Section 6A of CST Act, 1956 provides that if a dealer claims
that he is not liable to pay CST on an
interstate movement of goods due to the reason that it is not sale and the
goods have been transferred inter-state to any other place of his business or to
his agent or principal, then he will have to produce a prescribed form i.e Form
F to his assessing authority duly signed by the principal officer of his other
place of business or his agent or principal as the case may be.
Section 6A(1) of the CST Act, 1956 is being reproduced
herebelow for ready reference:
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.
It is clear from the wording of the above section that it
applies only to the cases
(a)when the goods are sent interstate to one’s principal
place of business in other state or to one’s agent or one’s principal and
(b) the interstate movement of goods from one State to the
other is otherwise than as sale.
Both the above conditions should be satisfied before section
6A has any applicability.
Allahabad High court in Ambica Steels Ltd. vs State of
UP(2008) 12 VST 216 (ALL HC DB) held that form F is required to be issued even
if goods are sent outside for job work or repairs on returnable basis.
In case goods are sent interstate for job work or repair
outside the State then the movement of goods takes place always otherwise than
as sales. However the relationship between the job worker and the owner of the
goods is not of principal-agent but that of Principal to Principal.
A pure Job work or repair work does not come under the ambit
of tax as there is no transfer of property in goods and therefore he will not
be required to get registered under CST Act or concerned State VAT Act.
In such
case it will be practically impossible for the job worker or the person doing the repair work to get F form from
the sales tax department as he is not registered with the sales tax department.
This will badly effect inter-state movement of goods, which will be violative
of Article 301 as well as of freedom of trade guaranteed under article 19(1)(g)
of the Constitution of India.
In my view this interpretation of section 6A by Allahabad High court in
the above noted case needs reconsideration as it involves a lot of practical
difficulties. In any case where two interpretations are possible, the one which does
not violate the provisions of Constitutional mandate should be followed.
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Thanks for this valuable article.
Is it mandatory to registered job worker in registration certificate of the company who is sending goods for job work?
If job work not registered in certificate, how can company obtain form F?