2026 (2) TMI 426 - HC - VAT / Sales Tax

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 ... Burden of proof in stock transfers u/s 6A - Obligation of dealer to furnish declaration Form F and evidence of despatch - Duty of assessing and revisional authorities to scrutinise documents and make inquiries - Remand for fresh adjudication after defective consideration - HELD THAT:- In the present case, the petitioner submitted all necessary documents before the Assessing Authority but the concerned authority on the basis of difference of value between F-Form and entry tax paid by the petitioner passed two separate orders levying 14% VAT tax and entry tax Rs.85,436/-. In the revision, the petitioner took a plea that there was malfunction of newly employed SAP Software but same was not taken into consideration by the said authority. As the documents were provided by the petitioner to the Assessing Authority as well as the Revisional Authority, therefore, the authorities were under an obligation to examine those documents. According to the provisions contained in Section 6A of the Act of 1956, the Assessing Authority as well as the Revisional Authority are under an obligation to scrutinize all the documents before taking any decision. As in these petitions, the Assessing Authority as well as the Revisional Authority failed to scrutinize the documents provided by the petitioner and also failed to consider the grounds raised by the petitioner, therefore, orders passed by the Revisional Authority in both the petitions dated 11.01.2016 are hereby set aside. The matter is remitted back to the Assessing Authority to decide afresh after affording due opportunity of hearing to the petitioner strictly in accordance with the provisions of law. As the orders impugned were passed way back in the year 2016, the Assessing Authority is directed to conclude the proceeding within a period of 6 months from the date of receipt of a copy of this order. With the aforesaid observations/directions, both petitions are disposed of. 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.