PRABHAT SOLVENT EXTRACTION INDUSTRIES PVT LTD v. UNION OF INDIA

Tax Act, 1956 (hereinafter referred to as the "Act") as ultra vires the Constitution of India. The petitioners have also prayed for an appropriate writ, direction and order quashing and setting aside the reassessment order dated 04.04.2007 passed by the respondent no.4, the order dated 3.8.2009 passed by the respondent no.3- Joint Commissioner of Commercial Tax, Division-3, Rajkot and also judgment and order dated 15.06.2011 passed by the Gujarat Value Added Tax Tribunal as well as judgment and order dated 21.04.2016 passed by the Central Sales Tax, Appellate Authority, New Delhi.

2.0. The facts leading to the present petition in nutshell are as under:

2.1. That the petitioners are manufactures and dealers of edible oil. They in course of their business send such goods to different States outside of State of Gujarat. It is the case of the petitioners that during the relevant assessment year i.e. 2002-03, the petitioners had inter alia sent goods to three of its commission agent being (1) M/s. Zarana Corporation, Bombay, (2) M/s. Raj & Sons, Kalyan and, (3) M/s. Sarthak Enterprise, Delhi, all registered under the relevant provisions of the Act. It is the case on behalf of the petitioners that goods sent by the petitioners to the aforesaid agents were purely on transfer of goods from principal to agent basis and there was no sale of the said goods from the petitioners to the agents. According to the petitioners, the goods thus received by the agents were sold by them to third parties, as local sales in their respective States and they have also paid the local sales tax as applicable in the respective States. According to the petitioners, the sale proceeds were remitted by the agents to the petitioners after deducting their commission and incidental expenses.

Page 2 of 38

2.2. During the course of assessment proceedings in the year 2002-03, the petitioners produced the declaration in terms of Section 6A of the Act, in the Form F, which were sent to the petitioners by its agents, along with other evidence showing dispatch of such goods from the petitioners to its agents in Maharashtra and Delhi.

2.3. That the original assessment order in respect of the year 2002-03 was passed by the Assistant Commissioner of Commercial Tax, Circle, Junagadh on 31.1.2004 wherein he accepted the aforesaid transaction between the petitioners and the agents as transfer of goods otherwise than by way of sale.

2.4. That thereafter, on 12.01.2007 the respondent no.4- Deputy Commissioner of Commercial Tax - Revisional Authority issued notice for reassessment on the basis that certain transfers of goods from the petitioners to its agents were suspicious. The petitioners were asked to remain present along with declarations in Form F and evidence in support of the said transfers. It is the case of the petitioners that during the reassessment, the petitioner's representative produced all the evidence in respect of the aforesaid transfer of goods. That during the course of inquiry and reassessment proceedings, it was found that declaration in Form F with respect to the transactions between the petitioners and the aforesaid alleged agents had purportedly not been issued by the prescribed authority and form F produced by the petitioners with respect to to the aforesaid transactions are fake, the respondent no.4- Deputy Commissioner of Commercial Tax, Junagadh passed the order to levy tax at the rate of 10% on the aforesaid sales being Rs. 70,57,502/- + interest of Rs. 38,11,051/- and penalty of Rs.

Page 3 of 38

63,51,752/- amounting to total Rs. 1,72,20,305/-.

2.5. Feeling aggrieved and dissatisfied with the reassessment order dated 04.04.2007, the petitioners filed appeal before the respondent no.3 - Joint Commissioner of Commercial Tax, Division 3, Rajkot, which came to be dismissed on 10.06.2007 on the ground of non deposit of pre-deposit amount of Rs.35 lakhs. That against the order dated 10.06.2007, the petitioners filed further appeal before the Gujarat Value Added Tax Tribunal, which came to be allowed vide order dated 14.03.2008 and the matter was remanded to the First Appellate Authority for consideration and fresh decision. That thereafter, respondent no.3 herein -Joint Commissioner of Commercial Tax, Division 3, Rajkot has passed de-novo order rejecting the said appeal and also relying upon the assessment for the year 2003-04, it was found that similar declaration sent by the agents has been found not to have been issued by the concerned authorities at their respective States. That on further appeal, the learned Tribunal partly allowed the said appeal qua imposition of penalty only, however rejected the appeal against the reassessment order. That the learned Tribunal passed the order on 15.06.2011.

2.6. Feeling aggrieved and dissatisfied with the order dated 15.6.2011 passed by the learned Tribunal, the petitioners preferred further appeal being Appeal No. CST/27/2011/402, under Section 20 of the Central Sales Tax Act before the Central Excise Tax Appellate Tribunal. The said appeal has been rejected by the learned Appellate Court vide judgment and order dated 21.04.2016 on the ground that non genuineness of the declarations in Form F implied non filing of such declarations and would therefore, result in deeming fiction under Section 6A(1) of the Act. Hence, petitioners have preferred the present

Page 4 of 38

Special Civil Application for the aforesaid relief.

3.0. At the outset, it is required to be noted that with respect to the assessment year 2003-04, similar reassessment order was passed with respect to the similar transaction with the aforesaid alleged agents and similar F Form were produced which were found to be fake. That the petitioners lost before learned Tribunal. That Tax Appeal No. 1205 of 2009 preferred by the petitioners also came to be dismissed by the Division Bench of this Court vide order dated 30.07.2009. That thereafter, the petitioners filed Review Application, being Miscellaneous Civil Application No. 121 of 2009 before this Court seeking review of the order dated 30.07.2009 and also filed appeal before the appellate authority against the order passed by the learned Tribunal. The petitioners also filed Special Civil Application No.12260 of 2009 challenging the Constitutional validity of Section 6A of the Act, which came to be disposed of by the Division Bench of this Court vide order dated 24.11.2009, however, without entering into the issue of validity of Section 6A of the Act in view of the fact that review application as well as appeal before the Appellate Authority were pending. That the Review Application was thereafter allowed by this Court on 4.2.2010 by recalling the order dated 30.07.2009 and permitting the petitioners to withdraw the Tax Appeal No. 1205 of 2009 since the petitioners had filed appeal before the Appellate Authority. That thereafter, the petitioner's appeal before the the Appellate Authority was rejected vide order dated 06.08.2010 considering the provisions of Section 6A of the Act. Against the order passed by the Appellate Authority dated 06.08.2010, the petitioners preferred Special Leave Petition No. 35734 of 2010 before Hon'ble Supreme Court, which the petitioners withdrew in order to prefer

Page 5 of 38

petition under Article 226 of the Constitution of India. That thereafter, the petitioners preferred Special Civil Application No. 3262 of 2011 before this Court, in which, also petitioner challenged the Constitutional validity of Section 6A of the Act. From the order passed by the Division Bench dated 24.03.2011 passed in Special Civil Application No.3262 of 2011, it appears that elaborate submissions were made before the Division Bench with respect to the Constitutional validity of Section 6 A of the Act, however the Division Bench was not prima facie satisfied and was not inclined to accept the submissions on Constitutional validity of Section 6A of the Act, the learned counsel for the petitioners did not press the validity of Section 6 A of the Act. The Division Bench in the order dated 24.3.2011 specifically observed that in that view of the matter, prayer to challenge the validity of Section 6A of the Act is not pressed and that the writ petition to that extent is closed and allowed the petitioners to pursue other prayer before the appropriate Court. The Division Bench has directed to post writ petition before the Bench hearing Sales Tax (Admission) matters. That thereafter, by detailed judgment and order dated 15.04.2011 the Division Bench dismissed the said Special Civil Application No. 3262 of 2011 which was for the year 2003-04 with respect to similar transactions and same / similar F forms produced and received from the different agents which were found to be fake. The Division Bench confirmed the reassessment order as well as subsequent orders passed by the Appellate Authority by observing that a F Form declaration is found to be not genuine, to that extent sub-section(1) of Section 6A and deeming fiction contained therein to be applied to hold that the movement of goods was by way of sale. The Division Bench dismissed the said petition. It is reported that the order passed by the Division Bench in Special Civil Application No. 3262 of 2011 has been

Page 6 of 38

confirmed by the Hon'ble Supreme Court. That thereafter, again petitioners have challenged the Constitutional validity of Section 6 A of the Act while challenging the reassessment order for the year 2002-03.

4.0. Shri Mihir Thakore, learned Senior Advocate has appeared on behalf of the petitioners and Shri Kamal Trivedi, learned Advocate General has appeared on behalf of the Revenue.

5.0. Shri Mihir Thakore, learned counsel for the petitioners has vehemently submitted that Section 6A(1) of the Central Sales Tax Act, 1956 is unconstitutional and ultra vires to the Constitution of India.

5.1. It is submitted that under Entry no. 92 A of List I of the Schedule 7 of the Constitution, Parliament can levy tax on sale of goods where such sale takes place in the course of interstate trade or commerce. It is submitted that Article 269(3) confers power on the Parliament to enact a law formulating principles for determining when sale takes place in the course of interstate trade or commerce. It is submitted that however under the said constitutional provisions, the Parliament can by law only tax a particular transaction provided it is a

"sale"in the first place and cannot tax transactions which are not sales by merely enacting that they shall be deemed to be sale. In support of his above submissions, Shri Thakore, learned counsel for the petitioners has heavily relied upon the decision of the Hon'ble Supreme Court in the case of The State of Madras vs. M/s. Gannon Dunkerley and Co (Madras) Ltd reported in AIR 1958 SC 560 (para 26 & 47). It is submitted that in the said decision, the Hon'ble Supreme Court has inter alia held that "... the words 'sale of goods' in Entry 48 must be interpreted in the sense which they bear in the Indian

Page 7 of 38

Sale of Goods Act, 1930" and that ".... in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to good which of-course presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale ........". It is submitted that therefore, by enacting provision to treat a particular transaction as deemed to be sale on non furnishing F Form, it is proposed to levy the CST treating it as interstate sale.

5.2. It is further submitted by Shri Thakore, learned counsel for the petitioner that subsequent to the aforesaid decision in the case of M/s. Gannon Dunkerley and Co (Madras) Ltd (supra), there is an amendment to the Constitution (the 46^thamendment) whereby Article 366(29A) has been inserted by which it has expanded the meaning of sale to the extent stated therein and certain transactions as stated therein are deemed to be sale.

5.3. It is submitted that the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd and Another vs. Union of India and others reported in (2006) 3 SCC 1 has held that the principle enunciated in the the case of Gannon Dunkerly (supra) has been modified by Article 366(29A) only to the limited extent stated in the said Article and that all other transactions would have to qualify as sale within the meaning of the Sale of Goods Act, 1930 for the purpose of levy of sales tax. In support of his above submissions, he has heavily relied upon para 41 to 43, 84, 105 to 107 of the decision of the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Limited (supra).

Page 8 of 38

5.4. It is further submitted by Shri Thakore, learned counsel for the petitioners that Section 6A(1) of the Central Sales Tax Act prior to its amendment w.e.f. 11.05.2002, contained an optional (not mandatory) requirement of filing a declaration in Form F. It is submitted that it permitted a dealer to establish by other evidence that the movement of goods was occasioned by reason of transfer of such goods by him to any other place of business or to his agent or principal and not by reason of sale. It is submitted that however w.e.f. 11.5.2002, Section 6A(1) of the Central Sales Tax Act has been amended whereby declaration in Form F has been made mandatory failing which the movement of such goods would be "deemed for all purposes of this Act to have been occasioned as a result of sale". It is submitted that Section 6A(1) as amended therefore, creates an irrebutable presumption by deeming every movement of goods to be a

"sale" even if it is in fact not a sale, merely on account of absence of declaration in Form F. It is submitted that in other words, the amendment results in treating every movement of goods to be a "sale"

even if the evidence available with a dealer can establish that a particular movement / transaction is in fact not a "sale". It is submitted that therefore, the said amendment is unconstitutional since it seeks to expand the meaning of the word "sale" beyond the constitutional parameters thereof and seeks to tax transactions which are not "sale"

by merely enacting that they shall be "deemed" to be "sale".

5.5. It is further submitted by Shri Thakore, learned counsel for the petitioners that said amendment therefore, violates Articles 14, 19(1)(g), 265 and 300-A of the Constitution. In support of his above submissions, Shri Thakore, learned counsel for the petitioners has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Bengal Immunity Co Ltd vs. State of Bihar & Ors reported in

Page 9 of 38

AIR 1955 SC 661(para 60) as well as para 34 of the decision in the case of Bharat Sanchar Nigam Limited (supra).

5.6. It is further submitted by Shri Thakore, learned counsel for the petitioners that the declaration in Form F is not inherently relevant for proving the fact that transactions involving interstate movement of goods are not sale and has no probative value in that behalf. It is submitted that it is only a requirement artificially created by the Statute. It is submitted that the said amendment in Section 6A(1) of the Central Sales Tax Act, 1956 however creates an irrebutable presumption of "sale" in absence of declaration in Form F and it is therefore, not a rule or evidence or procedural law or machinery provision, but is in fact part of substantive law. It is submitted that it being substantive law, is unconstitutional since, by not permitting the dealer to rebut the presumption by other evidence, it deems a transaction which may not be an actual sale to be a "sale". In support of his above submission, Shri Thakore, learned counsel for the petitioners has relied upon para 29 of the decision of the Hon'ble Supreme Court in the case of Izhar Ahmad Khan & Ors vs. Union of India & Ors reported in AIR 1962 SC 1052 as well as para 14, 16 and 17 of the decision of the Hon'ble Supreme Court in the case of Sodhi Transport Co. and Ors vs, State of UP and others reported in (1986) 2 SCC 486(which are also relied upon by the learned Advocate General appearing on behalf of the State).

6.0. Now, with respect to preliminary objection raised on behalf of the State as well as Union of India that as earlier petitioners withdrew the challenge to the Constitutional validity of Section 6A(1) of the Act in respect of assessment period 2003-04 and therefore, the

Page 10 of 38

petitioners may not be permitted to challenge the Constitutional validity of Section 6A(1) subsequently, it is vehemently submitted by Shri Thakore, learned counsel for the petitioners that in fact petitioners have stated the facts pertaining to the legal proceedings in respect of the assessment period 2003-04 and has produced orders passed by this Court and the Hon'ble Supreme Court in respect of said assessment period. It is submitted that there is no suppression and the petitioners have come with clean hands before this Court.

6.1. It is submitted that the petitioners had withdrawn the challenge as regards constitutional validity of Section 6A(1) of the Central Sales Tax Act for another assessment period i.e. 2003-04 therefore, it does not create any bar of res judicata or constructive res judicata to the present petition which is in respect of the assessment period 2002-03 and therefore, arising out of a separate cause of action. In support of his above submission, more particularly, his submission that every assessment year is different and distinct assessment year and the bar of res-judicata or constructive res-judicata shall not be applicable in the tax statute, Shri Thakore, learned counsel for the petitioners has relied upon the decisions of the Hon'ble Supreme Court in the case of Amalgamated Coalfields Ltd and another vs. Janapada Sabha Chhindwara and ors reported in AIR 1964 SC 1013 (para 18 & 24); in the case of Union of India and Another vs. Ranchi Municipal Corporation, and Ors reported in (1996) 7 SCC 542 (para 5) and in the case of Bharat Sanchar Nigam Limited (supra) (para 23).

6.2. It is submitted that in the case of Jeypore Sugar Company Ltd vs. Sales Tax Officer and Ors reported in (1998) 9 SCC 358, in fact, the Hon'ble Supreme Court has, even in respect of the same assessment

Page 11 of 38

period, held that it would not be just and proper to deny relief which is otherwise due to an assessee, on the ground of constructive res- judicata.

6.3. It is further submitted by Shri Thakore, learned counsel for the petitioners that since the petitioners had withdrawn the challenge to the constitutional validity of Section 6A(1) for the assessment period 2003-04, there is no precedent on this issue and hence, the petitioner's contentions are permissible to be raised before this Court.

6.4. It is further submitted by Shri Thakore, learned counsel for the petitioners that even otherwise there is no bar to the petition on the ground of "propriety" or "forum shopping".

6.5. It is submitted that in light of law laid down by Hon'ble Supreme Court that each assessment period constitutes a separate cause of action for the assessee and when the Hon'ble Supreme Court has not laid down any bar other than precedent for entertaining a petition in respect of a different assessment period and has specifically held that the bar of res judicata or constructive res judicata would not apply to matters in respect of different assessment periods, rejecting a petition on the ground of "propriety" or "forum shopping" would be contrary to the judgment of the Hon'ble Supreme Court.

6.6. It is further submitted that withdrawal was permitted by the this Court. It is submitted that whereas the present petition in respect of assessment period 2002-03 and is filed in 2016. It is submitted that therefore, there is no question of "forum shopping" in the present case. It is further submitted that there can be no allegation

Page 12 of 38

of "forum shopping" when by the very fact of withdrawal of its challenge in the other assessment period 2003-04, the petitioners have lost its right in respect of that assessment period and its tax liability for that period has become absolute.

6.7. Shri Thakore, learned counsel of petitioners has relied upon the decision of Arunima Baruah vs. Union of India reported in (2007) 6 SCC 120 in support of his submission that petition which raises a genuine grievance and seeks redressal of a constitutional violation, ought not to be rejected on technical grounds, more so when such grounds have no bearing or relation to the assessment period 2002-03 which constitutes a separate cause of action. Making above submissions, it is requested to consider the present petition on merits and making above submissions and relying upon the above decisions, it is requested to declare Section 6A(1) of the Central Sales Tax Act, 1956 as unconstitutional and / or ultra vires of the Constitution of India.

7.0. Present petition is vehemently opposed by Shri Kamal Trivedi, learned Advocate General appearing on behalf of the State and Shri Devang Vyas, learned Assistant Solicitor General of India appearing on behalf of the Union of India.

8.0. Present petition challenging vires of Section 6A(1) of the Central Sales Tax Act is vehemently opposed by learned counsel for the respondents by submitting that earlier the very petitioner in the earlier round of litigation did challenge the vires and Constitutional validity of the very provision i.e. Section 6A(1) of the CST Act and elaborate submissions were made by the learned counsel appearing on behalf of

Page 13 of 38

the petitioner with respect to the Constitutional validity of the Section. However, as Division Bench was not convinced and therefore, the petitioner did not challenge and / or did not press the challenge to the Constitutional validity of the Section 6A(1) of the CST Act. It is submitted that therefore, the petitioner may not be permitted to challenge the Constitutional validity of Section 6A(1) of the Act once again under the guise that for the subsequent assessment year, the petitioner can challenge the Constitutional validity, by submitting that in the taxation matter each year is separate and distinct year and would give a separate cause of action every year. It is vehemently submitted by the learned counsel for the respondent that if the course adopted by the petitioner is permitted, in that case, it would lead to enter into forum shopping, as having failed to get the relief from one Bench, the same is not pressed and thereafter the same will be challenged, subsequently which may be before the another Bench / Court. It is vehemently submitted that it may not be strictly a case of res-judicata still looking to the conduct of the petitioner, the Court may not exercise the discretion in favour of such petitioner and may not issue prerogative writ. In support of the above submissions, learned counsel for the respondents have heavily relied upon the decision of the Division Bench of this Court in the case of Murtujakhan Joravarkhan Babi vs. Municipal Corporation Ahmedabad reported in AIR 1975(Guj) 182 (para 22).

8.1. On merits, Shri Trivedi, learned Advocate General appearing on behalf of the State has vehemently submitted that Section 6(A) of the CST Act cannot be said to be ultra vires and / or unconstitutional as sought to be contended on behalf of the petitioner.

Page 14 of 38

8.2. It is submitted by Shri Trivedi, learned Advocate General appearing on behalf of the State that as such the provisions contained in Section 6A of the CST Act are not charging provisions but are just machinery provisions, which are enacted to make the Act workable and to prevent evasion and Entry 92A of List I of the 7^thSchedule to Constitution of India deserves to be read in wider fashion so as to include all subsidiary and ancillary matters, not only as authorizing the imposition of tax but also authorizing an enactment which prevents the tax imposed being evaded.

8.3. It is further submitted by Shri Kamal Trivedi, learned Advocate General that even otherwise provision contained in sub- section (1) of Section 6A of the Act do not seek to tax on transaction which is not sale as defined under Section 2(g) of the Act or under Entry 92A of List I of 7^thSchedule to the Constitution of India, but the said provisions merely provide for rule of evidence carrying a probative or persuasive value in the matter of proving the existence of the fact of transfer (not the sale) of goods from one State to another State.

8.4. It is further submitted by Shri Kamal Trivedi, learned Advocate General that a factum of production of "F" Form as provided under Section 6A(1) of the Act is relevant in proof of fact of having transferred and not sold the goods from one State to another State. It is submitted that since the said fact having produced "F" Form bears a probative or persuasive value in the matter of proving the existence of the fact of transfer of goods from one State to another, the same is, as aforesaid, a rule of evidence, prescribing for an irrebuttable (conclusive) presumption.

Page 15 of 38

8.5. It is submitted that statutory provision which creates a rebuttable presumption or irrebuttable presumption as regards the proof of a set of circumstances, which would make a transaction liable to tax with the object of preventing evasion of tax, cannot be considered as conferring on the authority concerned, the power to levy a tax which the legislature cannot otherwise levy.

8.6. Shri Trivedi, learned Advocate General has taken us to the scheme and relevance of submitting "F" Form. It is submitted that a complete machinery is provided under Section 6A of the Act. It is submitted that after "F" Form is submitted in that case the Assessing Officer is required to hold inquiry with respect to genuineness of the contains mentioned in "F" Form and at this stage there would be an opportunity to the dealer and within the meaning of this provision to convince the Assessing Officer that he has discharged the burden to prove that transfer of goods was not by way of sale. It is submitted that however if the dealer does not come with a case that the transfer of goods is not by way of sale by submitting "F" Form in that case there shall be presumption that goods transferred outside the State are by way of sale and interstate sale is CST leviable. It is submitted that therefore, it is machinery section and by no stretch of imagination it can be said that by such a provision the transaction which is not a sale is sought to be considered as a sale, Section 6A(1) does not confer power to levy tax which Legislature otherwise cannot levy.

8.7. Shri Trivedi, learned Advocate General has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Sodhi Transport Co. and Others vs. State of U.P and Others reported in (1986) 2 SCC 486 (para 1 to 3, 7 to 11, 14 to 19).

Page 16 of 38

8.8. Shri Trivedi, learned Advocate General has also relied upon para 16, 25 to 29 and 34 of the decision of the Hon'ble Supreme Court in the case of Izhar Ahmad Khan and ors vs. Union of India and Ors reported in AIR 1962 SC 1052.

8.9. Shri Trivedi, learned Advocate General has also heavily relied upon the decision of the Hon'ble Supreme Court in the case of Johnson Matthey Chemicals India Pvt. Ltd vs. State of Maharashtra rendered in Writ Petition No. 7400 of 2015. It is submitted that in the aforesaid decision the Division Bench of the Bombay High Court has considered Section 6A(1) as machinery Section and not charging provision. Making above submission, it is submitted that Section 6A(1) is Constitutionally valid and not violative of Entry 92 A, Articles 14 and 19 of the Constitution as alleged.

8.10. It is submitted by Shri Trivedi, learned Advocate General that as such in the present case the petitioner did produce the "F' Forms in support of their case that the transactions outside the State were not by way of sale. However on inquiry it has been found that "F" Forms are fake. It is submitted that the petitioner is not disputing that the "F"

Forms which were submitted, were fake. It is submitted that therefore, once the "F" Form submitted by the petitioner in support of their case that the transactions outside the State were not sale and are found to be fake and thus the petitioner failed to prove that the transactions were not a sale, in that case, there cannot be any other eventuality and such transactions are to be treated and / or held to be interstate sale on which the petitioner is liable to pay the CST. It is submitted that therefore, this is not a case in which on non production of the "F" Form

Page 17 of 38

the petitioner is held liable to pay CST treating, the transaction as interstate sale. It is vehemently submitted by Shri Trivedi, learned Advocate General that for the earlier years with respect to very "F"

Forms, the petitioner had lost upto Hon'ble Supreme Court and the petitioner is held liable to pay CST on such transactions, of which, "F"

Forms were submitted but were found to be fake.

Making above submissions, it is requested to dismiss the present petition.

9.0. Shri Devang Vyas, learned Assistant Solicitor General of India has adopted the submissions made by Shri Kamal Trivedi, learned Advocate General and has requested to dismiss the present petition.

10.0. Heard the learned counsel for the respective parties at length.

11. The first question which is posed for the consideration of this Court is whether in the facts and circumstances of the case when the petitioner earlier challenged the Constitutional validity of Section 6A(1) of the Central Sales Tax Act, 1956 in earlier round of litigation for AY 2003-04, by way of Special Civil Application No. 3262 of 2011 and after learned counsel for the petitioner made the elaborate submissions on constitutional validity of the said provision,withdrew the same, is it open for the petitioner -assessee therefore, to challenge the same again in the subsequent assessment year and / or whether in such circumstances the High Court would like to exercise the discretionary powers under Article 226 of the Constitution of India ?

11.1. It is the case on behalf of the petitioner relying upon the

Page 18 of 38

decisions of the Hon'ble Supreme Court in the case of Amalgamated Coalfields Ltd and another (supra); Ranchi Municipal Corporation Ranchi and Ors (supra); Bharat Sanchar Nigam Ltd (supra) and Jeypore Sugar Company Ltd (supra) that bar of res-judicata or constructive res-judicata shall not be applicable in the taxation matter, as liability to pay tax from year to year is separate and distinct liability; it is based on different cause of action from year to year. It is also the case on behalf of the petitioner that as held by the Hon'ble Supreme Court in the case of Jeypore Sugar Company Ltd (supra), it will not be just and proper to deny relief which is otherwise due to an assessee, on the ground of constructive res-judicata. It is also the case on behalf of the petitioner - assessee that there is no bar to the petition on the ground of "propriety" or "forum shopping" as the bar of res-judicata or constructive res-judicata would not bar with respect to different assessment period.

11.2. On the other hand, it is the case on behalf of the State that in the present case as such in the earlier round of litigation for AY 2003-04, in the petition being Special Civil Application No.3262 of 2011, the petitioner specifically challenged the Constitutional validity of Section 6A(1) of the Act and learned counsel for the petitioner as such made elaborate submissions on merits on the Constitutional validity of Section 6A(1) of the Act, however the Division Bench was not satisfied with the submissions made on behalf of the learned counsel for the petitioner with respect to Constitutional validity of aforesaid provisions, and thereafter only learned counsel for the petitioner did not press the petition challenging the validity of Section

6 A(1) of the Act. It is submitted that therefore, the present petition challenging the Constitutional validity of Section 6A(1) of the Act again

Page 19 of 38

may not be entertained. It is submitted that therefore, in the aforesaid facts and circumstances of the case, the decisions cited at the bar on behalf of the learned counsel for the petitioner referred to herein above shall not be applicable to the facts of the case on hand.

11.3. Heard the learned advocates for the respective parties on the aforesaid objection with respect to entertainability of the present petition with respect to challenge to validity of Section 6A(1) of the Act again.

11.4. At the outset, it is required to be noted that in earlier round of litigation for AY 2003-04, the petitioner did challenge the Constitutional validity of Section 6A(1) of the Act, in a petition under Article 226 of the Constitution of India being Special Civil Application No.3262 of 2011. From the order dated 24.03.2011 in aforesaid Special Civil Application No. 3262 of 2011, it appears that elaborate submissions were made by the learned counsel for the petitioner on the question of validity of Section 6A(1) of the Act, however as observed by the Division Bench in the order dated 24.03.2011, the Division Bench was not inclined to accept such submission on the question of validity of Section 6 A of the Act and therefore, the learned counsel for the petitioner did not press the writ petition with respect to the prayer to challenge the validity of Section 6A of the Act. Consequently, the Division Bench specifically observed and held that in that view of the matter, as the prayer to challenge the validity of Section 6A of the Act is not pressed, writ petition to that extent is closed. The order passed by the Division Bench dated 24.3.2011 passed in Special Civil Application No.3262 of 2011 is as under:

"The Central Sales Tax Appellate Authority, New Delhi

Page 20 of 38

(for short, 'the Appellate Authority'), by order dated 6^th August 2010, decided the appeal preferred by the petitioner under Section 20 of the Central Sales Tax Act, 1956 (for short, 'the Act'). The said appeal was preferred against the order passed by the Value Added Tax Tribunal, Ahmedabad.

The Appellate Authority, referring Section 6A of the Act and the other provisions, the facts of the case and the decision of the Supreme Court, by its order dated 6^th August 2010, upheld the imposition of tax. It appears that at this stage, the petitioner moved before the Supreme Court in Special Leave to Appeal (Civil) No.35734/2010. The said petition was withdrawn on 11^th February 2011 with a liberty to move before the High Court under Article 226 of the Constitution of India. The Supreme Court directed that if the petitioner files a writ petition, the High Court may consider the same on its own merits. The present writ petition has been preferred with a prayer to allow the first petitioner to produce evidence before the Central Sales Tax Authorities to establish that the goods were despatched on consignment basis and not by way of interstate sale. In the alternative, validity of Section 6A of the Act is also challenged. After arguments on the question of validity of Section 6A of the Act and as the Court was, prima facie, not inclined to accept such submission, learned counsel appearing on behalf of the petitioner submitted that the petitioner will not desire to challenge the validity of Section 6A of the Act. On the other reliefs, the case may be heard.

In that view of the matter, while we hold that the prayer to challenge the validity of Section 6A of the Act is not pressed and that the writ petition to that extent is closed, allow the petitioner to pursue other prayer before the appropriate Court.

Post the writ petition before the Bench hearing Sales Tax (Admission) matters on 1^st April 2011."

11.5. Thereafter, again now in the present petition, the petitioners have challenged the Constitutional validity of Section 6A of the Act which was not earlier pressed by the very petitioners. Therefore, one of the question which is posed for the consideration of this Court

Page 21 of 38

whether in such situation narrated herein above i.e. once the petitioners after making elaborate submissions before the Division Bench in Special Civil Application No. 3262 of 2011, as the Court was not inclined to accept the submissions made on behalf of the petitioners on the question of validity of Section 6A of the Act and thereafter when the petitioners did not press the challenge to the Constitutional validity of Section 6A of the Act, whether the petitioners may be permitted to again raise the question of validity of Section 6A of the Act in the subsequent proceedings.

11.6. In the case of Upadhyay and Co vs. State of U.P and Others, in para 11 to 15, the Hon'ble Supreme Court has observed and held as under:

11.We made a recapitulation of the events as above for the purpose of showing that the petitioner has absolutely no case in the present S.L.Ps. He cannot, at any rate, now challenge the order of the High Court dated 3-5-1996 over again having withdrawn the S.L.P. which he filed in challenge of the same order. It is not a permissible practice to challenge the same order over again after withdrawing the Special Leave Petition without obtaining permission of the Court for withdrawing it with liberty to move for special leave again subsequently.

12. The above principle has been incorporated as a rule in the realm of suits. Order 23, Rule 1 of the Code of Civil Procedure deals with withdrawal of suit or abandonment of part of the claim. Sub-rule (3) says that the Court may in certain contingencies grant permission to withdraw from suit with liberty to institute a fresh suit in respect of the subject matter of such suit. Sub-rule (4) reads thus :

1."(4) Where the plaintiff-

(a) abandons any suit or part of claim under sub-rule (1), or

(b) withdraw from a suit or part of a claim without the permission referred to in sub-rule (3), he shall be liable for such costs as the Court may award and shall be precluded from instituting any fresh suit in respect of such subject matter or such part of the claim."

Page 22 of 38

13. The aforesaid ban for filing a fresh suit is based on public policy. This Court has made the said rule of public policy applicable to jurisdiction under Article 226 of the Constitution (Sarguja Transport Service v. State Transport Appellate Tribunal, Gwalior (1987) 1 SCC 5 : (AIR 1987 SC

88). The reasoning for adopting it in writ jurisdiction is that very often it happens, when the petitioner or his counsel finds that the Court is not likely to pass an order admitting the writ petition after it is heard for some time, that a request is made by the petitioner or his counsel to permit him to withdraw it without seeking permission to institute a fresh writ petition. A Court which is unwilling to admit the petition would not ordinarily grant liberty to file a fresh petition while it may just agree to permit withdrawal of the petition. When once a writ petition filed in a High Court is withdrawn by the party concerned he is precluded from filing an appeal against the order passed in the writ petition because he cannot be considered as a party aggrieved by the order passed by the High Court. If so, he cannot file a fresh petition for the same cause once again. The following observations of E.S. Venkataramiah, J. (as the learned Chief Justice then was) are to be quoted here (at p. 92 of AIR):

"We are of the view that the principle underlying Rule 1 of Order 23 of the Code should be extended in the interests of administration of justice to cases of withdrawal of writ petition also, not on the ground of res judicata but on the ground of public policy as explained above. It would also discourage the litigant from indulging in bench-hunting tactics. In any event there is no justifiable reason in such a case to permit a petitioner to invoke the extraordinary jurisdiction of the High Court under Art. 226 of the Constitution once again. While the withdrawal of a writ petition filed in High Court without permission to file a fresh writ petition may not bar other remedies like a suit or a petition under Art. 32 of the Constitution since such withdrawal does not amount to res judicata, the remedy under Art. 226 of the Constitution should be deemed to have been abandoned by the petitioner in respect of the cause of action relied on in the writ petition when he withdraws it without such permission."

14. Of course their Lordships added that the above rule is not applicable to writ petitions involving personal liberty

"since such a case stands on a different footing altogether."

15. We have no doubt that the above rule of public policy, for the very same reasoning, should apply to special leave

Page 23 of 38

petitions filed under Art. 136 of the Constitution also. Even otherwise, the order passed by the Division Bench of the High Court on 3-5-1998 does not warrant interference on merits as the learned Judges of the High Court have taken into account all the relevant facts and came to the correct conclusion.

11.7. In the case of Avinash Nagra vs. Navodaya Vidhyalaya Samiti and Ors reported in (1997) 2 SCC 534, the Hon'ble Supreme Court has observed that where the first writ petition challenging the order of termination of service was withdrawn without grant of liberty by the Court to file a second writ petition, the second writ petition for that very purpose is not maintainable on the ground of constructive res- judicata. In para 13, the Hon'ble Supreme Court has observed as under:

"13.The High Court also was right in its conclusion that the second writ petition is not maintainable as the principle of constructive res judicata could apply. He filed the writ petition in first instance but withdrew the same without permission of the Court with liberty to file the second writ petition which was dismissed. Therefore, the second writ petition is not maintainable as held by the High Court is applying the correct principle of law. Thus considered we find no merit in the appeal for interference."

11.8. In the case of Murtujakhan Joravarkhan Babi (supra) in para 22 while not permitting the petitioner again to challenge to the Constitutional validity of relevant provisions of the Act in a subsequent petition, the Division Bench in para 22 has observed as under:

22. There is still one more ground on which the challenge to the constitutional validity of the relevant provisions of the Act at the instance of the petitioner is barred in this writ petition. The petitioner seeks the writ of mandamus which is not a writ of course or a writ of right but is as a rule of matter for the discretion of the Court. Upon a prerogative writ of that nature there may arise many matters of discretion which may induce the Court to withhold the grant of it matters connected with delay or possibly with the conduct of the parties (See Bombay Municipality vs. Advance Builders AIR 1972 SC 793 page 800). Now, as stated earlier the petitioner had earlier filed Special Civil Application No.

Page 24 of 38

425 of 1966 in this Court. It is not in dispute that the validity of the Act as a whole was inter alia challenged in the said writ application. On the issue of the rule the respondents appeared and filed affidavits and contested the petition on merits. The petition was ultimately withdrawn and the Court which allowed the withdrawal made a speaking order. The order was in the following terms:-

Mr. K.G. Vakharia learned advocate appearing on behalf of the petitioner states that the only point raised in this petition relates to the validity of the provisions of the Bombay Town Planning Act, 1954 and since that point is already covered by the decisions of the Supreme Court nothing survives in the petition. He, therefore, withdraws the petition and the petition accordingly stands withdrawn. There will be no order as to costs of the petition.

The consequence of the withdrawal of the said writ petition in the eye of law was that it stood dismissed on merits albeit on a concession made by or on behalf of the petitioner to the effect that the question of the constitutional validity of the Act was no longer open in view of the decisions of the Supreme Court. In other words the effect of the dismissal by withdrawal was that the challenge of the petitioner to the actions of the respondents under the Act on the ground that the said Act itself was ultra vires stood concluded by an adverse decision of this Court based on his own concession. It is not the case of the petitioner as set out in the petition that the concession was wrongly made by his counsel. Indeed such a contention could not have been raised in the view that we have taken as regards the wide ambit of the pronouncement of the Supreme Court and it was therefore, rightly nut raised. In these circumstances the petitioners complaint in the present petition directed against the actions of the respondents under the same statute and based on identical grounds is barred by the general principles of res judicata or at least by principles underlying the doctrine of res-judicata namely that there should be finality in litigation and that a person should not be vexed twice over in respect of the same cause or matter. In any case, the petitioner having himself abandoned without reservation the previous writ proceeding initiated in this very Court with eyes open and after due deliberation he cannot now be allowed to pick up the thread after a lapse of five years and to start a fresh proceeding to re-agitate the very point which he expressly gave up in the previous proceeding. He had set the machinery of law in motion but solemnly brought it to an abrupt halt indeed forsaken it in midstream

Page 25 of 38

in proclaimed obeisance to the decisions of the Supreme Court. He cannot be permitted to resume it now after a number of years and be heard to say that despite his earlier proclamation he still wishes to persist in raising the same point in this litigation. Courts moved upon a prerogative writ are not the forum to flog a dead horse or to resuscitate a ghost already laid to rest. The doctrine of abandonment has been expressly invoked and recognised in Trilokchand Motichand vs. HB Munshi AIR 1970 SC 898 in a proceeding under Article 32 and relief was refused to the petitioner in that case (although the point that he was agitating was covered in his favour by a Supreme Court decision given in a different case). On the ground that after an adverse decision of the High Court in his writ petition under Article 226 he had not moved the Supreme Court by way of appeal but had chosen to move the Supreme Court directly after a number of years only when another person more adventurous than him in his turn got a favourable decision meanwhile on a point not urged by the petitioner in his writ petition before the High Court (see the decision of Hidaytullah C.J. St pages 902 and

903). The principle on which the Supreme Court acted in that case will apply appositely and with greater force to a situation such as that which obtains in the present case. We are therefore, of the opinion that even on that ground the petitioners challenge to the constitutional validity of the Act must fail.

11.9. Now, so far as reliance placed upon the decision of the Hon'ble Supreme Court in the case of Amalgamated Coalfields Ltd and another (supra) is concerned, it is required to be noted that as such on facts the said decision shall not be applicable to the facts of the case on hand. In the said decision, the Hon'ble Supreme Court as such has specifically observed and held, that the general principle of res judicata applies to writ petitions filed under Article 32 or Article 226. However, thereafter having so observed and held the Hon'ble Supreme Court found that attack against the validity of the notices in the present proceedings is based on grounds different and distinct from the grounds raised on the earlier occasion and it was specifically found that same ground which was urged on earlier occasion was not placed before the

Page 26 of 38

Court in another form and having found that the ground subsequently urged were entirely distinct, the Hon'ble Supreme Court observed and held that High Court ought not to have dismissed subsequent petition on the ground of res-judicata / constructive res judicata. The observations made by the Hon'ble Supreme Court in para 23 and 24 are required to be referred to, which are as under:

23. In considering this question, it may be necessary to distinguish between decision on questions of law which directly and substantially arise in any dispute about the liability for a particular year, and questions of law which arise incidentally or in a collateral manner, as Lord Radcliffe himself has observed in the case of the Society of Medical Officers of Health, 1960 AC 155 that the effect of legal decisions establishing the law would be a different matter. If, for instance, the validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to the High Court or brought before this Court and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic andmaterial issue would not operate as res judicata against the assessee for a subsequent year. That, however, is a matter on which it is unnecessary for us to pronounce a definite opinion in the present case. In this connection, it would be relevant to add that even if a direct decision of this Court on a point of law does not operate as res judicata in a dispute for a subsequent year, such a decision would, under Art. 141, have a binding effect not only on the parties to it, but also on all counts in India as a precedent in which the law is declared by this Court. The question about the applicability of res judicata to such a decision would thus be a matter of merely academic significance.

24. In the present appeals, the question which arises directly for our decision is : does the principle of constructive res judicata apply to petitions under Art. 32 or Art.226 where the dispute raised is in respect of a year different from the year involved in a prior dispute decided by this Court ? We have already noticed the points actually decided by this Court against the appellants on the earlier occasion (vide Amalgamated Coalfields Ltd., 1962-1 SCR 1: (AIR 1961 SC 694). One of the points sought to be raised

Page 27 of 38

was in regard to the validity of the increase in the rate of tax from 2 pies to 9 pies per ton; and since this point had not been taken in the petition and relevant material was not available on record, this Court refrained from expressing any opinion on it. The appellants contend that the order passed by this Court refusing permission to the appellants to raise this point on the earlier occasion does not mean that this Court has decided the point on the merits against the appellants; it may mean that the appellants were given liberty to raise this point later; but even otherwise, the point has not been considered and should not be held to be barred by constructive res judicata . It is significant that the attack against the validity of the notices in the present proceedings is based on grounds different and distinct from the grounds raised on the earlier occasion. It is not as if the same ground which was urged on the earlier occasion is placed before the Court in another form. The grounds now urged are entirely distinct and so, the decision of the High Court can be upheld only if the principle of constructive res judicata can be said to apply to writ petitions filed under Art. 32 or Art. 226. In our opinion, constructive res judicata which is a special and artificial form of res judicata enacted by S. 11 of the Civil Procedure Code should not generally be applied to writ petitions filed under Art. 32 or Art.

226. We would be reluctant to apply this principle to the present appeals all the more because we are dealing with cases where the impugned tax liability is for different years. In dismissing the appellants' petitions on the ground of res judicata, the High Court has no doubt referred to Art. 141 under which the law declared by this Court is binding on all Courts within the territory of India. But when we are considering the question as to whether any law has been declared by this Court by implication, such implied declaration, though binding, must be held to be subject to revision by this Court on a proper occasion where the point in question is directly and expressly raised by any party before this Court. Therefore, we are inclined to hold that the appellants cannot be precluded from raising the new contentions on which their challenge against the validity of the notices is based.

Page 28 of 38

Even in the said decision, it is specifically observed and held that if, validity of taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to the High Court or brought before this Court and it is held that the taxing statute is valid, it may not be easy to hold that the decision on this basic and material issue would not operate as res judicata against the assessee for a subsequent year.

11.10. Now, so far as reliance placed upon the decision in the case of Ranchi Municipal Corporation, and Ors (supra) relied upon by the learned counsel for the petitioner is concerned, it is required to be noted that in the case before the Hon'ble Supreme Court earlier petition was dismissed challenging the validity of the demand summarily and to that it is held that summary dismissal does not constitute res judicata for deciding the controversy. That is not the situation here. In the present case, in earlier petition, learned counsel for the petitioner did made elaborate submissions on Constitutional Validity of Section 6 A of the Act, however as observed by the Division Bench, the Court was not inclined to accept the submission and only thereafter instead of inviting the order on merits on the Constitutional validity of Section 6A, the learned counsel for the petitioner did not press the petition qua challenge to the Constitutional validity of Section 6A of the CST Act.

11.11. Similarly, the decision of the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd (supra) also shall not be applicable to the facts of the case on hand. Even in the said decision, it is observed by the Hon'ble Supreme Court that the Courts will

Page 29 of 38

generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. It is further observed that reason why Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. It is further observed that where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view.

11.12. Even the decision of the Hon'ble Supreme Court in the case of Jeypore Sugar Company Ltd (supra) relied upon by the learned counsel for the petitioner shall not be applicable to the facts of the case on hand. In the case before the Hon'ble Supreme Court, it was the case on behalf of the revenue that as the point raised in the subsequent proceeding was available earlier and was not taken, the assessee may not be permitted to raise the same ground. On facts the Hon'ble Supreme Court found that it will not be just and proper to deny relief to the assessee, which was otherwise due, on the ground they earlier it had only assailed the question of exigibility to tax. It is further observed that it is true that the plea now taken could have been advanced earlier as well, but the fact this was not done, should not be a ground to deny the relief which is otherwise due to the appellant. Under the circumstances, th said decisions decision shall not be applicable to the facts of the present case.

11.13. The principle on which the Hon'ble Supreme Court in the case of Upadhyay and Co. (supra), Avinash Nagra (supra) and the Division

Page 30 of 38

Bench in the case of Murtujakhan Joravarkahn Babi(supra) applied in those cases, shall apply appositely and with greater force to a situation such as in the present case. As observed herein above and it is not in dispute that earlier the petitioner specifically challenged the Constitutional validity of Section 6A (1) in Special Civil Application No.3262 of 2011 in which, learned counsel for the petitioner made elaborate submissions on validity of Section 6A, however Division Bench was not inclined to accept the submissions made by the learned counsel for the petitioner challenging the Constitutional validity of Section 6A of the Act and only thereafter the learned counsel for the petitioner took a conscious decision and did not press the challenge to the Constitutional validity of Section 6A of the Act. It appears that the learned counsel for the petitioner at that stage did not thought it fit to invite the order on merits with respect to the Constitutional validity of Section 6A of the Act. If learned counsel for the petitioner would not have withdrawn the petition and / or withdrawn the challenge to the Constitutional validity of Section 6A of the Act, in that case, the Division Bench would have definitely decided the matter on Constitutional validity of Section 6A of the Act and would have given its verdict on the same. However, having realized that the Court is not inclined to accept the submissions on Constitutional validity of Section 6A of the Act and therefore, would hold against the petitioner with respect to Constitutional validity of Section 6A of the Act, the learned counsel for the petitioner took a conscious decision and did not press the Constitutional validity of Section 6A of the Act, which is now challenged. It is not the case on behalf of the petitioner that learned counsel for the petitioner withdrew the challenge to the Constitutional validity of Section 6A of the Act in earlier proceedings wrongly and and / or without their consent. The matter is also required to be considered

Page 31 of 38

from another angle also. In a given case it may happen that the litigant approach the Court with a particular challenge and having realized that the Court is against him, he may withdrew the petition / challenge and thereafter may approach the Court with respect to very challenge before another Bench. The aforesaid would give rise to eventuality of

"forum shopping". On the aforesaid ground also, the present petition is not required to be entertained. In view of the aforesaid facts and circumstances of the case, we are of the opinion that present petition at the instance of the petitioner challenging the Constitutional validity of Section 6A of the Act is not required to be entertained.

12.0. Even otherwise on merits also, for the reasons stated herein below, it cannot be said that Section 6(A)(1) of the Act can be said to be ultra vires to Article 269(3) of the Constitution of India and / or Section 6A(1) of the Act treats the transaction which is not

"sale" shall be treated as "sale"(deemed sale), as sought to be contended on behalf of the petitioners.

12.1. While considering vires / constitutional validity of Section 6A(1) Section 6 & Section 6A of the Central Sales TAx Act, as a whole are required to be referred to and considered, which read as under:

"6. Liability to tax on inter-State sales :-

[(1) Subject to other provisions contained in this Act, every dealer shall, with effect from such 2[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 3[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

Page 32 of 38

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.] (1-A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-state trade or commerce not withstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.]

[2] Not withstanding anything contained in sub- section(1) or sub-section (1A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods-to a registered dealer, if the goods are of the description referred to in sub- section (3) of Section 8, shall be exempt from tax under this Act; Provided that no such subsequent sale shall be exempt from tax under the sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner and within the prescribed time or within such further time as that authority may, for sufficient cause, permit,-

(a) a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars in a prescribed form obtained from the prescribed authority; and (b) If the subsequent sale is made to a registered dealer, a declaration referred to in of sub-section(4) of section 8;

Provided further that it shall not be necessary to furnish the declaration or the certificate referred to in clause (b) of the proceeding proviso in respect of a subsequent sale of goods if,--

(a) the sale or purchase of such goods is, under the Sales Tax law of the appropriate State, exempt from tax generally or is subject to tax generally at a rate which is lower than 1[three] percent or such

Page 33 of 38

reduced rate as may be notified by the Central Government, by notification in the Official Gazette, under sub-section (1) of Section 8 (Whether called a tax or fee or by any other name); and

(b) the dealer effecting such subsequent sale proves to the satisfaction of the authority referred to in the preceding proviso that such sale is of the nature referred to in clause (a) or clause (b) of this sub- section.]

(3)Not withstanding anything contained in this Act, no tax under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer, in the course of inter-State trade or commerce, to any official, personnel, consular or diplomatic agent of ---

(I) any foreign diplomatic mission or consulate in India ; or

(ii) the United nations or any other similar international body,

entitled to privileges under any convention or agreement to which India is a party or under any law for the time being in force, if such official, personnel, consular or diplomatic agent, as the case may be, has purchased such goods for himself or for the purposes of such mission, consulate, United Nations or other body.

(4) The provisions of sub-section (3) shall not apply to the sale of goods made in the course of inter-State trade or commerce unless the dealer selling such goods furnishes to the prescribed authority a certificate in the prescribed manner on the prescribed from duly filled and signed by the official personnel, consular or diplomatic agent, as the case may be

6A. (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

Page 34 of 38

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 goods² [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].

(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 and that no inter-State sale has been effected, 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, subject to the provisions of sub-section (3)] be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale.

(3) Nothing contained in sub-section (2) shall preclude reassessment by the assessing authority on the ground of discovery of new facts or revision by a higher authority on the ground that the findings of the assessing authority are contrary to law, and such reassessment or revision may be done in accordance with the provisions of general sales tax law of the State."

12.2. From the aforesaid, it can be said that Section 6 of the Act is a charging Section and Section 6 A of the Act can be said to be a procedural Section.

Section 6 A of the Act provides for complete machinery, by which, the assessee/ dealer shall have an ample opportunity to prove whether the transfer of goods is not by way of sale. It is required to be noted that if the transfer of goods takes place out of State / from one State to

Page 35 of 38

another State, there can be only two eventualities. Either the same is during the course of inter-state sale or it is not by way of sale, may be such transfer is to the Depot, Branch Office, Agent etc. If the dealer is of the opinion that the transfer of goods is not by way of sale, in that case, the dealer is required to submit "F" form with full particulars. Therefore,

"F" Form with full particulars is not submitted by the concerned dealer, in that case, it can be said that according to said dealer, such transfer is by way sale, otherwise such dealer would file / submit "F" Form with full particulars in support of his case that transfer is not by way of sale. The opening word of Section 6A itself states that ......."where any dealer claims that he is not liable to pay tax under this Act.....". Therefore, if the dealer claims that he is not liable to pay tax under the Central Sales Tax Act in respect of any goods, on the ground that the movement of such goods from one State to another State has occasioned by reason of transfer of such goods by him to any other place of his business, as the case may be, and not by reason of sale, the burden of proving that the movement of those goods has so occasioned shall be on that dealer and for this purpose, he may furnish to the Assessing Authority, prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of dispatch of such goods i.e. Form

"F". Thus, Section 6A(1) cast burden upon the dealer. If the dealer submits the prescribed Form (F Form) containing prescribed particulars obtained from the prescribed authority, along with evidence of dispatch of such goods etc, in that case, it can be said that initial burden / onus is discharged by the dealer and thereafter it is for the concerned appropriate authority to hold inquiry and prove otherwise. Only in case the dealer fails to furnish such declaration, then, there is a presumption that the movement of such goods shall be deemed sale for all purposes of Central Excise Acct to have been occasioned as a result of sale. Therefore, Section 6 A is a complete machinery. Therefore, by Section, it

Page 36 of 38

cannot be said that Legislature intends to levy the tax on inter-state sale, which otherwise is not a sale. As observed herein above, Section 6 is charging Section and Section 6A is a procedural Section. Under the circumstances, the submission on behalf of the petitioner that by Section 6! and the deeming provision, it is intended to levy the tax on sale, which otherwise is not sale, has no substance and cannot be accepted.

13. In view of the above, more particularly, when it is observed and held that Section 6 is a charging Section and Section 6 A is a procedural Section and therefore, by Section 6A(1) of the CST Act, it cannot be said that by the said provision, the transaction which otherwise is not a sale is treated as sale (deemed sale), it cannot be said that Section 6A (1) of the CST Act is unconstitutional and / or ultra vires to Article 269(3) of the Constitution of India and / or Entry no. 92 A of List I of the Schedule 7 of the Constitution, as contended on behalf of the petitioners. Under the circumstances, the decisions of the Hon'ble Supreme Court in the case of Gannon Dunkerley and Co (Madras) Ltd (supra) and in the case of Bharat Sanchar Nigam Ltd (supra) shall not be applicable to the facts of the case on hand.

13.1 Similarly, for the reasons stated above and as observed herein above, complete machinery is provided under Section 6A of the CST Act and that Section 6A is a procedural provision, the submission that

Page 37 of 38

maintainability and also on merits and is accordingly dismissed. Rule discharged. No costs.

sd/-

(M.R. SHAH, J.)

sd/-

(B.N. KARIA, J.)

Kaushik

Page 38 of 38