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2009 DIGILAW 3625 (ALL)

A. C. P. L. JEWELS PRIVATE LTD. v. UNION OF INDIA

2009-12-01

SUNIL AMBWANI, VIRENDRA SINGH

body2009
ORDER By the Court.—In all these writ petitions, the petitioners have challenged the assessment orders; re-assessment orders and notices under Section 21 (2) of the U.P. Trade Tax Act, for relevant assessment years, by the Trade Tax Department, on the transactions of job-work and goods-returned treated as sales under Section 6-A of the Central Sales Tax, and in which the assessing authority or the reassessing authority has assessed or has proposed to assess the liability of Tax following the judgment in Ambica Steels Limited v. State of U.P. and others, 2008 12 VST 216 (All) on the ground that since ‘Form F’ of the Central Sales Tax have not been produced, no other evidence is required to be considered for determining the tax liability on the sales/trade activities carried out by the petitioners. 2. In Ambica Steels (supra), a Division Bench of this Court has held as follows : “The provisions of Sections 6 and 6A of the Central Act came up for consideration in the case of Ashok Leyland Ltd. v. State of T.N. and another, (2004) 3 SCC 1 . Dealing with Sections 6 and 6A of the Central Act, the Apex Court, in paragraph 43 of the report, has held as follows : “Section 6 of the Act provides for liability to tax on inter-State sales in terms whereof every dealer is liable to pay tax thereunder on sales effected by him in the course of inter-State trade or commerce subject to the exception contained in the proviso appended thereto. Such tax would be leviable notwithstanding the fact that no tax is leviable either on seller or the purchaser under the State tax laws of the appropriate State if that sale had taken place inside the State.” In paragraph 44 of the report, the Apex Court has further held as under : “44. 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 6-A provides for exception as regard the burden of proof in the event a claim is made that transfer of goods had taken place otherwise than by way of sale. Section 6-A provides for exception as regard the burden of proof in the event a 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 signed by the principal officer of the other place of business or his agent or principal. Such declaration would contain the prescribed particulars in the prescribed form obtained from the prescribed authority. Along with such declaration, the dealer is required to furnish the evidence of such dispatch of goods by reason of Act 20 of 2002. In the event, if it fails to furnish such declaration, by reason of legal fiction, such movement of goods would be deemed for all purposes of the said Act to have occasioned as a result of sale. Such declaration indisputably is to be filed in Form F. The said form is to be filled in triplicate. The prescribed authority of the transferee State supplies the said form. The original of the said form is to be filed with the transferor State and the duplicate thereof is to be filed before the authorities of the transferee State whereas the counterfoil is to be preserved by the person where the agent or principal of the place of business of the company is situated.” In paragraph 47 of the report, it has further held as under : “47. By reason of sub-section (2) of Section 6-A, a legal fiction has been created for the purpose of the said Act to the effect that transaction has occasioned otherwise than as a result of sale.” The Apex Court has, therefore, clearly laid down that, under Section 6A of the Central Act, the burden would be on the dealer to show that movement of the goods had been occasioned not by reason of any transaction involving sale of goods but by reason of transfer of such goods to any other place of business or to the agent or principal, as the case may be, for which the dealer is required to furnish prescribed declaration form in the absence of which the transfer would be treated as sale. Admittedly, what the petitioners send or receive either for job work or as a return of goods from outside U.P., are goods within the Central Act. They are claiming that the goods have been transferred/received from ex-U.P. which are not sale and not liable to tax under Section 6 of the Central Act. The submission that the goods sent for job work or received for doing job work, do not amount to sale would depend upon the contract entered into between the parties and would be the subject matter of examination by the Assessing Authority. Even otherwise, under Section 2(g)(ii) of the Central Act, transfer of goods used in execution of work contract is treated to be a sale. If the petitioner claims that it is not liable to tax on the transfer of goods from U.P. to ex U.P., then it would have to discharge the burden placed upon it under Section 6A by filing declaration Form F. It would be immaterial whether the person to whom the goods are sent for or received after job work is a bailee. As held by the Apex Court, under the statutory provision, the requirement is that if any person claims that he is not liable to pay tax on transfer of the goods from one State to another, he has to furnish declaration Form F. This would be applicable in a case of goods returned also. The statement of objects and reasons, referred to by Sri S.D. Singh, does not advance his case any further. The statement of objects and reasons, referred to by Sri S.D. Singh, does not advance his case any further. Before parting with the case, we may, however, observe that as the petitioners have claimed that they are not liable to furnish declaration Form F in respect of the transaction in question and we have come to the conclusion that they are, in fact, liable. We direct the respective the Assessing Authorities to accept the declaration Form F of each of the petitioners if they file it within a period of three months from today and to grant exemption in accordance with law. In view of the foregoing discussions, we do not find any merit in these petitions and subject to the aforesaid observations, they are accordingly dismissed. All the interim orders are discharged. However, the parties shall bear their own costs.” 3. The judgment in Ambica Steels Ltd. (supra) was challenged in Supreme Court in Civil Appeal No. 4970 of 2008 [M/s. Ambica Steels Ltd. v. State of U.P. and others]. The Supreme Court on 31.3.2009 passed an order as follows : “Shri Sorabjee, learned senior Counsel appearing on behalf of the assessee, on instructions, states that the appellant-assessee will submit itself to the re-assessment proceedings initiated vide Show Cause Notice (see Annexure P-2). He further states that the assessee will file Form “F” with the Authority concerned within ten weeks from today. On expiry of the period of ten weeks the Assessing Officer will take up re-assessment proceedings which will be completed within a period of three months, thereafter. At this stage, it may be mentioned that on the scope and applicability of Section 6A of the Central Sales Tax Act, 1956, there exists difference of opinion between the various Sales Tax Collectors in the country and therefore since the Appellant is now ready to file Form “F”, we are directing the Assessing Officer not to impose penalty/interest, in the re-assessment proceedings as one time waiver. Needless to add that waiver of penalty and interest shall be admissible only on Form “F” being furnished by the assessee within the prescribed period. The appellant has deposited a sum of Rs. 1,00,00,000/- (one crore) on 27th December, 2008, under protest vide letter of even date. Needless to add that waiver of penalty and interest shall be admissible only on Form “F” being furnished by the assessee within the prescribed period. The appellant has deposited a sum of Rs. 1,00,00,000/- (one crore) on 27th December, 2008, under protest vide letter of even date. It is made clear that the said amount shall be refunded to the assessee herein within a period of two weeks after the completion of re-assessment proceedings, subject to adjustment, if any, in the Duty assessed. We are informed that certain State(s) within whose jurisdiction the transferee is located is/are not issuing “F” Forms. In such an eventuality it would be open to the Assessing Officer to complete re-assessment proceedings on its own merits after examining the transaction between the parties, keeping in mind the circumstance that the assessee is not in a position to obtain the “F” Form, for no fault of his. Accordingly, this civil appeal is disposed of with no order as to costs.” 4. We have been informed that the Commissioner Trade Tax of the State of Uttar Pradesh has issued a circular dated 26.6.2009, to all the Zonal Additional Commissioners, Trade Tax, U.P., after seeking opinion from the Law Department of the Government of Uttar Pradesh, to the effect that where the trader/dealer of the State of U.P., is not issued Form F, by the transferee in the other State, or where the trader/dealer doing job-work, is an unregistered dealer, to which Form F is not issued, without any fault on the part of the trader/dealer in the State of U.P., the Tax Assessment Authority shall examine the transactions between the parties, and will complete the assessment of tax on merits. 5. It is submitted that in view of the judgment of the Supreme Court dated 31.3.2009 in M/s. Ambica Steels Ltd. v. State of U.P. and others and the Circular dated 26.6.2009, carrying out the effect of the judgment of the Supreme Court, the petitioners are advised not to challenge the vires of Section 6-A of the Central Sales Tax Act, 1956 (hereinafter referred to as the ‘Act’), as amended by Finance Act 2002. 6. It is contended that Section 6-A of the Act is applicable to stock transfers and consignment transfer, and thus the applicability of the amended Section 6-A of the Act, may be considered only with regard to transactions involving job-work and goods-returned. 6. It is contended that Section 6-A of the Act is applicable to stock transfers and consignment transfer, and thus the applicability of the amended Section 6-A of the Act, may be considered only with regard to transactions involving job-work and goods-returned. We are therefore confining our judgment only to the cases of job-work and goods-returned. 7. Learned Counsel for the petitioners would submit that the judgment in Ashok Leyland Ltd. v. State of Tamil Nadu and another, 2004 (3) SCC 1 , was in respect of stock transfer and that the ratio of the judgment would not be applicable in the cases of job-work and goods-returned. It is submitted that in Ambica Steels (supra) the judgment of Ashok Leyland (supra) was not correctly applied, and that the deemed sale as envisaged in Section 6-A of the Act is a rebuttable presumption, in proof of which evidence other than Form F (where it is not issued) is admissible. 8. We are relieved of considering the submissions of the Counsel for the petitioners and referring the matter to a larger bench, as the Hon’ble Supreme Court has considered the submissions in the Civil Appeal No. 4970 of 2008 in Ambica Steels (supra) and has held on 31.3.2009, that where the State(s) is/are issuing Form F, the assessee will be provided Form F for making assessment; where however Form F is not being issued by the State (s), it will be open to the Assessing Officer to complete the reassessment proceedings on its own merits after examining the transaction between the parties, keeping in mind the circumstance that the assessee is not in a position to obtain the Form F, for no fault of his. 9. It is submitted by Sri S.P. Kesarwani and Shri Shambhoo Chopra appearing for the Department that in these writ petitions there are cases arising out of assessment as well as reassessment orders and also notices for assessment/reassessment, so far as the transaction of job-work and goods-returned, and thus, the matter should be left open to the assessing authority to complete the assessment or reassessment proceedings as the case may be on its own merits after examining the transaction between the parties. 10. 10. Sri Rahul Agarwal, Counsel for the petitioners appearing in the matter would submit that in some cases, the Tax Assessing Authorities while completing the assessment have recorded the findings that the transaction was job-work/good-returned, but thereafter in reassessment proceedings, they again recorded a finding that the transactions involved job-work and goods returned, but though Form F were not produced in terms of Ambica Steels case, these transactions will attract Tax. 11. We have taken into account the submissions, the judgment of the Supreme Court dated 31.3.2009, arising out of the judgment of the Division Bench of this Court in Ambica Steels (supra), as well as the Circular Letter issued by the Commissioner, Trade Tax Department dated 26.6.2009, and consequently without going into the merits of the challenge to the vires of Section 6-A of the Act or other submissions, we dispose of all the writ petitions with the following directions : (1) In all the cases, in which transactions of job-work and goods-returned are involved, the assessment orders only to the extent that the tax was imposed on such transactions for want of Form F of the Central Sales Tax are set aside. The petitioners will appear and submit before the assessing authority a certified copy of this judgment in six weeks to complete the assessment proceedings with regard to such transactions only, on its own merits, after examining the transactions between the parties, and keeping in mind that the assessee is not in a position to obtain Form F for no fault of his; and (2) In the cases where the assessee has been subjected to reassessment proceedings in which the transactions of job-work and goods-returned are involved, the reassessment orders only to the extent that the tax was imposed on such transaction/s for want of Form F of the Central Sales Tax are set aside. The assessee will appear before the Reassessing Authority and submit a certified copy of this judgment in six weeks, to complete the reassessment proceedings in respect of such transactions only, on its own merits after examining the transactions between the parties, keeping in mind the findings recorded earlier on such transactions, and also that the assessee is not in a position to obtain Form F, for no fault of his. 12. There will be no order as to costs. ————