (16T of 2007 and 5T of 2009) and concluded that the 2010 circular correctly interpreted the legal requirements. The court emphasized that a circular cannot displace a legal provision and that the interpretation of Section 6A is the duty of the court. The court found no inconsistency between the circulars and upheld the validity of Trade Circular No. 2T of 2010.2. Applicability of Section 6A of the CST Act to Interstate Movement of Goods Returned After Job Work:The petitioner argued that Section 6A does not apply to the interstate movement of goods returned after job work, claiming it only applies to transactions between agents and principals. The court referred to the judgment of the Supreme Court in Ashok Leyland Ltd. v. State of Tamil Nadu and the Allahabad High Court's decision in Ambika Steels Ltd. v. State of U.P. The court held that Section 6A applies to all interstate transfers not by way of sale, including job work transactions. The burden of proof lies on the dealer to show that the movement of goods was not by reason of sale, which can be discharged by furnishing 'F' forms.3. Legality of Assessment Orders and Tribunal's Order:The petitioner challenged the assessment order dated 14.08.2014 and the Tribunal's order dated 17.07.2015. The court noted that the assessment order was based on the petitioner's failure to produce 'F' forms, leading to the presumption of an interstate sale. The court upheld the assessment order, stating that the burden of proof was on the petitioner to demonstrate that the movement of goods was not by way of sale. The Tribunal's order, which required the petitioner to deposit a part payment, was also upheld as it was in accordance with the legal requirements.4. Requirement of Furnishing 'F' Forms for Interstate Job Work Transactions:The petitioner contended that 'F' forms are not required for interstate job work transactions. The court referred to Section 6A and Rule 12(5) of the CST (Registration and Turnover) Rules, 1957, which mandate the furnishing of 'F' forms for all interstate transfers not by way of sale. The court clarified that the failure to furnish 'F' forms would lead to the presumption of an interstate sale. The court also noted that if a state does not issue 'F' forms, the dealer can bring this to the attention of the assessing officer, who can then consider the circumstances and pass appropriate orders.Conclusion:The court dismissed the writ petitions, upholding the validity of Trade Circular No. 2T of 2010, the applicability of Section 6A to interstate job work transactions, and the legality of the assessment and Tribunal's orders. The court emphasized the mandatory requirement of furnishing 'F' forms for interstate transfers not by way of sale and provided guidance for cases where 'F' forms are not issued by certain states. The court directed the first appellate authority to decide the appeals by 30th May 2016.