Burden of proof in stock transfers requires examination of Form F and despatch evidence; orders remitted for fresh adjudication

Burden of proof in stock transfers requires production of declaration Form F and contemporaneous evidence of despatch; authorities must scrutinize those documents and consider taxpayer explanations before assessing tax. Failure by assessing and revisional authorities to examine submitted documents and grounds raised vitiated prior orders, which were set aside and remitted for fresh adjudication with opportunity of hearing. The assessing authority is directed to conclude proceedings within six months from receipt of the remand.

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Issues: Whether the revisional orders dated 11.01.2016 levying VAT and entry tax could be sustained where the Assessing Authority and the Revisional Authority failed to scrutinize documentary evidence (including Form F and other material) and did not consider the petitioner's plea of SAP software malfunction leading to discrepant values.

Analysis: Section 6A(1) and (2) of the Central Sales Tax Act, 1956 places the burden on a dealer to furnish a declaration in the prescribed form (Form F) together with evidence of despatch to establish that movement of goods was by way of stock transfer and not sale; the assessing authority must make such inquiry as it deems necessary and examine the particulars in the declaration before treating movement as sale. The authorities imposed tax on the basis of a difference in values recorded in F-Forms and entry tax returns without adequately examining the documents submitted by the petitioner and without addressing the petitioner's explanation regarding incorrect values caused by malfunctioning SAP software. The statutory scheme requires scrutiny of declarations and supporting evidence before concluding that movement was occasioned by sale.

Conclusion: The revisional orders dated 11.01.2016 are set aside and the matters are remitted to the Assessing Authority for fresh decision after affording the petitioner an opportunity of hearing and after proper scrutiny of the documentary evidence, to be completed within six months from receipt of the order.

Ratio Decidendi: Where a dealer furnishes declaration Form F and supporting evidence, the assessing authority must scrutinize those documents and make necessary inquiries under Section 6A of the Central Sales Tax Act, 1956 before treating inter-state movement as a sale; failure to do so vitiates the assessment and warrants remand for fresh consideration.

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