Form-F declaration enquiry required before treating stock transfer as inter-State sale; disallowance was set aside and matter remitted.

Form-F declarations under the Central Sales Tax Act require a genuine enquiry under Section 6A(2) into whether the declarations are true, genuine and supported by relevant materials before a stock transfer can be treated as an inter-State sale. A conclusion based mainly on an inspection statement, without considering the declaration and supporting documents, is unsustainable. The Madras High Court set aside the disallowance of stock transfer and remitted the matter for a fresh enquiry into the Form-F declarations, with a fresh speaking order to be passed after hearing the assessee.

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Issues: Whether the disallowance of the claimed stock transfers and treatment of the transactions as inter-State sales could be sustained without conducting an enquiry into the Form-F declarations and the supporting materials.

Analysis: The assessment under the Central Sales Tax Act turned on the truth of the particulars in the Form-F declarations. The enquiry contemplated by Section 6A(2) is confined to verifying whether the declaration is true, genuine and supported by relevant materials. The respondent did not conduct such an enquiry and instead relied mainly on a statement recorded during inspection. The existence and effect of the Andhra Pradesh assessment certificate and other supporting documents also required consideration. In the absence of a proper enquiry, the conclusion that the transactions were inter-State sales was unsustainable.

Conclusion: The disallowance of stock transfer was held to be unsustainable and the impugned orders were set aside.

Final Conclusion: The matter was remitted to the respondent for a fresh enquiry into the Form-F declarations and for passing a fresh speaking order after giving the petitioner an opportunity of hearing.

Ratio Decidendi: When a dealer furnishes Form-F declarations, the assessing authority must conduct a genuine enquiry under Section 6A(2) and determine the truth of the declaration on relevant materials before treating the transfer as a sale.

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