Failure to Submit Form-F Invokes Deemed Interstate Sale Under CST Act

CUSTOMS, EXCISE & SERVICE TAX 

APPELLATE TRIBUNAL NEW DELHI

PRINCIPAL BENCH – COURT NO. I

CENTRAL SALES TAX APPEAL NO. 11 OF 

2017

(Arising order out of dated 01.02.2017 passed by the Maharashtra Sales Tax Tribunal, Mumbai in VAT Appeal Nos. 187-188 of 2014)

M/s. Abbott India Limited

VERSUS

1. Deputy Commissioner of Sales Tax (E-630), L.T.U. – III
2. Joint Commissioner of Sales Tax (Appeal) – III, Mumbai
3. Secretary of Finance,  

WITH 

CENTRAL SALES TAX APPEAL NO. 12 OF 2017

(Arising order out of dated 01.02.2017 passed by the Maharashtra Sales Tax Tribunal, Mumbai in VAT Appeal Nos. 187-188 of 2014)

M/s. Abbott India Limited

VERSUS

1. Deputy Commissioner of Sales Tax (E-630), L.T.U. – III
2. Joint Commissioner of Sales Tax (Appeal) – III, Mumbai
3. Secretary of Finance,

 

APPEARANCE:

Shri Sanjeev Sachdev, Shri Rohan Shah and Ms. Diksha Ranjan, Ms. Surabhi Prabhudesai, Advocates for the Appellant

Ms. Rama Ahluwalia, Advocate for the State of Maharashtra

CORAM: HON’BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON’BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)

 

Date of Hearing: 02.08.2024 Date of Decision: 31.01.2025

 

FINAL ORDER NO’s. 50119-50120/2025

 

JUSTICE DILIP GUPTA:

Both the aforesaid appeals have been filed by M/s. Abbott India Limited¹ for quashing the order dated 01.02.2017 passed by the Maharashtra Sales Tax Tribunal² partly allowing VAT Second Appeal No.187 of 2014 and VAT Second Appeal No. 188 of 2014 filed by the appellant. These two appeals had been filed by the appellant against the order dated 02.05.2014 passed by the Joint Commissioner of Sales Tax (Appeal)-III³ in respect of the Financial Years 2007-08 and 2008-09.

4. The issue that had arisen for consideration before the State Tribunal was whether it was obligatory on the part of the appellant to supply declaration in Form-F to support its case that in transfer of promotional products suchas Physician’s Samples (samples of Abbott-brand drugs), as well as ‘Brand Reminders’ (pens, newsletters, product brochures with Abbott branding) free of cost to depots or branches of the appellant located in other States or for supply of promotional products free of cost to the medical representatives of the appellant posted in other States, sales in the course of inter-State trade had not taken place.
5. The State Tribunal allowed the appeals filed by the appellant in part. The appellant was required to produce declaration in Form-F to support that sales had not taken place in the course of inter-State transfer of promotional items to the depots or branches of the appellant in other States. In respect of transfer of promotional items to the medical representatives, the State Tribunal observed that if the appellant raises a plea that the medical representatives cannot issue a declaration in Form- F, then the assessing authority would consider the peculiar facts and circumstances and pass an appropriate order in respect of the transfer of promotional goods to the medical representative in States where the depots/warehouses are not available. The matters were, therefore, remanded to the assessing authority to pass a fresh order in the light of the directions issued by the State Tribunal.
6. The appellant is engaged in the business of manufacture, sale and trading of medical drugs and devices. The appellant carries on its business across India, and for this purpose has warehouses/depots/branches in various States, including the State of Maharashtra. In order to increase its market presence and brand recall, the appellant claims that it undertakes free distribution of various promotional products to doctors located across India. For this purpose, the appellant provides these promotional products free-of-cost to its employees (medical representatives), located across India, who further distribute the promotional products to the doctors free- of-cost. The promotional products are transported from the State of Maharashtrato either the depots of the appellant in other States, or to the address of the medical representatives in other States.
7. The contention of the appellant is that the promotional products are incapable of being sold and are, in fact, not sold. Consequently, no consideration is received by the appellant for such products. The conditions of the charging section 6 of the Central Sales Tax Act, 1956⁴are, therefore, not fulfilled and consequently the provisions of section 6 of the CST Act will not apply. Thus, central sales tax cannot be levied on the transfer of such promotional products.

6. The contention of the department is that the transfer of promotional products from the warehouse of the appellant in the State of Maharashtra to the depots of the appellant in other States and to the medical representative in the other States have to be made against the receipt of Form-F to merit the application of section 6A of the CST Act, failing which the condition set out in section 6A of the CST Act is not fulfilled by the appellant. The appellant would, therefore, have to pay central sales tax.
7. The submissions made by the learned counsel of the appellant have been recorded by the State Tribunal in paragraph 6 of the order and they are:

“6. We have consciously heard rival submissions. There are two aspects. One is regarding “C” forms and other is regarding “F” forms as per appeal memo. While arguing the case, learned Advocate Mr. Banhatti, has withdrawn aspect regarding levy of tax as per rate under Local Act on sales not supported by declarations in Form “C”. He has argued the case only in respect of transfer of goods from the State of Maharashtra to other states. According to him, these are being promotional items transferred to employees and depots situated in different states all over India, not for sale and ultimately there is no possibility of sale of such items. Hence, declarations in Form “F” are not required. We have perused assessment order, first appeal order, appeal memo and contention from both sides. It is undisputed fact that, appellant has purchased stationary items and branding items as well as manufactured pharmaceutical products for free distribution to medical practitioners. All these items are collectively called promotional items which are transferred from the State of Maharashtra to employees and depots situated in different states of the country. Appellant claims that, movement of these goods is effected not as a result of sale.”

(emphasis supplied)

8. The issue before the State Tribunal has been noted in paragraph 7of the order in the following manner:

“7. On going through the above facts, crux of the case is whether movement of promotional items which is incorporated as selling and distribution expenses in the books of accounts, which are not for sale are required to be supported by declarations in form “F” as per Section 6A of the C.S.T. Act? If the said goods is covered u/s. 6A, whether the first appellate authority is justified in treating it as deemed sales in the course of interstate trade? In order to answer these questions, we have to refer the provisions in relevant sections.*****”

(emphasis supplied)

9. In respect of the transfer of the promotional products from the State of Maharashtra to the warehouses/depots of the appellant situated in other States, the State Tribunal recorded the following findings:

“10.In the present case, promotional items are goods as envisaged under the provisions of law. There is a movement of goods from one state of another. It is claimed that, this is mere transfer of goods not as a result of sale. Therefore, according to the provisions U/s. 6A burden lies on the dealer to prove the claim by furnishing declarations in Form “F”. Otherwise it is deemed interstate sales. If the burden is not discharged appellant is liable to pay tax as per the provisions u/s. 6. The matter is squarely covered by the judgment of Apex Court in case of Ambica Steels Ltd. (cited supra). The question of deeming fiction created by provisions in Section 6A is for the purpose of plugging wrong claims. It does not impose tax in respect of transfer of goods from H.O. to branch office or vice-versa, as these transactions do not amount to sale, but the legislature was mindful of the fact of blanket understanding of this type encourages evasion of tax, rather than facilitate it. Therefore, burden is put on the shoulder of the claimant. The appellant claims that, goods are moved from the State of Maharashtra to its depots and employees in other states. All depots are registered under the C.S.T. Act. It is up to the dealer within the meaning of this provision to convince the assessing authority that, he has discharged the burden that there is transfer of goods not by way of sale. In the circumstances, we do not think that, there is any difficulty for the dealer to discharge the burden by obtaining F forms from their own branches and submit it before assessing officer.”

(emphasis supplied)

10. In respect of the transfer of promotional products from the State of Maharashtra to the medical representatives of the appellant in other States, the State Tribunal recorded the following findings:

“12.We do agree with one of the contentions of the appellant that, there are transfer of goods to medical representative, who are employees in other states, where there are no depots or branches. In such cases, goods receiving employees are not legally in a position to issue declarations in form “F”. It is practical difficulty of the appellant. Burdon of proof cannot be discharged as expressed in Section 6A. *****

13. Similar, are the facts in the present case. Employees of the appellant called medical representative not being registered dealer in other states are not in a position to issue declarations in Form “F”. Therefore, it would be open to assessing authority to complete the assessment proceedings on its own merits after examining the transactions between HO and employees.Keepingin  mind  circumstances  that, appellant is not in a position to obtain “F” forms for no fault of his. After due verification of movement of goods to the employees in the state in which appellant has no branch office should be allowed as transfer of goods. Movement of goods from the State of Maharashtra to other states in which appellant is having sales depots or sales agent are covered u/s. 6A. It shall be allowed, to deduct only on submission of declaration in Form “F”.”

(emphasis supplied)

11. Theoperative part of the order dated 02.2017 passed by the State Tribunal is reproduced below:

“ORDER

 

Vat Second Appeal Nos. 187 and 188 of 2014 are partly allowed. Appellant is required to produce declarations in Form “F” in support of interstate transfer of promotional items where the transfers are to the states wherein depots or branches are located. Pursuant to the liberty given by Hon. Supreme Court of India and the dealer raising the plea that employees are not able to issue declarations in Form “F”, the assessing authority, while taking note of it, would consider the peculiar facts and circumstances and may pass required order in respect of transfer of goods to the employees in the state where branch office is not available. This is not rule but exception. The case is remanded back to the file of assessing authority to the extent of fresh verification of transfer of promotional items. He shall accept declarations in Form “F” if the appellant is able to produce. He shall verify transfer of promotional items claimed as transfer to medical representative in the state where depots or branches of the appellant are not situated and allow the same. He is directed to impose penalty equal to 20% of tax payable on transfer of promotional items being deemed interstate sales if any, as a result of assessment. Rest of the appeal orders are upheld. Accordingly, appeals are disposed off.”

(emphasis supplied)

12. Shri Sanjeev Sachdev learned counsel for the appellant assisted by Shri Rohan Shah and Ms. Diksha Ranjan, Ms. Surabhi Prabhudesai, made the following submissions:

• The levy of central sales tax under the CST Act islegislatively formulated in terms of the powers vested with the Union of India under article 264 of the Constitution read with the Seventh Schedule. Article 246 grants to the Parliament the exclusive power to make laws with respect to matters enumerated in List I of the Seventh Schedule. Entry 92A of List I empowers the Centre to legislate on taxes on the sale or purchase of goods where such sale or purchase takes place in the course of inter-State trade or commerce. The CST Act has been enacted in exercise of the powers conferred under article 246A read with Entry 92A of List I of the Seventh Schedule of the Constitution. In line with the Constitutional scheme of taxation, central sales tax can only be levied by law on the event of “sale or purchase of goods”;
• Section 6 of the CST Act has been formulated as thecharging section for the levy central sales tax. Under the statutory scheme, as well as the Constitutional Scheme, the taxable event which triggers the levy of central sales tax is the event of “sale of goods”. In order for a transaction to be leviable to central sales tax, the following jurisdictional conditions are required to be fulfilled (i) there must be a “sale of goods” in the course of inter-State trade or commerce; and (ii) such sale of goods must be made by a “dealer”. In the absence of both the aspects being cumulatively fulfilled, the levy of central sales tax cannot be attracted. Neither of the two conditions are satisfied in the case of the appellant;

• The transfer of promotional products which are not capable of being sold does not amount to “sale”;
• In the absence of a “sale price” for the promotionalproducts, there is no machinery provision for the computation of the central sales tax liability on the appellant;
• Theprovisions of section 6 and section 6A of the CST Act are distinct and separate, and operate independently of each other. Where the charging provision of section 6 of the CST Act is not applicable, there can be no question of the sui generis application of section 6A of the CST Act;
• The respondent have erred in their interpretation of the decisions of the Supreme Court in Ambica Steels Ltd. Stateof U.P. and other⁵ and Ashok Leyland Ltd. vs.

State of T.N. and another⁶; and

• The imposition of interest and penalty is without the authority of law.

13. Rama Ahluwalia, learned counsel for the State of Maharashtra, however, supported the impugned order and made the following submissions:

• Priorto 05.2002 filing of Form-F was optional, but in view of the amendment made w.e.f. 11.05.2002 the filing of Form-F is mandatory. The option of verification of transactions by other collateral evidence to establish that the transfer was otherwise than by way of sale when Form-F is not produced, has been omitted by amendment in section 6A by Finance Act, 20 of 2000 w.e.f. 11.05.2002. The burden of proof is on the dealer claiming that the movement of goods from one State to another is otherwise than by way of sale, which burden has to be discharged by filing Form-F. The words of section 6A of the CST Act are very explicit and unambiguous;
• In terms of the amended provision, if the dealer fails and/or neglects to file such a declaration, the transaction would be deemed to be an inter-State sale;
• In this connection reliance has been placed upon thedecision of the Allahabad High Court in Ambica Steels Limited State of U.P. and others⁷ and the decision of the Supreme Court in Ashok Leyland;
• In the present case, goods have been moved from the State of Maharashtra to the depots of the appellant and medical representatives of the appellant in other States. The appellant has to provide Form-F to the assessing authority, and failure to do so, will make the deeming provision operational;
• Even when goods have been sent to medical representative of the appellant in other States, the appellant is required to produce Form-F; and
• The Courts cannot legislate and neutralize the provision of section 6A of CST Act which mandates production of Form-F to prove non sale transaction. In this connection, reliance has been placed on the judgment of the Supreme Court in Ambica Steels.

14. The submissions advanced by the learned counsel for the appellant and the learned counsel for the State of Maharashtra have been
15. Under article 246(1) of the Constitution, Parliament has the exclusive power to make laws with any of the matters enumerated in List 1 of the Seventh Schedule. Entry 92A of List 1 of the Seventh Schedule deals with taxes on the sale or purchase of goods, where such sale or purchase takes place in the course of inter-State trade or commerce. This entry was inserted by Constitution (Sixth Amendment) Act, 1956. The Central Sales Tax Act, 1956 was, accordingly, enacted.
16. It would appropriate examine sections 3, 6 and the amended provision of 6A of the CST Act, and the relevant portions of these sections are reproduced below:

“3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.- A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-

• occasions the movement of goods from one State to another; or
• is effected by a transfer of documents of titleto the goods during their movement from one State to another.

6. Liability to tax on inter-State sales.–

• Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year on and from the date so notified:

Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5, is a sale in the course of export of those goods out of the territory of India.

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 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.

• If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under sub-section(1) are true, he may, atthe time of, or at any time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale.

*****”

(emphasis supplied)

17. Section 3 of the CST Act is contained in Chapter II and deals with “when is a sale or purchase of goods said to take place in the course of inter-State trade or commerce”. It provides that a sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase occasions the movement of goods from one State to the other.
18. Section 6 of the CST Act is contained in Chapter III and deals with “inter-State sales tax”. Sub-section (1) of section 6, in particular, deals with “liability to tax on inter-State sales”. It provides that subject to the provisions contained in the Act, every dealer shall be liable to pay tax on all sales effected by him in the course of inter-State trade or commerce during any year.
19. Section 6(A) of the CST Act is also contained in Chapter III. It deals with “burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale”. With effect from 11.05.2002, it provides that where any dealer claims that he is not liable to pay tax under the Act in respect of any goods on the ground that the movement of goods from one Stateto another was occasioned by reason of transfer of such goods by him to any other place of his business or his agent or principal and not by reason of sale, the burden of proving that the movement of these goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority a declaration duly filled and signed by the principal officer of the other place of business containing the prescribed particulars in the prescribed Form-F along with the evidence of dispatch 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 the CST Act to have been occasioned as a result of sale.

20. The appellant has provided factual flow of the distribution of promotional products in the following manner:

• The promotional products are procured by the appellant centrally in the State of Maharashtra from suppliers located within and outside the State of Maharashtra;
• The promotional products are centrally stocked at the warehouse of the appellant in the State of Maharashtra,from where they are sent to the depots of the appellant in other States and to the medical representatives of the appellant located across the country, for free distribution;
• The items are sent to other States under the cover of documents which clearly specify that the promotional productsare “for free distribution to medical profession of no commercial value”. The documents are:
  • A“transfer note” is prepared for each consignment of promotional products sent to other States. It specifies details of the total quantity of material sent and the cost of the material. The value of the promotional products are mentioned for the purposes of internal control and accounting; and
  • Cycle Reports (called ‘sample invoices’) whichprovide a break-up of the items in the consignment for each medical representative in the receiving State. The said documents carry the name and address of the medical representative, the quantity of material to be delivered to each medical representative and the cost of such material. The promotional products are distributed by the medical representatives free of cost to the medical professionals.

21. The contention of the learned counsel for the appellant is that the transferof promotional products are not capable of being sold and, in fact, have not been sold and, therefore, such a transfer would not amount to “sale” as defined in section 2 of the CST Act. Elaborating this submission, learned counsel pointed out that the taxable event for levy of central sales tax under the charging provisions of section 6 of the CST Act is that a “sale” has been effected by a dealer in the course of inter-State trade and as the jurisdictional condition constituting a “sale” is not fulfilled, central sales tax cannot be demanded from the appellant.
22. This submission of learned counsel for the appellant overlooks the provisions of section 6A of the CST Act. It is true that prior to the amendment made in sub-section (1) of section 6A of the CST Act by Act No. 20 of 2002 w.e.f. 11.05.2002, filing of Form-F was optional. The dealer could either file such a form or not file the same and only because such a form was not filed the dealer could still plead that sale was not occasioned by movement of goods. The unamended section 6A of the CST Act is reproduced below:

“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 of 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 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 dispatch of such goods.

(2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under Sub-section (1) are true, he may, at the time of, or at any time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall be deemed for the purposes of this Act to have been occasioned otherwise than as a result of sale.

Explanation.–In this section, “assessing authority”, in relation to a dealer, means the authority for the time being competent to assess the tax payable by the dealer under this Act.”

23. In view of amendment made in sub-section (1) of section 6A of the CST Act w.e.f. 11.05.2002, the filing of Form-F no longer remains
24. If the contention of a dealer is that transfer of goods took place otherwise than by of sale, then the burden of proving that movement of the goods was so occasioned would be on the dealer, and for this purpose he has to submit to the assessing authority a declaration duly filled and signedby the Principal Officer of the other place of business in Form-F and if the dealer fails to furnish such declaration, then the movement of such goods shall be deemed for all purposes of the CST Act to have been occasioned as a result of sale. Section 6A, therefore, provides for the only manner in which a dealer can substantiate that transfer of goods was otherwise than by way of sale and that is by furnishing a declaration in Form-F. It is not a case of the appellant that movement of goods had not taken place from the State of Maharashtra to other States. The contention is that the movement of goods was not by reason of sale in the course of inter-State trade or commerce. It was, therefore, imperative for the appellant, in terms of section 6A of the CST Act, to have furnished the declaration in Form-F.

25. The Bombay High Court in Johnson Matthey Chemicals India Pvt. Ltd. The State of Maharashtra through the Government Pleader, High Court, Mumbai and others⁸ examined the amended provisions of section 6A of the CST Act and held that for discharging the burden the dealer would have to produce and furnish to the assessing authority a declaration in Form-F and if the dealer fails to furnish the declaration, then the movement of goods shall be deemed for all purposes of the CST Act to have occasioned as a result of sale. The relevant portion of the judgment is reproduced below:

“34.  Section 6A deals with burden of proof in case of transfer of goods claimed otherwise than by way of sale. Split up for understanding the section applies in case there is a claim that there is no sale. In that case and on such claim, the burden of proof is on the dealer making such claim as this claim would relieve him from the liability to pay tax under the CST Act. That liability is in respect of any goods sold within the meaning of preceding sections. The dealer would have to establish and prove the ground raised, namely, that the goods have moved from one State to another, but that movement was occasioned by reason of transfer of the goods by the dealer to any other place of his business or to the place of his agent or to the place of the principal and not by reason of sale. For discharging that burden, the dealer would have to produce and furnish to the assessing authority, within prescribed time or such further time as the authority may, for sufficient cause, permit a declaration within the meaning of sub-section

• of section 6A. Along with the declaration, the evidence of despatch of goods has to be furnished.If the dealer fails to furnish that declaration, then, the movement of goods shall be deemed for all purposes of the CST Act to have been occasioned as a result of sale. *****”

(emphasis supplied)

26. In Ashok Leyland, the Supreme Court also examined theprovisions of the amended section 6A of the CST Act and held that whereas prior to the amendment in sub-section (1) of section 6A, a dealer had an option of filing a declaration in Form-F but after the amendment w.e.f. 11.05.2002 a dealer does not have any option and if the dealer fails to file such a declaration, the transaction would be deemed to be an inter- State sale. The Supreme Court emphasised on the use of the expression “deemed” and held that if this is interpreted differently, an incongruity would ensue. The relevant portions of the judgment of the Supreme Court are reproduced below:

“Interpretation of section 6-A of the Central Act

 

72. A statute, as is well-known, must be interpreted having regard to the text and context thereof. Mischief Rule may also be applied in a given case.
73. While construing a statute, the object of the Act must be taken into consideration. (See Killick Nixon Ltd. v. CTI: (2003) 1 SCC 145)
74. Section 6-Aof the Act although provides for a burden of proof, the same has to be read in the context of Section 6 of the said Act. Section 6 provides for liability to pay tax on inter-State sales. Any transaction which does not fall within the definition of ‘sale’ would not be exigible to tax, the burden whereof would evidently be on the assessee. We have noticed hereinbefore that whereas prior to the amendment in Sub-section (1) of Section 6A the dealer had an option of filing a declaration in Form-F; after such amendment, he does not have such option, insofar as in terms of the amended provision, if the dealer fails and/or neglects to file such a declaration, the transaction would be deemed to be an inter-State sale. It is to be noticed that for the aforementioned purpose also, the Parliament advisedly used the expression ‘deemed’. If the expression ‘deemed’ is interpreted differently, an incongruity would ensue.
75. In absence of any indication that the Parliament while enacting Sub- section (2) of Section 6A did not intend to make the deeming provisions to be a conclusive fact as regard occasion of the transaction having taken place otherwise than as a result ofsale, it would have dealt with the matter differently.
76. Section 6-A(2)of the Act uses the following expressions which are important : (1) ‘thereupon’;

(2) ‘for the purpose of this Act’; (3) ‘the movement of goods to which the declaration related shall be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale’.

77. Eachof them must be given its proper 
78. A statute for the purpose of its interpretation must be read in its entirety. It is to be given a purposive construction. Applying Heydon’srule,  it  must  be  held  that  the amendment was necessitated not only to make the dealer to file such a declaration imperatively but also to see that such movement of goods becomes inter-State sale by raising a legal fiction, as ‘having been occasioned in course of a inter-State sale’. In other words, if such a declaration is filed and on an inquiry made pursuant to or in furtherance of the particulars furnished are found to be correct by the assessing authority, the result thereof which is evidenced by the expression ‘thereupon’ shall in view of the legal fiction created would be a transaction otherwise than as a result of an inter-State sale. Furthermore, once such a legal fiction is drawn, the same would continue to have its effect not only while making an order of assessment in terms of the State Act but also for the purpose of invoking the power of reopening of assessment contained in Section 9(2) of the Central Act as well as Section 16 of the State Act.

(See Indian Handicrafts Emporium and Ors. v. Union of India (2003) 7 SCC 586 and Ameer Trading Corpn. Ltd. v. Shapoorji Data Processing Ltd. (2004) 1 SCC 702).”

(emphasis supplied)

27. It is, therefore, clear from the aforesaid decisions that if a dealer intends to take up a case that transfer of goods was otherwise then by way of sale, he has to submit a declaration in Form-F, otherwise the deeming fiction contained in sub-section (1) of section 6A will come into play and the movement of goods shall be deemed for all purposes of the CST Act to have been occasioned by reason of sale in the course of inter- State trade or commerce.
28. The contention of the learned counsel for the appellant is that sale had not taken place in the transfer of the promotional products from the Stateof Maharashtra to other  The appellant had, therefore, necessarily to file a declaration in Form-F, in the absence of which it shall deemed that the transfer of goods was occasioned as result of sale.

29. The State Tribunal has given an option to the appellant to produce the declaration in Form-F to support its case that sale had not taken place in the transfer of the promotional products to the depots of the appellant in other States so that the assessing authority can examine and pass an order. In respect of the transfer of the promotional products to themedical representatives who are not registered dealers in other States, the State Tribunal has left it open to the assessing authority to complete the assessment proceedings on its own merit after examining the transactions between the head office and the employees since there would be a practical difficulty for the appellant to obtain the declaration in Form-
30. There is, for the reasons stated above, no infirmity in the order passed by the State Tribunal that may call for any interference in these appeals. The appeals are, accordingly, dismissed.

(Order pronounced on 31.01.2025)

 

(JUSTICE DILIP GUPTA)

PRESIDENT

(P.V. SUBBA RAO)

MEMBER (TECHNICAL)