IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN TUESDAY, THE 10TH NOVEMBER 2009 / 19TH KARTHIKA 1931 ST.Rev..No. 221 of 2009() ------------------------- TA.277/2008 of S.T.A.TRIBUNAL,ERNAKULAM .................... PETITIONER/APPELLANT IN TA. ----------------------------------------------- M/S.PROCTER & GAMBLE HYGIENE AND HEALTH CARE LTD, ERNAKULAM. BY ADV. SRI.ANIL D. NAIR RESPONDENT(S): RESPONDENT ------------------------- STATE OF KERALA, REP.BY FINANCE SECRETARY, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. BY G.P. SRI.MOHAMMED RAFIQ THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 10/11/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... S.T. Rev. No.221 of 2009 .................................................................... Dated this the 10th day of November, 2009. ORDER Ramachandran Nair, J. Revision is filed against the order of the Tribunal disposing of appeal against KGST assessment for the year 2002-2003. The only issue raised is whether the Tribunal was justified in confirming disallowance of stock transfer value of goods for the reason that petitioner has not produced Check Post sealed delivery notes or other documents towards proof of transport of goods outside the State. An alternate question raised is whether after disallowing exemption on stock transfer, the Assessing Officer was justified in making assessment as local sales as against assessee's claim that assessment should be under CST Act on the stock transfer value. 2. The contention of the counsel for the assessee is that exemption on stock transfer is disallowed only because the transport documents did not contain Check Post seals. He pointed out that the goods stock transferred from Kerala to branches in Tamil Nadu and Karnataka were assessed there under the local Sales Tax Act. Government Pleader on the other hand 2 contended that without proof of physical movement of goods from Kerala to outside State, the stock transfer value cannot be granted exemption. The issue raised is settled by decision of this court in ESAB INDIA LTD. V. STATE OF KERALA reported in (2004) 12 KTR 34. In this decision this court held that in order to claim exemption, the best proof available will be the document used for transport of goods beyond the State which will contain seal of Sales Tax Boarder Check Post in Kerala. Under the Rules goods have to be transported under cover of prescribed documents mainly Delivery Note (Form 26) and in respect of interstate movement, Form 27B also is required. In fact, the goods reach the destination outside Kerala along with these documents, which would have been sealed by the Boarder Check Post wherefrom goods leave the State. Even though there may be omission to seal documents which may rarely happen, invariably every document used for transport of goods across the State would be sealed by the Check Post. Therefore, we do not find any justification to deviate from the view taken in the judgment abovereferred. However, even if full documents of transport with Check Post seal are not available, still the dealer will be able to prove stock transfer by producing available Check Post sealed transport documents and for the balance goods accounts of the branches towards receipts and sale of goods and also by producing proof of 3 payment of freight to local carriers for transport of such goods outside the State. If these documents are produced and the Assessing Officer is able to correlate the freight payments and goods movements and receipts outside the State, exemption can be granted. Since the assessment is for the year 2003-2004 only, we feel one more opportunity can be granted to the assessee to produce books of accounts from branches along with copies of monthly returns and copies of assessment orders issued in those States and L.R. copies and receipts for payment of freight for transport of goods. If documents are produced to prove physical movement of goods within a period of six weeks from date of receipt of copy of this judgment, the Assessing Officer will verify the same and if found genuine, grant exemption. However, if convincing evidence is not produced towards proof of transport of goods beyond the State, then the Tribunal's order will stand confirmed. There will be direction to the officer to consider the F Forms later obtained also along with corresponding proof of other documents, if the assessee produces such evidence. 3. The assessee's contention that even if exemption on stock transfer is disallowed, the turnover should be assessed under the CST Act, is unacceptable because in the absence of proof of physical movement of goods, the assessment could not be made under Section 3(a) of the CST Act. 4 In the absence of proof of interstate movement, assessment under local Act is permissible based on presumption of local sale of goods. Therefore, we reject this alternate claim of the assessee. The S.T. Revision case is disposed of as above directing the Assessing Officer to reconsider the matter, if documents are produced as indicated above. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms