TaxTMI 
TaxTMI 
2010 (8) TMI 827
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....elevant assessment year is 2003-04. The appellant claimed exclusion of the value of the goods said to have been sent on consignment basis to commission agents outside Gujarat State, (i.e., Delhi and Mumbai) for the purpose of sales in those other States. The appellant, inter alia, filed F forms prescribed by rule 12(5) of the CST (Registration and Turnover) Rules, 1957 having regard to the provision contained in section 6A(1) of the CST Act. However, the assessing authority vide its order dated November 17, 2008 rejected the F forms relating to the transactions with two dealers, viz., (1) Sarthak Enterprises, Delhi and (2) Zarna Corporation, Mumbai. It was found that the F forms said to have been issued by these two dealers who according to the appellant acted as its commission agents, were not genuine. It was found on inquiry by the assessing officer that the F forms were not, in fact, issued to those two dealers whom the appellant claimed to be its consignment agents. The value of consignments despatched to these two agent-dealers was Rs. 17,14,47,155. Out of this, the bulk of turnover, i.e., Rs. 16.79 crores relates to Sarthak Enterprises, Delhi. The transactions with these two ....
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....y the appellant, but only for the purpose of sales to be effected through commission agents, still, no relief can possibly be granted to the assessee in the absence of valid F forms, having regard to the clear legal position as discussed hereinafter. The appellant could have relied on other evidence even without reference to F forms, if the relevant assessment year was before 2002. The provision introduced by the CST (Amendment) Act, 2002 makes all the difference here. I shall now refer to the relevant provisions in section 6A of the CST Act. "6A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale.-(1) Where any dealer claims that he is not liable to pay tax under this Act, in respect of any goods on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be, and not by reason of sale, the burden of proving that the movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority within the prescribed time or within such further....
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....xemption on the ground that there was no inter-State sale, the assessing authority is entitled to hold an inquiry in terms of sub-section (2) to determine whether the particulars furnished in F form are correct and what is the true nature of the transaction. Further, for this purpose, the assessing authority may insist upon the production of documentary evidence including the accounts and registers maintained in the ordinary course of business. If on such inquiry, the assessing authority is satisfied that the particulars are correct and it is a case of stock transfer to the branch or the agent, he will pass an order recording his satisfaction. Thereupon, the movement of the goods to which the declaration in form F relates "shall be deemed to have been occasioned otherwise than as a result of sale". This deeming fiction in sub-section (2) raises a conclusive presumption of the transaction being not an inter-State sale as held by the Supreme Court in Ashok Leyland Ltd. v. State of Tamil Nadu [2004] 134 STC 473; [2004] 3 SCC 1. Thus, the deeming provision in sub-section (2) enures to the benefit of the assessee-dealer who dispatches the goods to other States for the purpose of effecti....
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....t, genuine and the allegation was unfounded. Section 6A as amended by Act 20 of 2002 was analyzed by the Supreme Court in the case of Ashok Leyland Ltd. v. State of Tamil Nadu [2004] 134 STC 473; [2004] 3 SCC 1. This is what has been said in para 34: "The liability to tax on inter-State sale as contained in section 6 is expressly made subject to the other provisions contained in the Act. Sub-section (2) of section 9, on the other hand, which is a procedural provision starts with the words 'subject to the other provisions of this Act and the rules made thereunder'. Section 6A provides for exception as regards the burden of proof in the event of claim is made that transfer of goods had taken place otherwise than by way of sale. Indisputably, the burden would be on the dealer to show that the movement of goods had occasioned not by reason of any transaction involving sale of goods but by reason of transfer of such goods to any other place of his business or to his agent or principal, as the case may be. For the purpose of discharge of such burden of proof, the dealer is required to furnish to the assessing authority within the prescribed time a declaration duly filled and s....
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....rm F a condition precedent for the waiver of penalty. Obviously, the cases in which the out of State dealer concerned is not in a position to obtain the F forms for no fault of his, stand on a different footing. The learned counsel for the appellant then invited my attention to an observation made by the Gujarat High Court while disposing of the writ petition (Spl. Civil Application No. 12260 of 2009) (Prabhat Solvent Extraction Industries Pvt. Ltd. v. Union of India [2010] 34 VST 430) filed by the appellant. The High Court while refusing to go into the merits in view of the pendency of appeal before this Authority, observed thus: "It is open for the petitioner to agitate this issue before the pending proceedings and establish its claim in absence of form F while leading other evidence to the effect that the transaction in question is not an inter-State sale, but it is merely a consignment. With this observation . . . the petition is disposed of." This observation according to the appellant's counsel, tantamounts to an expression of opinion that the absence of valid F forms will not stand in the way of the appellant/assessee adducing other evidence in support of its claim. ....
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....unsel has asserted that only a general notice was issued on September 4, 2004. A perusal of the assessment record which has been produced by the concerned officials after the last hearing confirms the assertion of the appellant in this behalf. The record reveals that a notice was issued as far back as on September 4, 2004 and this notice is in form VI(B). According to rule 9A of the CST (Gujarat) Rules, a notice summoning the dealer for assessment or reassessment under the Act shall be in form VI(B). In the pro forma of the notice, the assessee has been directed to attend at the specified time and date to produce any evidence on which the assessee would like to rely in support of the returns and to show cause as to why he should not be assessed/reassessed to tax and penalty under section 9 of the CST Act in respect of the said period. The notice also calls upon the dealer to produce the documents and accounts. Thus, it is an omnibus general notice issued calling upon the dealer to be present with all the records on the specified date and to produce evidence in support of the return. Later, it was followed by the reminder notice. The notice dated September 2, 2004 or further communi....
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....d merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out." Whether or not the penalty should automatically follow the assessment in respect of the differential amount of tax and whether mens rea is implicit in the provision (section 45 (vi)) of the Gujarat Sales Tax Act, is at least a moot point. But, nothing has been adverted to by the assessing officer who mechanically applied the penalty provision, as if it is automatic. As rega....