Branch transfer tax demands cannot rest on conjecture; disputed Form F evidence requires verification before levy or penalty.

Assessment under the Central Sales Tax regime could not be sustained where the levy on alleged local or inter-State sales rested on presumptions about branch transfers and disputed Form F materials rather than verified documentary evidence. The Court held that incomplete buyer particulars, TIN details, or payment proof were not enough by themselves to reject the exemption claim without proper factual examination, and the orders were therefore set aside. It further stated that if goods were not actually received as branch transfers, tax could not be recovered on that assumption; at most, the matter could attract penalty under the Central Sales Tax Act, 1956, subject to proper verification and fresh decision.

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Issues: (i) Whether the assessment orders levying tax on the footing that the transactions were local sales or inter-State sales not covered by C forms could be sustained when the conclusion rested on presumed facts and disputed branch-transfer materials. (ii) Whether, on the alleged absence of proof of receipt of goods in Tamil Nadu, tax could be recovered under the Central Sales Tax regime or only penalty could follow.

Issue (i): Whether the assessment orders levying tax on the footing that the transactions were local sales or inter-State sales not covered by C forms could be sustained when the conclusion rested on presumed facts and disputed branch-transfer materials.

Analysis: The assessment was founded on the view that exemption stood reduced from 12.07.2011 and that the petitioner must have discontinued genuine branch transfers. The impugned orders also proceeded on the absence of complete buyer details, TIN particulars, and payment proof in invoices, and treated that as sufficient to reject the claim of exemption and branch transfer. However, the Form F materials carried transport particulars and required factual verification. The demand was therefore built on presumptions and conjectures rather than a conclusive examination of the documentary record. Such a basis was not sufficient to sustain the levy as made.

Conclusion: The assessment orders could not be sustained on the existing reasoning and were liable to be set aside.

Issue (ii): Whether, on the alleged absence of proof of receipt of goods in Tamil Nadu, tax could be recovered under the Central Sales Tax regime or only penalty could follow.

Analysis: The Court accepted that if the respondent's case was that the goods were never received as branch transfers, the consequence would not be recovery of tax on that premise. In that situation, the proper course would be to consider penalty under the relevant provision of the Central Sales Tax Act, 1956. Any tax, if leviable, would lie in the hands of the authority having jurisdiction over the alleged originating transactions in Maharashtra, not by treating the present demand as recoverable in the manner adopted in the impugned orders.

Conclusion: Tax could not be recovered on the stated assumption, and only the penal consequence under the Central Sales Tax Act, 1956 could be considered if the factual foundation was ultimately established.

Final Conclusion: The impugned assessment orders were set aside and the matters were remitted for fresh decision after proper verification and hearing, leaving the substantive liability to be redetermined in accordance with law.

Ratio Decidendi: A tax demand cannot be sustained on assumptions and conjectures about the movement or receipt of goods; where the factual foundation for branch transfer is disputed, the authority must verify the record before levying tax, and a mere absence of receipt does not automatically justify recovery of tax under the Central Sales Tax Act, 1956.

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