Transit sales exemption: valid C Forms cannot be rejected for non-genuineness without reliable departmental proof.

Exemption under Section 6(2) of the Central Sales Tax Act was upheld where the assessee produced prima facie valid C Forms for alleged transit sales and the Department failed to prove that they were fabricated or otherwise unreliable. The assessing authorities did not produce the C Form register or supporting inter-office communications, and the appellate authority had already accepted the existence of the same Forms while deleting the penalty. On that record, the assessee was treated as having discharged the burden of proof, and the allegation of non-genuineness was held unsubstantiated.

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Issues: Whether the assessee was entitled to exemption under Section 6(2) of the Central Sales Tax Act, 1956 on the basis of C Forms claimed for alleged transit sales, and whether the rejection of those Forms as non-genuine was sustainable.

Analysis: The exemption claim turned on whether the Department could establish that the C Forms were fabricated or otherwise unreliable. The Court noted that the assessing authorities had not produced the C Form register or any supporting inter-office communication to prove non-genuineness. The assessee had produced the relevant Forms with serial details, and the Department failed to disprove them. The Court also took note that the appellate authority had accepted the existence of the same Forms while setting aside the penalty, and that the Department had not challenged that part of the order. In these circumstances, the burden cast on the assessee was treated as discharged and the Department's allegations were found unsubstantiated.

Conclusion: The denial of exemption was unsustainable and the assessee was entitled to the benefit of Section 6(2) of the Central Sales Tax Act, 1956.

Ratio Decidendi: Where an assessee produces prima facie valid C Forms supporting a claim of transit sales, the exemption cannot be rejected merely on allegation of non-genuineness unless the Department adduces reliable material to disprove those Forms.

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