R.K. Agrawal, J.@mdashIn all these writ petitions, the petitioners have challenged the circular letter dated 28.11.2005 issued by the Commissioner of Trade Tax, U.P., Lucknow, wherein it has been mentioned that, u/s 6A of the Central Sales Tax, 1956 (hereinafter referred to as "the Central Act"), Form F is required to be filed in respect of all transfer of goods which are otherwise than by-way of sale and also applies to all goods sent or received for job work or goods returned.
2. As all these petitions do not involve adjudication of any facts but raise a common question of law, i.e., interpretation of the provisions of Section 6A of the Central Act, they have been heard together and are being decided at the admission stage itself.
3. Civil Misc. Writ Petition No. 302 of 2007 is being treated as a leading petition and its facts are given below:
The petitioner is a public limited company and is engaged in the business of manufacture and sale of iron billets and ingots. It is also engaged in the activity of sale of iron and steel rounds, bars, flats, etc. It is a registered dealer under the provision of the U.P. Trade Tax Act, 1948 (hereinafter referred to as "the Act") and also under the Central Act. According to the petitioner, during the assessment year 2004-05 it had sent iron and steel ingots to various firms situated outside the State of U.P. for the purpose of converting them into iron and steel rounds, bars and flats. Those firms were directed to return the converted goods. It also received iron scrap from various firms situate outside the State of U.P. for the purpose of converting them into iron und steel billets and igots with a direction to return the converted goods to those firms. Under the Central Excise Act, 1944 and Cenvet Credit Rules, 2002, the Cenvet credit is admissible on fulfillment of certain requirements. Central excise duty is also leviable. It had received and made payment in respect of job work done and got done by it respectively and the claim is that no part of the payment made or received by it was on account of any action on the part of the petitioner or its job workers as agents or principal of the petitioner and vice versa. It had not affected any sale while sending goods for job work or while receiving goods for doing job work. It had filed its monthly return, both under the Act and the Central Act. However, the petitioner did not submit or obtain any Form F in respect of the transaction of job work as it did not involve any sale. Vide notice dated 23.6.2006, the Deputy Commissioner (Assessment) 1-A, Trade Tax, Ghaziabad, respondent No. 3, initiated the assessment proceeding in which the petitioner participated. The petitioner was asked to submit Form F in respect of the ex U.P. transaction of job work performed by it or got done by others to which it submitted a reply stating therein that no Form F is required for such transaction. The explanation was rejected. However, the respondent No. 3 granted time upto 31.3.2007 for submitting Form F. Another notice was issued on 27.2.2007 calling upon the petitioner to submit declaration Form F. The action of the respondent No. 3 in demanding Form F in respect of transaction of job work failing which tax would be imposed, including the circular dated 28.11.2005 issued by the Commissioner of Trade Tax, U.P., Lucknow, are under challenge in the present writ petition.
4. In some of writ petitions, apart from the transaction of job work, there have been return of goods from outside the State of U.P. on which the respective Assessing Authority have directed the petitioners to furnish declaration Form F failing which the tax under the Central Act would be imposed or had been imposed.
5. We have heard Sarvasri S.D. Singh, Nishant Mishra and Ashok Kumar, learned Counsel for the petitioners, and Sri A.C. Tripathi, learned Standing Counsel, on behalf of the respondents.
6. Sri S.D. Singh, learned Counsel, who lead the arguments, submitted that the activities of job work undertaken by the petitioner or getting the goods converted on job work from others, do not amount to sale. Likewise, the goods returned also do not amount to sale. Referring to Sections 148, 151 and 152 of the Indian Contract Act, 1872 which deals with bailment, bailor and bailee as also the obligation of the bailee, he submitted that when the petitioner had undertaken job work on behalf of the ex U.P. firms, its possession was that of a bailee. Similarly, when the petitioner had sent goods for job work to others, i.e., ex U.P. firms, they would be bailee and not an agent.
7. He relied upon a decision of the Apex Court in the case of
8. He also relied upon a decision of the Apex Court in the case of Hindustan Aeronautics Limited v. The State of Orissa (1984) 55 STC 327, wherein the Apex Court has held that there is no rigid or inflexible rule which applies to all transactions which can indicate distinction between a contract for sale and a contract for work and labour. It has further been held that whether a particular contract was one of sale or for work and labour, depends upon the main object of the purpose and in a contract for sale the main object of the party is to transfer the property and delivery of possession of a chattel as a chattel to the buyer.
9. He further submitted that, from a plain reading of the provisions of Section 6 of the Central Act, which is the charging section, there is no liability of payment of tax on job work and Section 6A would apply only to a case where the goods are transferred by a dealer from one State to another, either to any other place of his business or to his agent or principal and not to a case where the goods are sent or received for doing job work or where the goods are returned. According to him, Form F cannot be issued by a person who is not transferring the goods from one Slate to another to any other place of his business or to his agent or principal. In this connection, he also referred to the statement of objects and reasons for inserting Section 6A in the Central Act.
10. The other learned Counsels adopted the arguments advanced by Sri S.D. Singh.
11. Sri A.C. Tripathi, learned Standing Counsel, on the other hand, submitted that, from a plain reading of the provisions of Section 6A of the Central Act, Form F is required to be filed by every person who claims that he is not liable to pay any tax in respect of the goods transferred by him from one State to another and, therefore, the petitioners are under an obligation to furnish declaration Form F in respect of goods sent for job work or received back after job work or where the goods are returned.
12. We have given our anxious consideration to the various pleas raised by the learned Counsel for the parties. We find that, under Sub-clause (ii) of Clause (g) of Section 2 of the Central Act, a transfer of property in goods whether as goods or in some other form, involved in execution of a work contract, is included in the definition of the word "sale". Section 6 is the charging section and creates liability to tax on inter-State sales. Section 6A puts the burden of proof on the person claiming transfer of goods otherwise than by way of sale and not liable to pay tax under the Central Act. The burden is to be discharged only by furnishing of declaration Form F.
13. The provisions of Sections 6 and 6A of the Central Act came up for consideration in the case of
Section 6 of the Act provides for liability to tax on inter-State sales in terms whereof every dealer is liable to pay tax thereunder on sales effected by him in the course of inter-State trade or commerce subject to the exception contained in the proviso appended thereto. Such tax would be leviable notwithstanding the fact that no tax is leviable either on seller or the purchaser under the State tax laws of the appropriate State if that sale had taken place inside the State.
14. In paragraph 44 of the report, the Apex Court has further held as under:
44. The liability to tax on inter-State sale as contained in Section 6 is expressly made subject to the other provisions contained in the Act. Sub-section (2) of Section 9, on the other hand, which is a procedural provision starts with the words "subject to the other provisions of this Act and the rules made thereunder". Section 6A provides for exception as regard the burden of proof in the event a claim is made that transfer of goods had taken place otherwise than by way of sale. Indisputably, the burden would be on the dealer to show that the movement of goods had occasioned not by reason of any transaction involving sale of goods but by reason of transfer of such goods to any other place of his business or to his agent or principal, as the case may be. For the purpose of discharge of such burden of proof, the dealer is required to furnish to the assessing authority within the prescribed time a declaration duly filled and signed by the principal officer of the other place of business or his agent or principal. Such declaration would contain the prescribed particulars in the prescribed form obtained from the prescribed authority. Along with such declaration, the dealer is required to furnish the evidence of such dispatch of goods by reason of Act 20 of 2002. In the event, if it fails to furnish such declaration, by reason of legal fiction, such movement of goods would be deemed for all purposes of the said Act to have occasioned as a result of sale. Such declaration indisputably is to be filed in Form F. The said form is to be filled in triplicate. The prescribed authority of the transferee State supplies the said form. The original of the said form is to be filed with the transferor State and the duplicate thereof is to be filed before the authorities of the transferee State whereas the counterfoil is to be preserved by the person where the agent or principal of the place of business of the company is situated.
(underlined by us)
15. In paragraph 47 of the report, it has further held as under:
47. By reason of Sub-section (2) of Section 6A, a legal fiction has been created for the purpose of the said Act to the effect that transaction has occasioned otherwise than as a result of sale.
16. The Apex Court has, therefore, clearly laid down that, u/s 6A of the Central Act, the burden would be on the dealer to show that movement of the goods had been occasioned not by reason of any transaction involving sale of goods but by reason of transfer of such goods to any other place of business or to the agent or principal, as the case may be, for which the dealer is required to furnish prescribed declaration form in the absence of which the transfer would be treated as sale.
17. Admittedly, what the petitioners send or receive either for job work or as a return of goods from outside U.P., are goods within the Central Act. They are claiming that the goods have been transferred/received from ex U.P. which are not sale and not liable to tax u/s 6 of the Central Act.
18. The submission that the goods sent for job work or received for doing job work, do not amount to sale would depend upon the contract entered into between the parties and would be the subject matter of examination by the Assessing Authority. Even otherwise, u/s 2(g)(ii) of the Central Act, transfer of goods used in execution of work contract is treated to be a sale. If the petitioner claims that it is not liable to tax on the transfer of goods from U.P. to ex U.P., then it would have to discharge the burden placed upon it u/s 6A by filing declaration Form F. It would be immaterial whether the person to whom the goods arc sent for or received after job work is a bailee. As held by the Apex Court, under the statutory provision, the requirement is that if any person claims that he is not liable to pay tax on transfer of the goods from one State to another, he has to furnish declaration Form F. This would be applicable in a case of goods returned also. The statement of objects and reasons, referred to by Sri S.D.Singh, does not advance his case any further.
19. Before parting with the case, we may, however, observe that as the petitioners have claimed that they are not liable to furnish declaration Form F in respect of the transaction in question and we have come to the conclusion that they are, in fact, liable. We direct the respective the Assessing Authorities to accept the declaration Form F of each of the petitioners if they file it within a period of three months from today and to grant exemption in accordance with law.
20. In view of the foregoing discussions, we do not find any merit in these petitions and subject to the aforesaid observations, they are accordingly dismissed. All the interim orders are discharged. However, the parties shall bear their own costs.
