IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN TUESDAY, THE 19TH JULY 2011 / 28TH ASHADHA 1933 OT.Rev.No. 26 of 2011() ----------------------- AGAINST ORDER IN TA.175/2010 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM .................... REVISION PETITIONER/ PETITIONER /ASSESSEE --------------------------------------- M.RAMASAMY, PROPRIETOR, M/S.MARIAMMAL OIL MILLS, INDIRA GANDHI ROAD, WILLINGDON ISLAND, KOCHI-682009, REPRESENTED BY MUTHUKUMAR, S/O.RAMASAMY, AGED 33 YEARS, RESIDING AT 12A, 7TH STREET, THENKASI MAIN ROAD, ALANGULAM, TIRUNELVELI DISTRICT, P/A HOLDER. BY ADV. DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE SRI.K.M.FIROZ RESPONDENT(S): RESPONDENT/REVENUE --------------------------------- THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. MR.MOHAMMED RAFIQ, GOVERNMENT PLEADER THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 19/07/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OTREV. NO.26/2011 APPENDIX PETITIONER'S EXHIBITS ANNEXURE A : COPY OF ASSESSMENT ORDER FOR THE YEAR 2005/06 DATED 14/02/2007. ANNEXURE B : COPY OF FIRST APPEAL ORDER DATED 01/01/2010. ANNEXURE C :COPY OF TRIBUNAL APPEAL ORDER (COMMON ORDER) DATED 20/10/2010. ANNEXURE D : COPY OF GROUNDS OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY DATED 20/04/2007. ANNEXURE E : COPY OF GROUNDS OF THE APPEAL BEFORE THE APPELLATE TRIBUNAL DATED 05/04/2010. //TRUE COPY// PA TO JUDGE. jg C.R. C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... O.T.Rev.No.26 of 2011 .................................................................... Dated this the 19th day of July, 2011. J U D G M E N T Ramachandran Nair, J. This revision is filed against the order of the Tribunal sustaining petitioner's CST assessment for the year 2005-06. 2. We have heard learned Senior counsel Shri.K.B.Mohammedkutty appearing for the petitioner and learned Government Pleader appearing for the respondent. 3. The petitioner claimed exemption on stock transfer of goods by producing F-forms. The Assessing Officer on enquiry found that F-forms were bogus. All through the petitioner tried to substantiate that the transaction is stock transfer to a single party, who according to the petitioner is his consignment agent in Karnataka. However the petitioner could not convince any of the lower authorities including the Tribunal with evidence that the transaction is stock transfer for O.T.Rev.No.26/2011 2 sale through consignment agent in other State. Admittedly, details of sales made by the consignment agent in Karnataka, payment of tax there etc. have not been furnished by the petitioner. The petitioner does not have the details to be produced in this Court even at this stage. 4. Learned Government Pleader's case is that F-forms produced on enquiry were found to be bogus and so much so, the transfers were rightly assessed as inter-state sales. Learned Senior counsel for the petitioner contended that even if stock transfer is disallowed as not proved, the petitioner is entitled to assessment under the local Act, wherein the rate of tax is 4%. This claim of the petitioner has to be considered with reference to Section 6A of the CST Act, which reads as follows: “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 O.T.Rev.No.26/2011 3 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 time as that authority may, for sufficient cause, permit, a declaration, duly filled and signed by the principal officer of the other place of business or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of despatch of such goods (and if the dealer fails to furnish such declaration, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of sale). 5. The petitioner admittedly tried to prove that the goods transferred from Kerala to Karnataka is not under contract of sale and so much so it should be exempted from tax. Section 6A says that the burden of proving that the transfer of goods from one State to another is not by way of or under contract of sale is on the dealer. Therefore, what the dealer has to prove is the purpose for which the goods are transferred to another State which can be transfer to a branch of the dealer outside the State or to a consignment agent of O.T.Rev.No.26/2011 4 the dealer for sale in or from such other State to which goods are transferred. All what is required to be proved under Section 6A is that the transfer of goods is not pursuant to sale or contract of sale which is by establishing the nature of transaction pursuant to which goods are sent outside. However, if the dealer transferring goods from one State to another fails to prove that the transfer is not after or under contract of sale, then the presumption available on account of the failure to discharge the said burden cast on such dealer is that the transaction is an interstate sale and not a local sale. This is because Section 6A deals with goods actually transferred from one State to another and the petitioner also concedes that goods have been transferred from Kerala to Karnataka. So much so, when the petitioner failed to prove that the goods were moved other than under contract of sale, which in this case was claimed as transfer to a consignment agent but could not be proved, the presumption under Section 6A is interstate sale and therefore assessment was rightly O.T.Rev.No.26/2011 5 made under Section 6 of the CST Act. In other words, failure to prove interstate transfer of goods as not under contract of sale in terms of Section 6A always calls for CST assessment and not for assessment as local sales. However, the Assessing Officer can assess the transaction as local sales if the dealer fails to prove physical movement of the goods out of the State which also has to be proved by the dealer. So much so, the claim of the petitioner for assessment of the transaction under local Act is not tenable. We accordingly hold that the transactions were rightly assessed under the CST Act. Consequently, the O.T.Revision case fails and the same is dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (P.S.GOPINATHAN, JUDGE) jg