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of <h1>Court upholds 'F' Forms for stock transfers beyond 1 month, deeming Rule 12(5) directory.</h1> <h3>The State of Karnataka Represented By The Secretary Finance Department Versus M/s. V.N. Corporation</h3> The State of Karnataka Represented By The Secretary Finance Department Versus M/s. V.N. Corporation - TMI Issues:Interpretation of Rule 12(5) of the CST (R & T) Rules, 1957 regarding the validity of 'F' Forms for stock transfers covering a period exceeding one month.Analysis:The petitioner-revenue filed revision petitions under Section 23(1) of the Karnataka Sales Tax Act, challenging the order of the Karnataka Appellate Tribunal. The Tribunal allowed the assessee's appeals, holding that 'F' Forms under Rule 12(5) of the CST (R & T) Rules, 1957 for stock transfers over one month can be accepted. The Tribunal relied on the Calcutta High Court's decision in Cipla Limited vs. Deputy Commissioner, CT (Cal) and interpreted the permissive term 'may' in Rule 12(5) as directory, not mandatory.The petitioner argued that Rule 12(5) required 'F' Forms for a period of one calendar month only. However, the Tribunal found no justification to set aside the order of the Joint Commissioner of Commercial Taxes. Rule 12(5) allows a single declaration to cover transfers for one calendar month, but the particulars can be given in separate annexures if space is insufficient.The Court examined Section 6A of the CST Act, which places the burden of proof on the dealer claiming exemption for goods transferred not by sale. The Court referred to the Calcutta High Court's decision in Cipla Limited and the Supreme Court's decision in CIT vs. Smt. P.K. Noorjahan, supporting a permissive interpretation of Rule 12(5).The Court concluded that Rule 12(5) is directory, and the requirement of one declaration form for one calendar month is procedural. The purpose of 'F' Forms is to provide details of branch or stock transfers, not to determine sales tax liability. The Tribunal's decision aligns with the Supreme Court and Calcutta High Court rulings, and no substantial question of law necessitated consideration. Therefore, the revision petitions were dismissed as devoid of merits.
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