Form F declarations and stock transfer reassessment: roving enquiry barred absent fraud, misrepresentation or collusion.

A valid Form F declaration under the Central Sales Tax Act gives conclusive effect to the acceptance of a stock transfer as otherwise than an inter-State sale, and reassessment cannot be widened into a roving enquiry on contemporaneous documents alone. In the absence of any allegation of fraud, misrepresentation or collusion, the reassessment powers under the State sales tax law could not be used to disturb the declared stock transfer turnover. The Madras HC therefore held that the reassessment was not sustainable and set aside the turnover addition in favour of the assessee.

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Issues: Whether the reassessment of stock transfer turnover could be sustained on the basis of additional contemporaneous documents despite the filing of Form F declarations, and whether the enquiry could be widened in the absence of any allegation of fraud, misrepresentation or collusion.

Analysis: The legal effect of a valid Form F declaration under the Central Sales Tax Act is that, once the statutory authority accepts the transaction as a transfer otherwise than by way of inter-State sale, the finding operates as a conclusive determination and the scope of further enquiry is limited. The enquiry cannot be expanded into a roving investigation requiring proof beyond the declaration unless the assessment is sought to be reopened on recognised grounds such as fraud, misrepresentation or collusion. The reasoning also recognises that the legal fiction created for stock transfer continues to govern the assessment process and the reassessment powers under the State sales tax law.

Conclusion: The reassessment of the stock transfer turnover was not sustainable in the absence of any allegation of fraud, misrepresentation or collusion, and the impugned turnover addition was set aside in favour of the assessee.

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