www.caspot.com brings you the exclusive post of Problems Faced While Issue Of ' F ' Form Under CST
Issues in Form "F" in CST When a dealer is
transferring goods to another state not as a result of sale but as
stock transfer to any other place of his business ( branch, godown,
warehouse etc.), then such transfer would not be liable for CST as per
CST Act 1956. However, the burden of proving that the goods have not
moved as a result of sale is on the dealer transferring such goods. In
this article, an effort has been made to understand the concept of Form
"F" and few related issues with regard to issue of Form "F".
Whether Form "F" is mandatory?
As discussed, the burden of proving that a
transfer of goods to other state is not as a result of sale is always
on the dealer and not on the tax authorities. Tax authorities can treat
any transfer as sale unless contrary is proved by the dealer.
For this purpose, the dealer shall
mandatorily furnish Form "F". Such form shall be obtained by the
transferor of goods from the transferee (transferee would obtain Form F
from the local sales tax/VAT office). It is interesting to note that
prior to 11th May 2002, filing Form F was not mandatory. Other documents
could have been filed to prove stock transfers. Even the Honourable
High Court of Kerala has held that Form F is not the only document to
prove stock transfer but it could be proved by other documents as well
[CPK Trading Co. Vs. Addl. STO 1990 (76) STC 211 (Ker HC)].
However, Form F is mandatory now as per the amendment made in Section 6A with effect from 11th May 2002.
Whether Form "F" is conclusive evidence?
Section 6A (2) provides that if assessing
authority is satisfied after making enquiry that the declaration
furnished (Form F in this case) by dealer are true, he shall make an
order to that effect and thereupon, the movement of goods to which the
declaration relates shall be deemed for the purpose of the CST Act to
have been occasioned other than as a result of sale. However, it is
important to note that Form "F" itself is not conclusive evidence in all
the cases. The assessing authority can always make enquiry in this
regard to verify if it is true and can even reject if the same is found
to be false or not genuine. In such cases, the dealer shall be required
to submit other records to prove the genuineness of the
transactions.Many High courts have held that Form "F" is not conclusive
evidence.
How many forms to be issued?
As per Rule 12(5) of the CST (R&T)
Rules, 1957, a single declaration in Form "F" may cover details of all
transfer of goods made during a period of one calendar month. However,
it is interesting to note that the Form F cannot be rejected merely
based on the fact that it covers transactions for more than a month.
Recently, the Calcutta High Court in Cipla Limited vs Deputy
Commissioner, Commercial Tax reported [VSTI 2013 Vol. 17 B-509] has held
that there is nothing in Rule 12(5) of CST (R&T) Rules which could
be construed to vitiate a declaration form i.e "F" form on a ground that
such declaration form covered transactions for a period of more than a
month.
Therefore, it can be concluded that the
forms can cover transactions of more than a month as well. When Stock
transfer is treated as Interstate sales? If there is movement of goods
(even as stock transfer) which is occasioned on account of sales, the
movement would be treated as interstate sales. The Punjab & Haryana
High court has held that where goods were despatched and sold through
branch (but buyer was known and identified before goods dispatched from
factory), the transaction is interstate sales and not a stock transfer
[Electric Construction and Equipment Ltd Vs State of Haryana- (1990) 77
STC 424]. Therefore, when there is a conceivable link between contract
of sale and the movement of goods from one state to another in order to
discharge the obligation under the contract of sale, the transaction
cannot be exempt from tax.
Whether Form F can be rejected if few information missing?
Due care has to be taken in filling up of
the Form F containing details of name of transferor, registration
number, amount, description of goods, quantity etc. Sometime it may so
happen that the forms are not filled properly or few columns are left
blank. In such cases, the assessing authority cannot reject the forms
merely for missing information. An opportunity shall be given to rectify
the errors. This view is also supported by the Madras High Court in
case of Lanson Cars (P) Ltd Vs. CTO, Koyambedu (2009) 19 VST 414.
Whether Form F required in case of goods sent on job work basis?
Fortunately or unfortunately, the answer to this question is "Yes" as
per the decision of Supreme Court. The Allahabad High Court in case of
Ambica Steels Vs State of UP [2008(12) VST 216 All] has held that if any
person claims that he is not liable to pay tax on transfer of goods
from one state to another, he has to furnish Form F. This view was
affirmed by the honourable Supreme Court as well. However, as observed
many of the dealers are not filing Form F for job work transactions,
sales returns etc though the same is required to be filed as per the
decision.
The Supreme Court has further said that
the assessee cannot be punished for no fault of his if the authorities
do not provide forms to the assessee for submission with the assessing
authorities. If assessee is unable to obtain forms, then the assessing
authorities shall decide the matter based on the facts keeping in mind
the circumstances which led to non filing of forms.
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