MANU/SC/0020/2004

Equivalent/Neutral Citation: AIR2004SC 2836, 2004(6)ALT5(SC ), 2004(1)SC ALE224, (2004)3SC C 1, [2004]1SC R306, [2004]134STC 473(SC )

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 943, 944 and 976-979 of 2001 and W.P.(C) No. 195 of 1999 and civil
Appeal No. 53/2004 (Arising out of SLP (C) No. 5579/2001)
Decided On: 07.01.2004
Appellants:Ashok Leyland Ltd.
Vs.
Respondent:State of Tamil Nadu and Ors.
Hon'ble Judges/Coram:
V.N. Khare, C.J., S.B. Sinha and A.R. Lakshmanan, JJ.
Counsels:
K. Parasaran, A.K. Ganguli, Bhasker Sen and P.P. Rao, Sr. Advs., A.T.M. Sampath, V.
Balaji, T.S. Santhi, Aarti Radhakrishnan, K.K. Mani, R.L. Ramani, Manika Pandey, K.V.
Vijay Kumar, Subramonium Prasad, Chitra Venkataraman, R. Gopalakrishnan, S.N. Jha,
Dilip Sinha, J.R. Das, Guntur Prabhakar, Sanjay R. Hegde, V.G. Pragasam, Kiran
Bhardwaj, K.C. Kaushik, Rajiv Tyagi, Anil Katiyar (NP), D.S. Mahra (NP), Ravindra
Keshavrao Adsure, Mukesh K. Giri, R.P. Wadhwani (NP), B.S. Banthia, Naveen Sharma,
Sakesh Kumar, S.K. Agnihotri, Krishna Sharma, Asha Gopalan Nair, V.K. Sidharthan,
Hemantika Wahi, P.R. Ramasesh (NP), R.S. Hegde, Chandra Prakash, Devish P., Savitri
Pandey, P.P. Singh, B.B. Singh (NP), M.N. Shroff (NP), G. Prakash (NP), N. Ganapathy
(NP), K. Ram Kumar (NP), V. Krishnamurthy (NP), and V. Ramasubramanian (NP), Advs.
for the appearing parties
Case Note:
Central Sales Tax Act, 1956 - 6, 6(2), 6A, 6A(1), 6A(2) Tamil Nadu General
Sales Tax Act, 1959 - Sections 2, 12, 12(1), 12(3), 16, 16(2) and 16(3);
Constitution of India - Article 14, 19(1), 32, 136, 142, 226 - Sales of Goods
Act, 1930 - Section 5(1), 5(1A) and 5(3); Central Sales Tax (Amendment) Act,
2001; Finance Act, 2002; Central Sales Tax (Registration And Turnover)
Rules, 1957 - Rule 12(5) and 12A; Citizenship Rules, 1956 - Rule 3; Evidence
Act - Sections 41, 112 and 133; Indian Companies Act, 1956; Andhra Pradesh
High Court (Original Side) Rule - Rule 5; Parliamentary Act; Indian Penal
Code - Sections 161 to 165A - Conflict between States Sales Tax assessment
proceedings and Central Sales Tax proceedings regarding alleged same sale
transactions - Appellants manufacturers of Commercial Vehicles, registered
under both States Act and Central Act having several regional offices
throughout country - Appellants filling up forms in terms of Section 6A of
Central Act for transfer of stocks - Assessing authority upon assessment under
Central Act allowing transfer of stocks but later issuing show cause notice as
to why transfer of stock of vehicles not to be taxed as interstate sales taxable
in Tamil Nadu - Appellants by writ petition challenged jurisdiction of
assessing authority to reopen assessment - Dismissed by High Court -
Reassessment was completed and imposed - Validity - Initial burden of proof
is on the dealer to show that the movement has occasioned by reason of
transfer of such goods which is otherwise than by reason of sale - For

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discharge of burden of proof assessee is required to furnish a declaration
within specified time - On a declaration so filed an inquiry is to be made by
the assessing authority for the purpose of passing an order on arriving at a
satisfaction that movement of goods has occasioned otherwise than as a
result of sale - Failure to furnish such declaration, by reason of legal fiction,
such movement of goods would be deemed to have occasioned as a result of
sale - Whenever such an order is passed, a legal fiction is created - Legal
fiction, as is well-known, must be given its full effect - When an order passed
in terms of Sub-Section (2) of Section 6A is found to be illegal or void ab
initio or otherwise voidable, the assessing authority derives jurisdiction to
direct reopening of the proceedings and not otherwise - Since order made
under Sub-Section (2) of Section 6A of the Central Sales Tax Act sets up a
conclusive presumption, observations made by this Court in Ashok leyland
(supra) to the effect that an order passed under Sub-Section (2) of Section 6A
can be subject matter of reopening of a proceeding under Section 16 of the
State Act was not correct
JUDGMENT
S.B. Sinha, J.
1. Leave granted in S.L.P. (Civil) No. 5579 of 2001.
2. Interpretation of Section 6A of the Central Sales Tax Act, 1956 is involved in these
appeals and the writ petition. The appeals arise out of judgments and orders dated
12.3.1999 passed by the Tamil Nadu Sales Tax Appellate Tribunal in T.A. Nos. 353, 456
and 457 of 1997 and 47 of 1998; dated 13.11.2000 in STA No. 459 of 1999; dated
14.11.1997 in Appeal No. 383 of 1996; and dated 2.12.1997 in Tax Case (Revision) No.
1096 of 1990 passed by the High Court of Madras.
3. The writ petition under Article 32 was filed by the Petitioner inter alia for declaring
that Section 9(2) of the Central Sales Tax Act, 1956 designating the authorities of the
movement State to adjudicate upon the situs of sales and character of a transaction in
the course of an inter-State sale, whether as falling under Section 3 or under Section 4
of the Central Sales Tax Act, 1956, is arbitrary, unworkable and ultra vires Articles 14,
19(1)(g) and Chapter XIII of the Constitution of India, in matters involving elements of
transactions taking place in more than one State.
BACKGROUND FACTS:
Civil Appeal No. 976-979 of 2001
4. The appellants herein are engaged in manufacture of commercial vehicles. They have
their factories at Bhandara in the State of Maharashtra and Alwar in the State of
Rajasthan for manufacture of popular models of passenger chassis. They are, inter alia,
registered under Tamil Nadu General Sales Tax Act, 1959 (hereinafter called for the
sake of brevity as "the State Act") as also the Central Sales Tax Act, 1956 (hereinafter
referred to as "the Central Act". They are registered as dealers in the Office of Assistant
Commissioner (Central Assessment Circle-III), the third respondent herein, under both
the Acts.
5. Indisputably, the appellants have several regional offices throughout the country
wherewith Regional Sales Offices are attached for the purpose of receiving,
warehousing and selling the vehicles produced by the appellants. The appellants

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contend that they transfer both goods vehicle and passenger chassis to their different
Regional Sales Offices for marketing the products which in turn are registered under the
Sales Tax laws governing the State in Question. The stock of vehicles are transferred to
the Regional Sales Offices under the cover of stock transfer invoices, excise gate pass,
and entrusted to the transport contractors for movement and delivery thereof where
upon transfer of such vehicles local sales tax are collected and paid by the different
Regional Sales Offices. The appellants herein upon transfer of such purported stocks of
vehicles filled up forms in terms of Section 6A of the Central Act, the original whereof
having been filed before the assessing authority of the State of Tamil Nadu, an enquiry
was made and/or caused to be made pursuant whereto and in furtherance whereof the
claim of the appellants to the effect that by reason of such transactions transfer of stock
of goods had taken effect as contra-distinguished from inter-State sale was accepted.
On or about 29.11.1990, the assessing authority upon completion of the order of
original assessment under the Central Act allowed transfer of stocks of the motor
vehicle chassis and other automobile parts to the branches stating:
"The dealers have got 26 branch sales depots in other States. They have
dispatched their, products - chassis, spare parts etc., to their own sales depots
in other States for sales and the goods involved in the stock transfer have
moved from Tamil Nadu to other State as "stock transfer", i.e., the movement
was occasioned by reason of branch transfer and not by reason of sale. The
dispatches are supported by stock transfer invoices, transport details and Form
F. These records have been verified with the exemption claimed."
6. An order of assessment for the year 1987-88 dated 28.8.1991 was passed finding:
"The dealers have filed detailed statement of stock transfer of vehicles to their
outside State Regional Sales Offices and Spares to their warehouses. The
statement was verified in detail with reference to Form "F" declaration filed by
them and dispatching documents. The dealers have also filed completed
assessment orders of their Regional Sales Offices in other States. Their claim
was examined in length and found to be in order. The Form "F" filed by them
are accepted and the exemption granted."
[Underlining is mine for emphasis)
7. The assessing authority despite the said findings issued notices directing the
appellants to show cause as to why the order dated 29.11.1990 should not be revised
and the stock of vehicles allegedly transferred to the Regional Sales Offices so far as the
same related to the State Transport Undertakings are concerned should not be taxed as
inter-State sales taxable in Tamil Nadu.
8 . The appellants filed their show cause inter alia Questioning the jurisdiction of the
assessing authority to reopen the assessment inter alia on the ground that the issues
stood determined in terms of the provisions of Sub-section (2) of Section 6A of the
Central Act relying or on the basis of the declarations made by the appellants in terms
of Form F. However, the reassessment proceeding was completed relying upon the
provisions contained in Section 16 of the State Act read with Section 9(2) of the Central
Act as also in terms of the decision of this Court in Sahney Steel & Press Works Ltd. v.
CTO, MANU/SC/0323/1985 : AIR1985SC1754. Consequent to the said order the sales of
the Regional Sales Offices in relation to the deliveries made to the State Transport
Undertakings of other States were reassessed. Penalty for non-disclosure of the
turnover as taxable sales in terms of Section 16(2) of the State Act read with Section
9(2) of the Central Act was also imposed. Similar show cause notices were issued in

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relation to other assessment years also.
9. A writ petition was filed by the appellants before the Madras High Court questioning
the said orders inter alia contending that having regard to the provisions contained in
Section 6A of the Central Act and further having regard to the fact that the appellants
had paid tax to the other States the orders impugned therein were illegal. The States
wherein the local sales tax had been paid in terms of the respective State Acts, namely,
State of Kerala, Karnataka, Andhra Pradesh, Maharashtra and Gujarat, were impleaded
as parties therein and they in turn also questioned the jurisdiction of the authorities of
the State of Tamil Nadu to enquire about the transactions carried out by the appellants.
A question was also raised that the Madras High Court had no jurisdiction to grant any
relief touching the orders of assessment completed under the respective State law.
Upholding the jurisdiction of Tamil Nadu authorities to reopen an assessment completed
despite acceptance of declaration in Form F, the Madras High Court by a judgment and
order dated 13.6.1996 dismissed the said writ application inter alia holding that they
had no jurisdiction to grant any relief. Thereafter the reassessment was completed and
penalty was imposed.
JUDGMENT OF THIS COURT :
10. The matter came up for consideration before this Court in Ashok Leyland v. Union
of India and Ors. since reported in MANU/SC/1371/1997 : [1997]2SCR224 at the
instance of the appellant herein; and upon referring to the decisions rendered in
Balabhagas Hulaschand v. State of Orissa MANU/SC/0441/1975 : [1976]2SCR939,Izhar
Ahmad Khan v. Union of India MANU/SC/0094/1962 : AIR1962SC1052.Sodhi Transport
Co. v. State of U.P. MANU/SC/0409/1986 : [1986]1SCR939 and several others, this
Court by a judgment dated 20.2.1997 held:
(a) Section 6A does not create conclusive presumption as contended on behalf
of the assessee.
(b) An order of assessing authority accepting Form F, whether passed during
the assessment or at any point earlier thereto, forms part and parcel of the
order of assessment.
(c) Its amenability to the power of reopening and revision depends upon the
provisions of the concerned sales tax enactments by virtue of the operation of
Section 9(2) of the Central Act.
(d) It is not possible to accept that an order under Section 6A(2) has an
independent existence.
(e) An order refusing to accept Form F may or may not be appealable
independently depending upon the provisions of the State sales tax enactments,
but it is certainly capable of being questioned if an appeal is preferred against
the order of assessment.
(f) If orders accepting Form F are sought to be reopened, it can be done as part
of reopening of assessment or may be done independently, which would
depend upon the language of the relevant provisions of the concerned State
Acts.
(g) It is permissible to reopen an assessment accepting Form F as true without,
even though such a reassessment necessarily leads to revision/ modification of

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 the assessment order.
(h) If the reopening is confined to the order accepting Form F as true, the
enquiry shall be confined to the matters relevant thereto. In that case, it was
noticed that the assessments were sought to be reopened only in respect of the
turnover relating to sales of vehicles to State Transport Undertakings and not
turnover relating to persons other than State Transport Undertakings.
(i) In the facts of the case, the question as to whether the power had been
exercised validly or not did not call for consideration. If the assessing authority
decided against the appellants, it would be open to the assessee to file appeal
(s) directly before the Tribunal (in order to shorten the litigation and in the
interest of justice). If and when the Tribunal decides against the appellants, it
shall be open to the appellants to approach the Supreme Court.
11. Having said so, this Court noticed the anomalous situation created by reason of the
absence of a proper mechanism to adjudicate the question as to whether a particular
transaction is an inter-State sale or a local sale in the presence of an assessee and the
relevant States concerned and the need for the Parliament to intervene and provide for a
suitable mechanism.
12. The Court appreciated the difficulties to be faced by the appellant having regard to
the fact that it had paid tax to the other State Governments. This Court further noticed
the contention of the appellant that the attitude adopted by the sales tax authorities in
Tamil Nadu is not conducive of judicial conduct as they are pre-determined to treat the
transactions as inter-State sale and levy tax thereon ignoring the fact and correct legal
situation, but did not express any opinion on the correctness or otherwise of the said
submissions. It, however, felt the necessity of evolving a central mechanism which
would decide once for all questions of this nature. Elucidating certain instances, it was
opined that although the assessment proceedings before certain States had become
final, this Court in exercise of its jurisdiction under Article 32 or 136 or 142 of the
Constitution of India may issue appropriate directions, whereupon the following
directions were issued :
"22...Let the Tamil Nadu assessing authorities first decide the matters before
them. Thereafter, if the order's are against the appellant, we permit the
appellant to file the appeal(s) directly before the Tribunal. If the Tribunal
decides in favour of the appellant, no further question would arise. But if it
decides against the appellant, to wit, if it holds that the sale of vehicles to the
STUs of various States are inter-State sales and if it is found that those very
transactions have also been taxed as intra-State sales under the State sales tax
enactments of another State, that would be the stage for considering the
advisability of giving appropriate directions of the nature contemplated above
by this Court - that is, of course, if by that time, no Central mechanism to meet
such a situation comes into existence.
2 3 . In the interest of inter-State trade and commerce, the suggestion for
creation of a Central mechanism to decide such disputes - which are really in
the nature of inter - State disputes - may be well worth considering; every
dealer affected may not be in a position to approach this Court for appropriate
directions. It is for the Government of India to consider this aspect and take
necessary decision in that behalf."
SUBSEQUENT PROCEEDINGS :

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13. Pursuant to or in furtherance of the said directions an order of reassessment was
passed for the years 1988-89 imposing tax on the sales of the appellants to the State
Transport Undertakings at the respective Regional Sales Offices by an order dated
12.12.1997. It, however, appears that when companies similarly situated, as for
example, Indicarb Limited approached the State Appellate Tribunal, it refused to
entertain an appeal there against holding that the direction of this Court in Ashok
Leyland (supra) was confined to the fact of that case. The Special Leave Petitions
having been filed by the assesses, this Court in civil Appeal No. 14406-14408 of 1997
by an order dated 17.3.1998 held:
"As these special leave petitions and writ petitions involve important questions
involving conflict between States' sales tax assessment proceedings and the
Central sales tax assessment proceedings regarding the alleged very same sale
transactions and as the problem is of a recurring nature and as a decision of a
Bench of two Judges of this Court in Ashok Leyland Ltd. v. Union of India and
Ors. MANU/SC/1371/1997 : [1997]2SCR224, has to be applied with suitable
modifications, if required, it would be appropriate that these matters are heard
by a Bench of three learned Judges. In the meantime, the Union of India who is
one of the respondents in these proceedings, may have to be heard with a view
to suggest a modus operandi to resolve this conundrum. We, therefore, request
the learned Attorney General to appear for respondent No. 2 Union of India for
assisting the court in these proceedings.
The office may obtain orders from Hon'ble the Chief Justice for placing these
matters before an appropriate Bench of three learned Judges."
1 4 . Notices, pursuant to the said directions, were issued to the concerned States.
Thereafter, even for the subsequent periods also the Appellate Tribunal upheld the order
passed in Indicarb Limited which are also the subject matter of challenge before us.
PARLIAMENTARY INTERVENTION :
15. We may notice that having regard to the several orders passed in the connected
matter, the Parliament enacted Central Sales Tax (Amendment) Act, 2001 and Finance
Act, 2002. Suggestions, as regards certain provisions of the said Acts, however, having
been mooted at the Bar, the matter is said to be receiving fresh consideration at the
hands of the Central Government.
16. It is also not in dispute that by enacting Central Sales Tax (Amendment) Act, 2001
by Central Act 20 of 2002, which came into force from 11th May, 2002, Section 2(g) of
the Act has been substituted by a new sub-section by which the definition of sale has
been widened to include the deemed sales defined by Article 366(29-A) of the
Constitution to enable the levy of Central Sales Tax inter alia on the transactions
involving transfer of property in the goods involved in the execution of works contract
or transfer of the right to use the goods so that now even these transactions are open to
levy by two different States either as inter-State transaction, or intra-State transaction.
Section 6A of the Central Act was also amended insofar as in Sub-section (1) thereof
the following words have been inserted:
"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."
17. The appellants filed applications in these appeals, seeking leave to raise additional

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grounds in the light of the said amendment.
SUBMISSIONS:
1 8 . Mr. K. Parasaran, learned senior counsel appearing on behalf of the appellants
would inter alia submit that the ratio arrived at by this Court in Ashok Leyland (supra)
requires a fresh look insofar as by reason of Sub-section (2) of Section 6A of the
Central Act, the statute provided for conclusive evidence as regards the nature of
transaction and as the orders passed thereunder attained finality, the same could not
have been reopened on any ground whatsoever. Drawing our attention to the history of
legislation as also the case laws leading to incorporation of Article 286, enactment of
the Central Act as also amendments made in Article 269 of the Constitution of India, the
learned counsel would submit that once by reason of the Central Act in terms of the
determination made by the statutory authorities thereunder, certain transactions by
creating a legal fiction were kept outside the purview of the Central Act, the assessing
authorities cannot exercise their purported jurisdiction of reopening an order of
assessment under Section 16(2) of the State Act or Section 9(2) of the Central Act.
Formulation of principles for determining when a sale or purchase of consignment of
goods takes place in the course of inter-state trade or commerce being within the
exclusive domain of the Parliament having regard to Clause (3) of Article 269 of the
Constitution of India, Mr. Parasaran, would contend; statutory authorities created under
the State Act could not exercise any jurisdiction contrary to or inconsistent therewith.
1 9 . The learned counsel would submit that the word "determination" signifies
expression of opinion which ends a controversy or a dispute by some authority to whom
it is submitted under a valid law.
20. Mr. Parasaran would contend that in terms of Section 6A of the Central Act, as it
then stood, the assessee had two options, namely, to file Form F or subjected himself to
an assessment proceeding. If the assessee opts to file a declaration in terms of Form F,
whereupon an order is passed holding an enquiry by the assessing authority; the same
being conclusive in nature, no proceeding for reopening the same would be permissible
in law. Reliance in this connection has been placed on Izhar Ahmed Khan (supra),
Balabhagas Hulaschand (supra) and Mahant Dharam Das etc. v. The State of Punjab and
Ors. MANU/SC/0014/1975 : [1975]3SCR160.
21. The learned counsel would argue that the expressions "for the purpose of the Act"
would imply "for the purpose of all the provisions of the Act" and, thus, once an order
is passed under Sub-section (2) of Section 6A of the Central Act, Section 9(2) thereof
will have also no application whatsoever. Reliance in this behalf has been placed by Mr.
Parasaran on M.K. Kochu Devassy v. State of Kerala MANU/SC/0117/1978 :
1979CriLJ147.
22. Mr. Parasaran would urge that while exercising the option, it is mandatory for the
assessee to supply all information(s) which are required in terms of Form F and once
compliance of statutory requirements are made, the adjudication thereupon shall
become final and binding. He in support of the said contention placed reliance on
Shrisht Dhawan v. Shaw Brothers MANU/SC/0295/1992 : AIR1992SC1555.
2 3 . According to the learned counsel, such a provision has been inserted so as to
emphasise the necessity of expeditious determination as regard a transaction involving
transfer of goods in terms whereof different States claim themselves to be entitled to
levy different rates of taxes under the respective State Acts. If with a view to give effect
thereto, no appeal has been provided, the same would not invalidate the law. In other

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words, argument of Mr. Parasaran is that Section 6A has been granted a higher status
than the proceeding of assessment under the general law.
24. Mr. B. Sen, the learned senior counsel appearing on behalf of the State of West
Bengal while supporting the submission of Mr. Parasaran would further argue that the
Central Act being relatable to Article 286 of the Constitution of India as also Entry 97 of
List I of the Seventh Schedule of the Constitution, a presumption must be drawn that
the purpose thereof was to take the taxing power of the State taken away and, thus, in
relation to such transactions the State cannot levy any tax. It is evident that order of
such nature passed by the assessing authorities of the State of Tamil Nadu would not
only affect the assesses but also other States as well and once it is held that the burden
of proof has been discharged by the assessee, such transactions must be held to have
taken place outside the purview of the Central Act.
2 5 . Mr. A.K. Ganguli, the learned senior counsel appearing on behalf of the
respondents, per contra, would contend that the question as regard the conclusiveness
or otherwise of an order under Sub-section (2) of Section 6A of the Act shall operate as
res judicata, keeping in view the fact that the said issue has already been determined by
this Court in Ashok Leyland (supra) and, thus, binds the parties herein. The learned
counsel would contend that Section 6A of the Act cannot be given a higher status than
the State Act or Section 9(2) of the Central Act inasmuch as an order passed in terms of
Sub-section (2) thereof is passed merely in aid of assessment and in that view of the
matter if an order of assessment can be appealed against or subjected to a reopening
proceeding, the same legal provisions must be held to be applicable also in relation to
an order passed under Sub-section (2) of Section 6A.
26. Mr. Ganguli has drawn our attention to the findings of the Tribunal to the effect that
raids were conducted by the authorities and that the appellant herein had escaped
proper assessment by taking recourse to suppressio veri and suggestio falsi. According
to the learned counsel, as fresh materials had been discovered, a reasoned show cause
notice was issued and pursuant thereto and in furtherance thereof, the impugned orders
had been passed, and in that view of the matter no case has been made out for
interference therewith.
STATUTORY PROVISIONS:
27. 'Sale' has been defined in Tamil Nadu General Sales Act, 1959 as:
"2(n) "Sale" with all its grammatical variations and cognate expressions means
every transfer of the property in goods (other than by way of a mortgage,
hypothecation, charge or pledge) by one person to another in the course of
business for cash, deferred payment or other valuable consideration and
includes -
(i) a transfer otherwise than in pursuance of a contract, of property in
any goods for "cash, deferred payment or other valuable consideration;
(ii) a transfer of property in goods (whether as goods or in some other
form) involved in the execution of a works contract:..."
28. 'Turnover' in the said Act has been defined as under:
"2(r) "turnover" means the aggregate amount for which goods are brought or
sold, or delivered or supplied or otherwise disposed of in any of the ways

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 referred to in Clause (n), by a dealer either directly or through another, on his
own account or on account of others whether for cash or for deferred payment
or other valuation consideration, provided that the proceeds of the sale by a
person of agricultural or horticultural produce, other than tea and rubber
(natural rubber latex and all varieties and grades of raw rubber), grown within
the State by himself or on any land in which he has an interest whether as
owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his
turnover ;"
2 9 . Section 12 of the said Act provides for the procedure to be followed by the
assessing authority in terms whereof the dealer is required to file the prescribed return
relating to his turnover submitted in the prescribed manner within the period prescribed
therefore. The Act provides for self-assessment subject of course to the exceptions
contained in Clause (b) of Sub-section (1) of Section 12. The errors contained in the
return can, however, be corrected. A dealer making self-assessment is required to make
true and correct statements of fact. In the event, the dealer does not file a return within
the prescribed period and the return is found to be incorrect: in addition to the tax
assessed, the assessing authority may direct it to pay the amount of penalty levied in
terms of Sub-section (3) of Section 12.
30. Section 16 provides for assessment of escaped turnover which reads thus:
"16. Assessment of escaped turnover. -
(1)(a) Where, for any reason, the whole or any part of the turnover of
business of a dealer has escaped assessment to tax, the assessing
authority may, subject to the provisions of Sub-section (2), at any time
within a period of five years from the date of order of the final
assessment by the assessing authority to determine to the best of its
judgment the turnover which has escaped assessment and assess the
tax payable on such turnover after making such enquiry as it may
consider necessary and after giving the dealer a reasonable opportunity
to show cause against such assessment.
(b) where, for any reason, the whole or any part of the turnover of
business of a dealer has been assessed at a rate lower than the rate at
which it is assessable, the assessing authority may, at any time within
period of five years from the date of order of the final assessment by
the assessing authority reassess the tax due after making such enquiry
as it may consider necessary and after giving the dealer a reasonable
opportunity to show cause against such re-assessment."
31. In case of willful non-disclosure of assessable turnover by the dealer while passing
an order of reassessment, penalty can also be imposed. Sub-section (3) of Section 16
provides for the manner in which limitation is to be computed. Section 31 of the Act
provides for appeal.
32. The relevant provisions of the Central Sales Tax Act, 1956 are as under :
2(b) "dealer" means any person who carries on (whether regularly or
otherwise) the business of buying, selling, supplying or distributing goods,
directly or indirectly, for cash or for deferred payment, or for commission
remuneration or other valuable consideration, and includes--

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 (i) a local authority, a body corporate, a company, any co-operative
society or other society, club, firm, Hindu undivided family or other
association of persons which carries on such business;
(ii) a factor, broker, commission agent, del credere agent, or any other
mercantile agent, by whatever name called, and whether of the same
description as hereinbefore mentioned or not, who carries on the
business of buying, selling, supplying or distributing, goods belonging
to any principal whether disclosed or not; and
(iii) an auctioneer who carries on the business of selling or auctioning
goods belonging to any principal, whether disclosed or not and whether
the offer of the intending purchaser is accepted by him or by the
principal or nominee of the principal.
Explanation 1.--Every person who acts as an agent, in any State, of a dealer
residing outside that State and buys, sells, supplies, or distributes, goods in the
State or acts on behalf of such dealer as -
(i) a mercantile agent as defined in the Sale of Goods Act, 1930 (3 of
1930), or
(ii) an agent for handling of goods or documents of title relating to
goods, or
(iii) an agent for the collection or the payment of the sale price of
goods or as a guarantor for such collection or payment and every local
branch or office in a State of a firm registered outside that State or a
company or other body corporate, the principal office or headquarters
whereof is outside that State, shall be deemed to be a dealer for the
purposes of this Act.
Explanation 2.-- A Government which, whether or not in the course of business,
buy, sells, supplies or distributes, goods, directly or otherwise, for cash or for
deferred payment or for commission, remuneration or other valuable
consideration, shall except in relation to any sale, supply or distribution of
surplus, unserviceable or old stores or materials or waste products or obsolete
or discarded machinery or parts or accessories thereof, be deemed to be a
dealer for the purposes of this Act;
(g) "sale", with its grammatical variations and cognate expressions, means any
transfer of property in goods by one person to another for cash or for deferred
payment or for any other valuable consideration, and includes,-
(i) a transfer, otherwise than in pursuance of a contract, of property in
any goods for cash, deferred payment or other valuable consideration;
(ii) a transfer of property in goods (whether as goods or in some other
form) involved in the execution of a works contract;
(iii) a delivery of goods on hire-purchase or any system of payment by
installments;
(iv) a transfer of the right to use any goods for any purpose (whether
or not for a specified period) for cash, deferred payment or other

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 valuable consideration;
(v) a supply of goods by any unincorporated association or body of
persons to a member thereof for cash, deferred payment or other
valuable consideration;
(vi) a supply, by way of or as part of any service or in any other
manner whatsoever, of goods, being food or any other article for
human consumption or any drink (whether or not intoxicating), where
such supply or service, is for cash, deferred payment or other valuable
consideration, but does not include a mortgage or hypothecation of or
a charge or pledge on goods;
(j) "turnover" used in relation to any dealer liable to tax under this Act means
the aggregate of the sale prices received and receivable by him in respect of
sales of any goods in the course of inter-State trade or commerce made during
any prescribed period and determined in accordance with the provisions of this
Act and the rules made thereunder;
6. Liability to tax on inter-State sales.-(1) Subject to the other provisions
contained in this Act, every dealer shall, with effect from such date as the
Central Government may, by notification in the Official Gazette, appoint, not
being earlier than thirty days from the date of such notification, be liable to pay
tax under this Act on all sales of goods other than electrical energy effected by
him in the course of inter-State trade or commerce during any year on and from
the date so notified:
Provided that a dealer shall not be liable to pay tax under this Act on any sale
of goods which, in accordance with the provisions of Sub-section (3) of Section
5 is a sale in the course of export of those goods out of the territory of India.
(1A) 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 notwithstanding
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) Notwithstanding 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 form 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,--
(a) to the Government, or
(b) to a registered dealer other than the Government, if the goods are
of the description referred to in Sub-section (3) of Section 8, shall be
exempt from tax under this Act.
6A. Burden of proof, etc., in case of transfer of goods claimed
otherwise than by way of sale. - (1) Where any dealer claims that he is not
liable to pay tax under this Act, in respect of any goods, on the ground that the
movement of such goods from one State of another was occasioned by reason

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 of transfer of such goods by him to any other place of his business or to his
agent or principal, as the case may be, and not by reason of sale, the burden of
proving that the movement of those goods was so occasioned shall be on that
dealer and for this purpose he may furnish to the assessing authority, within
the prescribed time or within such further time as that authority may, for
sufficient cause, permit, a declaration, duly filled and signed by the principal
officer of the other place of business, or his agent or principal, as the case may
be, containing the prescribed particulars in the prescribed form obtained from
the prescribed authority, along with the evidence of dispatch of such goods.
(2) If the assessing authority is satisfied after making such inquiry as he may
deem necessary that the particulars contained in the declaration furnished by a
dealer under Sub-section (1) are true he may, at the time of, or at any time
before, the assessment of the tax payable by the dealer under this Act, make an
order to that effect and thereupon the movement of goods to which the
declaration relates shall be deemed for the purpose of this Act to have been
occasioned otherwise than as a result of sale.
Explanation.--In this section, "assessing authority", in relation to dealer, means
the authority for the time being competent to assess the tax payable by the
dealer under this Act. "
33. It may be noticed that by reason of Section 151 by Act No. 20 of 2002 the following
has been added in Sub-section (1) of Section 6A after the words "dispatch of such
goods":
"and if the dealer fails to furnish such declaration, then, the movement of such
goods shall be deemed for all purposes of this Act to have been occasioned as a
result of sale."
Section 9 of the said Act reads as under:
"9. Levy and collection of tax and penalties.--(1) The tax payable by any
dealer under this Act on sales of goods effected by him in the course of inter-
State trade or commerce, whether such sales fall within Clause (a) or Clause
(b) of Section 3, shall be levied by the Government of India and the tax so
levied shall be collected by that Government in accordance with the provision of
Sub-section (2), in the State from which the movement of the goods
commenced:
Provided that, in the case of a sale of goods during their movement from one
State to another, being a sale subsequent to the first sale in respect of the same
goods and being also a sale which does not fall within Sub-section (2) of
Section 6, the tax shall be levied and collected--
(a) where such subsequent sale has been effected by a registered
dealer, in the State from which the registered dealer obtained or, as the
case may be, could have obtained, the form prescribed for the purposes
of Clause (a) of Sub-section (4) of Section 8 in connection with the
purchase of such goods; and
(b) where such subsequent sale has been effected by an unregistered
dealer in the State from which such subsequent sale has been
effected.]

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 (2) Subject to the other provisions of this Act and the rules made thereunder,
the authorities for the time being empowered to assess, re-assess, collect and
enforce payment of any tax under the general sales tax law of the appropriate
State shall, on behalf of the Government of India, assess re-assess, collect and
enforce payment of tax, including any interest or penalty, payable by a dealer
under this Act as if the tax or interest or penalty payable by such a dealer under
this Act is a tax or interest or penalty payable under the general sales tax law of
the State; and for this purpose they may exercise all or any of the powers they
have under the general sales tax law of the State; and the provisions of such
law, including provisions relating to returns. provisional assessment, advance
payment of tax, registration of the transferee of any business, imposition of the
tax liability of a person carrying on business on the transferee of or successor
to, such business, transfer of liability of any firm of Hindu undivided family to
pay tax in the event of the dissolution of such firm or partition of such family,
recovery of tax from third parties, appeals, reviews, revisions, references,
refunds, rebates, penalties, charging or payment of interest, compounding of
offences and treatment of documents furnished by a dealer as confidential, shall
apply accordingly.
34. Form 'F' which is relevant for the purpose of the case reads thus :
"ORIGINAL
THE CENTRAL SALES TAX (REGISTRATION AND TURNOVER) RULES, 1957
FORM F
[Form of declaration to be issued by the transferee]
[See Rule 12(5)]
Serial No...................................
Name of the issuing State................
Office of issue...........................
Date of issue.............................
Name and address of the person to whom issued along with his Registration
Certificate No....................................... Date from which registration is
valid....................................
Seal of Issuing
Authority
To.................................(Transferor) Registration Certificate No. of the
Transferor......................... Certified that the goods transferred to me/us as
per details below have been received and duly account for.
Description of the goods sent. ..................... Quantity or
weight................................ Value of the goods ............................ Number
and date of invoice [or challan or any other documents under which goods were
sent.] Name of Railway Steamer or Ferry Station or Air Port or Post Office or
Road Transport Company's Office from where the goods were
dispatched................................ No. and Date of Railway Receipt or Postal
Receipt or Goods Receipt with trip sheet of lorry or any other documents
indicating the means of transport. ...............

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 Date on which delivery was taken by the transferee............
The above statements are true to the best of my knowledge and belief.
(Signature)
(Name of the person signing the declaration)
*(Status of the person signing the declaration in relation to the transferee)
*(Status of the person signing the declaration in relation to the transferor)
Date..........
*Strike out whichever is not applicable (Note - To be furnished to the assessing
authority in accordance with the rules framed under Section 13(4)(e).)"
35. Having noticed the relevant provisions of the statute, we may notice the following
constitutional provisions:
"245. Extent of laws made by Parliament and by the Legislatures of
States. -- (1)
Subject to the provisions of this Constitution, Parliament may make laws for the
whole or any part of the territory of India, and the Legislature of a State may
make laws for the whole or any part of the State.
(2) No law made by Parliament shall be deemed to be invalid on the ground
that it would have extra-territorial operation
268. Duties levied by the Union but States. -- (1) Such stamp duties and
such duties of excise on medicinal and toilet preparations as are mentioned in
the Union List shall be levied by the Government of India but shall be collected-
-
(a) in the case where such duties are leviable within any Union
territory, by the Government of India, and
(b) in other cases, by the States within which such duties are
respectively leviable.
(2) The proceeds in any financial year of any such duty leviable within any
State shall not form part of the Consolidated Fund of India, but shall be
assigned to that State.
269. Taxes levied and collected by the Union but assigned to the
States.-(1)
Taxes on the sale or purchase of goods and taxes on the consignment of goods
shall be levied and collected by the Government of India but shall be assigned
and shall be deemed to have been assigned to the States on or after the 1st day
of April, 1996 in the manner provided in Clause (2).
Explanation.--For the purposes of this clause,-
(a) the expression "taxes on the sale or purchase of goods" shall mean

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 taxes on sale or purchase of goods other than newspapers, where such
sale or purchase takes place in the course of inter-State trade or
commerce;
(b) the expression "taxes on the consignment of goods" shall mean
taxes on the consignment of goods (whether the consignment is to the
person making it or to any other person), where such consignment
takes place in the course of inter-State trade or commerce.
(2) The net proceeds in any financial year of any such tax, except in so far as
those proceeds represent proceeds attributable to Union territories, shall not
form part of the Consolidated Fund of India, but shall be assigned to the States
within which that tax is leviable in that year, and shall be distributed among
those States in accordance with such principles of distribution as may be
formulated by Parliament by law.
(3) Parliament may by law formulate principles for determining when a sale or
purchase of, or consignment of, goods takes place in the course of inter-State
trade or commerce."
36. Article 286 as it stood prior to 6th Amendment Act, 1956 reads thus:
"286. Restrictions as to imposition of tax on the sale or purchase of
goods. --
(1) No law of a State shall impose, or authorise imposition of a tax on the sale
or purchase of goods where such sale or purchase takes place --
(a) outside the State; or
(b) in the course of import of goods into, or export of goods out of, the
territory of India.
Explanation: For the purposes of Sub-clause (a) a sale or purchase shall be
deemed to have taken place in the State in which the goods have actually been
delivered as a direct result of such sale or purchase for the purpose of
consumption in that State, notwithstanding the fact that under the general law
relating to sale of goods the property in the goods has by reason of such sale
or purchase passed in another State.
(2) Except in so far as Parliament may by law otherwise provide, no law of a
State shall impose, or authorize the imposition of, a tax on sale or purchase of
any goods where such sale or purchase takes place in the course of inter-State
trade or commerce:
Provided that the President may by order direct that any tax on the sale or
purchase of goods which was being lawfully levied by the Government of any
State immediately before the commencement of this Constitution shall,
notwithstanding that the imposition of such tax is contrary to the provisions of
this clause continue to be levied until thirty first day of March, 1951.
(3) No law made by the Legislature of a State imposing, or authorizing the
imposition of a tax on the sale or purchase of any such goods as have been
declared by Parliament by law to be essential for life of the community shall

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 have effect unless it has been reserved for the consideration of the President
and has received his assent."
37. Paragraph 16 of Second Report of the Law Commission of India states:
"16. The question whether on the analogy of the principles adopted in
connection with sales or purchase in the source of import or export, a sale
effected by the transfer of documents during the movement of goods from one
State to another should be regarded as an inter-State sale or purchase has
received our careful consideration. We are of the view that such sales or
purchases should be regarded as inter-State transactions. It was suggested that
if the rate of inter-State tax happened to be lower than the rate of tax levied by
the State on intra-State transaction the adoption of this principle might lead to
attempts by dealers to evade the higher tax of the State by giving intra-State
transactions the appearance of inter-State transactions by the creation of
fictitious records showing the movement of the goods from one State into
another. We are not inclined to attach much importance to this suggestion as in
any case the sale or purchase will not escape taxation altogether and it is
unlikely that dealers would resort to such attempts in order to save the
difference between the inter-State and the intra-State tax. Moreover, if this
principle is not applied considerable administrative and other difficulties will
arise. We are, therefore, of the view that sales and purchases effected by a
transfer of documents during the movements of goods from one State to
another should be regarded as inter-State transactions."
38. Thereafter the following Bill was introduced pursuant thereto:
"In Clause 2, it is proposed to add a new entry 92A in the Union List placing
taxes on inter-State sales and purchases within the exclusive legislative and
executive power of the Union, and to make entry 54 of the State List "subject to
the provisions" of this new entry.
In Clause 3, it is proposed to add these taxes to the list given in Clause (1) of
Article 269, so that, although they will be levied and collected in accordance
with an Act of Parliament, they will not form part of the Consolidated Fund of
India, but will accrue to the States themselves in accordance with such
principles of distribution as may be formulated by Parliament by law. A further
provision is proposed in Article 269 expressly empowering Parliament to
formulate by law principles for determining when a sale or purchase of goods
takes place in the course of inter-State trade or commerce.
It is proposed in Clause 4 to omit from Clause (1) of Article 286 the explanation
which has given rise to a great deal of legal controversy and practical difficulty.
In view of the centralization of inter-State sales tax proposed in Clause 2 of this
Bill, Clause (2) of Article 286 in its present form will cease to be appropriate. In
its place it is proposed to insert a provision empowering Parliament to
formulate principles for determining when a sale or purchase of goods takes
place (a) outside a State, or (b) in the course of import of the goods into the
territory of India, or (c) in the course of export of the goods out of the territory
of India.
It is further proposed to replace Clause (3) of Article 286 by a new clause on
the lines recommended by the Taxation Enquiry Commission. Under this revised
clause Parliament will have the power to declare by law the goods which are of

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 special importance in inter-State trade or commerce and also to specify the
restrictions and conditions to which any State law (whether made before or
after the Parliamentary law) will be subject in regard to the system of levy,
rates and other incidents of the tax on the sales or purchase of those goods."
39. Pursuant to or in furtherance of the Report of the Law Commission of India, Article
286 was amended. Article 286(3) now reads as under:
"(3) Any law of a State shall, in so far as it imposes, or authorises the
imposition of,--
(a) a tax on the sale or purchase of goods declared by Parliament by
law to be of special importance in inter-State trade or commerce; or
(b) a tax on the sale or purchase of goods, being a tax of the nature
referred to in Sub-clause (b), Sub-clause (c) or Sub-clause (d) of
Clause (29A) of Article 366, be subject to such restrictions and
conditions in regard to the system of levy, rates and other incidents of
the tax as Parliament may by law specify."
40. The history of legislation as also constitutional amendments in relation to inter-
State movement of goods has been noticed in State of A.P. etc. v. National Thermal
Power Corporation Ltd. and Others etc. MANU/SC/0356/2002 : [2002]3SCR278 and as
such it may not be necessary to reiterate the same once over again.
SECTION 6A OF THE CENTRAL ACT:
41. Prior to amendment of Section 6A of the Central Act, filing of Form F was optional.
The dealer was, thus, entitled either to file such form or not to file the same. Only
because such form is not filed, the same would not mean that the dealer was prohibited
from raising a plea that no stock of transfer from his Head Office to Regional Offices or
Regional Sales Offices has taken place. It was entitled to plead that by reason of such
transactions which are intra-organisation, sale was not occasioned by movement of
goods. The question which was required to be posed and answered by the assessing
authority was, thus, required to be confined only to the fact as to whether any sale has
(SIC) by movement of goods or not. In other words, an (SIC) to the concept of inter-
State sale invoking the provisions of the Central Act would be when such movement of
goods was by way of transfer of stock in terms whereof no tax under the Central Act
was payable. Indisputably determination of such a question at the hands of the
assessing authority was required for arriving at a finding of fact as to whether the
Central Sales Tax or the local sales tax would become payable. The States, where
manufacturing of goods takes place in case involving such nature of transaction,
presumably would like to invoke the provisions of the Central Sales Tax as in terms of
Article 270 of the Constitution of India despite the fact that the Central Sales Tax is
payable to the Central Government, the amount is invariably passed on to the State
concerned. On the other hand, the purchaser when it is a public sector undertaking,
would like to see that the purchase and sale takes place within the State so as to entitle
the concerned State to collect the local sales tax, a rate therefore would normally be
higher. There, thus, exists conflict in interest of the States particularly having regard to
the financial crunches faced by them.
42. Having regard to the Statement of Objects and Reasons of the Central Sales Tax Act
vis-a-vis the recommendations made by the Law Commission, as referred to
hereinbefore, it would appear that the Parliament with a view to bring in expediency in

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such a matter so that the dispute can be determined as expeditiously as possible
amended Section 6A. 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.
43. 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.
4 4 . When the dealer furnishes the original of Form F to its assessing authority, an
enquiry is required to be held. Such enquiry is held by the assessing authority himself.
He may pass an order on such declaration before the assessment or along with the
assessment. Once an order in terms of Sub-Section 2 of Section 6A of Central Act is
passed, the transactions involved therein would go out of the purview of the Central
Act. In other words, in relation to such transactions, a finding is arrived at that they are
not subjected to the provisions of the Central Sales Tax. It is not in dispute thereunder
no appeal is provided there against.
45. In Chunni Lal Parshadi Lal v. Commissioner of Sales Tax. UP MANU/SC/0417/1986 :
[1986]1SCR891
:
"23. It means that a sale of any of the goods specified in Sub-section (1) to a
registered dealer who has purchased them or to any unregistered dealer, shall
for the purpose of this section, be deemed to be a sale to the consumer unless
the purchasing dealer purchases the said goods for resale in the same
condition. It merely strengthens the provisions of Sub-section (2) of Section 3-
AA i.e. unless the dealer proves otherwise, every sale shall, for the purpose of
Sub-section (1), be presumed to be to a consumer. The combined effect of

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 Sub-sections (1), (2) and (3), of Section 3-AA of the Act is that tax would be
payable if the goods in question i.e. cotton yarn, in this case, are sold to a
dealer for consumption. Unless the dealer proves otherwise every sale by a
dealer shall for the purpose of Sub-section (1) be presumed to be a sale to a
consumer. A sale of any of the goods mentioned in Sub-section (1) to a
registered dealer who does not purchase them for resale in the same condition,
without processing or sale to unregistered dealer shall be deemed to be a sale
to the consumer. therefore, a registered dealer has to prove that a sale to
another registered dealer or an unregistered dealer is not for consumption. In
order to facilitate the working of the Act, by Rule 12-A a method of proving has
been provided that the sale is not a sale to the consumer. The reading of the
rule along with relevant provisions of the Act leads to the conclusion that Rule
12-A method, -furnishing of certificate in the form and with the particulars - is
one of- the methods of proving that sale by a registered dealer is not for
consumption. Neither the rule nor the provision of the section suggests that this
is the only method. If a dealer can prove by any other way than the way
contemplated by Rule 12-A then he is not so precluded. For the rule to say
otherwise would be exceeding the provision of the section. The purpose for the
making of the rule would however, be frustrated if after the dealer proves in the
manner indicated in Rule 12-A he has to prove again how the purchasing dealer
has dealt with the goods after he obtains the certificate from a registered
dealer. That would make the working of the Act and Rule unworkable.
24. There is no dispute that in this case certificates as mentioned in Rule 12-A
were furnished.
25. The questions involved in this case are whether by furnishing certificate in
Form III-A and the details of such certificate given in Form IV, the selling
dealer got exemption and Rule 12-A created an irrebuttable presumption i.e.
that no further evidence is required in this matter to prove that the goods were
sold to a dealer for resale in the same condition and not to be consumed by the
purchasing dealer."
46. 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.
4 7 . On an analysis of the aforementioned provisions, therefore, the following
propositions of law emerge:
(i) The initial burden of proof is on the dealer to show that the movement has
occasioned by reason of transfer of such goods which is otherwise than by
reason of sale. The assessee may file a declaration. On a declaration so filed an
inquiry is to be made by the assessing authority for the purpose of passing an
order on arriving at a satisfaction that movement of goods has occasioned
otherwise than as a result of sale.
(ii) Whenever such an order is passed, a legal fiction is created.
48. Legal fiction, as is well-known, must be given its full effect.
49. In the rules of evidence, there exist several presumptions. These presumptions may
be rebuttable or irrebuttable. Irrebuttable presumptions are referred to as conclusive
presumptions as they stand as conclusive proof of certain facts and are open to

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challenge only on very meagre grounds. Under the Indian Evidence Act, Sections 41,
112 and 133 deal with conclusive presumptions. Even in other enactments, like the
Indian Companies Act, 1956, such provisions exist.
50. In the case at hand it is necessary to determine whether Section 6A of the Central
Sales Tax Act sets up a conclusive presumption.
"Presumptions may be looked upon as the bats of law, flitting in the twilight,
but disappearing in the sunshine of facts."
51. This metaphor used by Cochran, J. in Stumpf v. Mantgomery (1924) 101 OKL 256.
pithily states the law.
52. However, the rule of conclusive proof stands on a different footing. Once it is held,
as we do, that Section 6A of the Central Act provides for a conclusive proof, except on a
limited ground, reopening of assessment would not be permissible.
RULE OF CONCLUSIVE PRESUMPTION : SOME CASE LAWS:
53. In several cases validity of rules of conclusive presumptions have been upheld.
54. However, in Ashok Leyland (supra), it was held:
"Section 6A does not create a conclusive presumption and that an order
accepting Form F, whether passed during the assessment or at any point earlier
thereto, is ultimately a part and parcel of the order of assessment. Its amenity
to power of re-opening and revision depends upon the provisions of the
concerned State sales tax enactment by virtue of Section 9(2)."
55. We do not think that the aforesaid view is correct.
56. In Re Eric Holmes Ltd. (1965) 2 All ER 333, it was held,
"that the giving of the certificate by the Registrar is conclusive that the
document creating the charge was properly registered, even if in fact it was not
properly registered."
5 7 . A discussion may also ensue as to whether a conclusive presumption is one of
substantive or of procedural law. This was discussed in Izhar Ahmad Khan (supra) and
was held to be part of the latter and not the former as it found place in the Indian
Evidence Act (among other reasons). The decision runs as follows:
"It was not correct to say that Rule 3 of Schedule III of the Citizenship Rules,
1956, which made it obligatory on the authority to infer the acquisition of
foreign citizenship from the fact of obtaining a passport from a foreign country
was not a rule of evidence but a rule of substantive law.
Like the rules of rebuttable presumption, which was undoubtedly a rule of
evidence. The function of an irrebuttable presumption was also to help the
judicial mind in appreciating the existence of facts with this difference that
while the former was open to rebuttal, the latter was placed beyond rebuttal. So
considered a rule of irrebuttable presumption could not be said to fall to fall
outside the law of evidence.
That such a rule might in some cases lead to hardship and injustice was not a

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 relevant consideration in judging its constitutional validity.
The real test whether a rule of irrebuttable presumption was one of evidence
was inherent relevancy. If the fact from the proof of which the presumption was
required to be drawn was inherently relevant in proving it, the rule was one of
evidence, no matter whether the presumption prescribed was rebuttable or
irrebuttable.
The expression 'rules of evidence' in Section 9(2) must be construed in the light
of its legislative history. Ever since the passing of the Evidence Act a conclusive
presumption has been a part of the law of evidence. It is well settled that the
scope of power to legislate on a topic had to be determined by the denotation
of that topic obtaining in legislative practice."
58. However, in the minority opinion it was observed,
"A rule of conclusive presumption made with a view to affect specified
substantive right was a rule of substantive law and did not cease to be so
because it rested on a fact which was relevant to it. The test was not one of
relevancy but whether it was intended to affect a specified substantive right or
provide a method of proof."
59. The said principle has been reiterated by this Court in M. Venugopal v. Divisional
Manager, Life Insurance Corporation of India, Machilipatnam, A.P. and Another
MANU/SC/0310/1994 : (1994)ILLJ597SC stating:
"In the case at hand, a statutory authority that had jurisdiction to pass such an
order has passed the order. In addition there is no provision for appeal, which
goes to show that this is part of the substantive law and not procedural law.
This order is conclusive for all purposes, as the above two stated elements
clearly go out to show. No appeal has been provided for depicting the will of
the legislature to make the order of such authority final."
6 0 . I n The Municipal Board, Hapur v. Raghuvendra Kripal and Ors.
MANU/SC/0263/1965 : [1966]1SCR650 this Court stated:
"...The provision making the notification conclusive evidence of the proper
imposition of the tax is conceived in the best interest of compliance of the
provisions of the Boards and not to facilitate their breach. It cannot, therefore,
be said that there is excessive delegation."
6 1 . I n State of Madras v. Radio and Electricals Ltd. MANU/SC/0221/1966 :
AIR1967SC234, it has been held that satisfaction once reached in absence of any
provision, review of such an order is not permissible.
6 2 . I n Balabhagas Hulaschand (supra) MANU/SC/0441/1975 : [1976]2SCR939, this
Court has given an example.
"Case No. II - A who is a dealer in State X agrees to sell goods to B but he
books the goods from State X to State Y in his own name, and his agent in
State Y receives the goods on behalf of A, Thereafter the goods are delivered to
B in State Y and if B accepts them a sale takes place. It will be seen that in this
case the movement of goods is neither in pursuance of the agreement to sell
nor is the movement occasioned by the sale. The seller himself takes the goods

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 to State Y and sells the goods there. This is, therefore, purely an internal sale
which takes place in State Y and falls beyond the purview of Section 3(a) of the
Central Sales Tax Act not being an inter-State sale.
6 3 . I n C.P.K. Trading Co. v. Additional Sales Tax officer, III Circle Mattancherry
MANU/KE/0084/1983, the law is stated in the following terms:
"...A plain reading of Section 6A(2) of the Central Sales Tax Act points out that
in cases where the dealer exercises the option of furnishing the declaration (F
forms), the only further requirement is that the assessing authority should be
satisfied, after making such enquiry, as he may deem necessary, that the
particulars contained in the declaration furnished by the dealer are "true". The
scope or frontiers of enquiry, by the assessing authority under Section 6A(2) of
the Central Sales Tax Act is limited to this extent, namely, to verify whether the
particulars contained in the declaration (F forms) furnished by the dealer are
"true". It means, the assessing authority can conduct an enquiry to find out
whether the particulars in the declaration furnished are correct, or dependable,
or in accord with facts or accurate or genuine. That alone is the scope of the
enquiry contemplated by Section 6A(2) of the Act. On the conclusion of such an
enquiry, he should record a definite finding, one way or the other. As to what
should be the nature of the enquiry, that can be conducted by the assessing
authority under Section 6A(2) of the Act, is certainly for him to decide. It is his
duty to verify and satisfy himself that the particulars contained in the
declaration furnished by the dealer are "true". As a quasi-judicial authority, the
assessing authority should act fairly, and reasonably in the matter. During the
course of the enquiry, under Section 6A(2) of the Act, it is open to him to
require the dealer to produce relevant documents or other papers or materials
which are germane or relevant, to find whether the particulars contained in the
declaration (F forms) are "true". It is not possible to specify the documents or
other materials or papers that may be required, to be furnished in all situations
and in all cases. It depends upon the facts and circumstances of each case. The
power vested in the officer is a wide discretionary power, to find, whether the
particulars contained in the declaration (F forms) are "true". It is not possible
or practicable to lay down the exact documents or materials that may be
required in all the cases, by the assessing authority, to come to a proper and
just finding as required by Section 6A(2) of the Act."
64. Thus from the above, we can conclude that the order of an authority under Section
6A is conclusive for all practical purposes.
LEGAL FICTION :
6 5 . The question that arises is whether a legal fiction can be applied to determine
whether a particular interstate transaction amounted to an interstate sale or a mere
transfer of stock. Legal fictions have been applied in a number of cases.
6 6 . I n Gannon Dunkerley and Co. v. State of Rajasthan, MANU/SC/0437/1993 :
(1993)1SCC364, it was held that, "Sections 3, 4, and 5 (of the Central Sales Tax Act)
were applicable to such contracts containing two separate agreements, these provisions
would apply to a contract which, though single and indivisible, by legal fiction
introduced by the 46th Amendment has been altered into a contract which is divisible
into one for sale of goods and other for labour and services. Such a deemed sale has all
the incidents of a sale of goods involved in the execution of a works contract where the

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contract is divisible into one for sale of goods and the other for supply of labour and
services. Sections 14 and 15 of the Central Sales Tax Act would also be applicable to
the deemed sales resulting from transfer of property in goods involved in the execution
of a works contract. The absence of any amendment in the definition of sale contained
in Section 2(g) of the Central Sales Tax Act, 1956 so as to include transfer of property
in goods involved in execution of a works contract, therefore, does not in any way
affect the applicability of Sections 3, 4, and 5 and Sections 14 and 15 of the Central
Sales Tax to such transfers.
6 7 . I n State of Bombay v. Pandurang MANU/SC/0025/1953 : 1953CriL J1049 it was
held,
" When a statute enacts that something shall be deemed to have been done,
which in fact and truth was not done, the court is entitled and bound to
ascertain for what purposes and between what persons the statutory fiction is
to be resorted to and full effect must be given to the statutory fiction and it
should be carried, to its logical conclusion. "
68. A legal fiction can be utilised in several ways wherein the word 'deemed' is used.
However, the mere use of the word 'deemed' is not in itself sufficient to set up a legal
fiction as was held in Consolidated Coffee Ltd. v. Coffee Board, MANU/SC/0541/1995 :
(1995)1SCC312, stating that, "the word 'deemed' is used a great deal in modern
legislation in different senses and it is not that a deeming provision is every time made
for the purposes of creating a fiction. A deeming provision might be made to include
what is obvious or what is uncertain or to impose for the purpose of a statute an
artificial construction of a word of phrase that would not otherwise prevail, but in each
case it would be a question as to with what object the legislature has made such a
deeming provision."
69. The Court went further to quote the position taken in St. Aubyn v. Attorney General
(1951) 2 All ER 473 wherein Lord Radcliffe observed thus,
"The word 'deemed' is used a great deal in modern legislation. Sometimes it is
used to impose for the purposes of a statute an artificial construction of a word
or phrase that would not otherwise prevail. Sometimes it is used to put beyond
doubt a particular construction that might otherwise be uncertain. Sometimes it
is used to give a comprehensive description that includes what is obvious, what
is uncertain and what is, in the ordinary sense impossible."
7 0 . I n Bhavnagar University v. Palitana Sugar Mill (P) Ltd. MANU/SC/1092/2002 :
AIR2003SC511 it was stated that the purpose and object of creating a legal fiction in
the statute is well known. But when a legal fiction is created it must be given its full
effect. It was held in East End Dwellings Co. Ltd. v. Finsbury Borough Council (1951) 2
All ER 587:
"If you are bidden to treat an imaginary state of affairs as real, you must
surely, unless prohibited from doing so, also imagine as real the consequences
and incidents which, if the putative state of affairs had in fact existed, must
inevitably have flowed from or accompanied it. One of these in this case is
emancipation from the 1939 level of rents. The statute says that you must
imagine a certain state of affairs; it does not say that having done so, you must
cause or permit your imagination to boggle when it comes to the inevitable
corollaries of that state of affairs."

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[See also ITW Signode India Ltd. v. Collector of Central Excise - MANU/SC/0938/2003 :
2003ECR783(SC)
7 1 . These decisions, therefore, show that whenever a legal fiction is created by a
statute, the same shall be given full effect.
INTERPRETATION OF SECTION 6A OF THE CENTRAL ACT :
7 2 . A statute, as is well-known, must be interpreted having regard to the text and
context thereof. Mischief Rule may also be applied in a given case.
73. While construing a statute, the object of the Act must be taken into consideration.
(See Killick Nixon Ltd. v. Deputy Commissioner of Income Tax MANU/SC/1042/2002 :
[2002]258ITR627(SC)
74. Section 6A of the Act although provides for a burden of proof, the same has to be
read in the context of Section 6 of the said Act. Section 6 provides for liability to pay
tax on inter-State sales. Any transaction which does not fall within the definition of
'sale' would not be exigible to tax, the burden whereof would evidently be on the
assessee. We have noticed hereinbefore that whereas prior to the amendment in Sub-
section (1) of Section 6A the dealer had ah option of filing a declaration in Form-F;
after such amendment, he does not have such option, insofar as in terms of the
amended provision, if the dealer fails and/or neglects to file such a declaration, the
transaction would be deemed to be ah inter-State sale. It is to be noticed that for the
aforementioned purpose also, the Parliament advisedly used the expression 'deemed'. If
the expression 'deemed' is interpreted differently, an incongruity would ensue.
75. In absence of any indication that the Parliament while enacting Sub-section (2) of
Section 6A did not intend to make the deeming provisions to be a conclusive fact as
regard occasion of the transaction having taken place otherwise than as a result of sale,
it would have dealt with the matter differently.
76. Section 6A(2) of the Act uses the following expressions which are important : (1)
'thereupon'; (2) 'for the purpose of this Act'; (3) 'the movement of goods to which the
declaration related shall be deemed for the purpose of this Act to have been occasioned
otherwise than as a result of sale'.
77. Each of them must be given its proper meaning.
78. A statute for the purpose of its interpretation must be read in its entirety. It is to be
given a purposive construction. Applying Heydon's rule, it must be held that the
amendment was necessitated not only to make the dealer to file such a declaration
imperatively but also to see that such movement of goods becomes inter-State sale by
raising a legal fiction, as 'having been occasioned in course of a inter-State sale'. In
other words, if such a declaration is filed and on an inquiry made pursuant to or in
furtherance of the particulars furnished are found to be correct by the assessing
authority, the result thereof which is evidenced by the expression 'thereupon' shall in
view of the legal fiction created would be a transaction otherwise than as a result of an
inter-State sale. Furthermore, once such a legal fiction is drawn, the same would
continue to have its effect not only while making an order of assessment in terms of the
State Act but also for the purpose of invoking the power of reopening of assessment
contained in Section 9(2) of the Central Act as well as Section 16 of the State Act.
[ S e e Indian Handicrafts Emporium and Ors. v. Union of India and Ors.

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MANU/SC/0640/2003 : AIR2003SC3240,Ameer Trading Corporation Ltd. v. Shapoorji
Data Processing Ltd. MANU/SC/0943/2003 : AIR2004SC355.
OUR ANALYSIS :
79. In the case at hand it has to be determined whether the sale in question is an
interstate one. If through the means of a legal fiction it is determined that this is not an
interstate sale, then it amounts to a transfer of stock. This finding is made by a
statutory authority who has the jurisdiction to do so and there is no provision for
appeal. therefore, the order made by such authority is conclusive in that it cannot be
reopened on the basis that there had been a mere error of judgment. It also cannot be
re-opened under another statute, for examples, the Sales Tax Act of the State
concerned, when the order had been made under the Central Act. Section 9(2) of the
Act is subject to the other provisions of the Act which would include Sub-section (2) of
Section 6A of the Act. "Subject to" is an expression whereby limitation is expressed.
The order is conclusive for all purposes. It can only be re-opened on a small set of
grounds such as fraud, misrepresentation, collusion etc.
80. It is also to be borne in mind that no presumption when movement of goods has
taken place in the course of inter-State sales may be raised in the case of standard
goods but the same is not conclusive. It is only one the factors which is required to be
taken into consideration along with others. In a case, however, where the purchaser
places order on the manufacturer for manufacturing goods which would be as per his
specifications, a presumption that agreement to sell has been entered into may be
raised.
81. The purport and object of Section 6A of this Act need not detain us for long as the
same has been considered at some details recently in 20th Century Finance Corporation
Ltd. and Anr. v. State of Maharashtra MANU/SC/0412/2000 : AIR2000SC2436 stating:
"While examining the power of State Legislatures under Entry 54 of List II in
the earlier part of this judgment, we have noticed that the situs of the sale or
purchase is wholly immaterial as regards the inter-State trade or commerce, as
held in Bengal Immunity Co. Ltd. case MANU/SC/0083/1955 : [1955]2SCR603.
Further, the State Legislature cannot by law, treat sales outside the State and
sales in the course of import as "sales within the State" by fixing the situs of
sales within its State in the definition of sale, as it is within the exclusive
domain of the appropriate legislature, i.e., Parliament to fix the location of sale
by creating legal fiction or otherwise."
82. In Mahant Dharam Das (supra), it has been held that the object of the Act is to get
rid of protracted litigation. The same is also required to be borne in mind while
interpreting the relevant provisions of the Central and the State Acts.
83. There cannot be any doubt or dispute that while defining sale, the situs of sale can
be fixed by the Parliament which having regard to Article 286 is within its exclusive
domain and in the context of Article 269(3) having regard to the following factors:
(i) Place where agreement of sale is concluded;
(ii) Passing of property in the goods;
(iii) Where the parties to the contract reside; and

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 (iv) Goods are located or manufactured.
84. Once the situs of sale either by way of legal fiction or otherwise is determined, the
State Legislature will be denuded of its power to fix another situs having regard to the
fact that the Parliament alone has the exclusive jurisdiction therefore. A sale may have
several elements and all of them need not necessarily take place in one State and in
that view of the matter a presumption had to be provided for by a deeming provision as
a logical corollary of the principles laid down by a law of Parliament.
85. It has not been disputed before us that all the requisite particulars are to be stated
in Form F. Once a determination is made that such statements are correct, the curtain is
drawn keeping in view the expression "thereupon". The said word is of great
significance and must be given its full effect.
86. In words and phrases, Permanent Edition, Volume 41A, 'thereupon' is defined as:
"Thereupon" has at least two meanings and may mean either immediately or
without delay or lapse of time. It has been defined as meaning upon this or that
and is used for the purpose of referring to a cause or, condition precedent. It is
also frequently used to denote a following or consequence of preceding events
and when considered in statutory interpretation it is often construed to refer to
a succession of events in the order or sequence of their performance rather
than as an adverb of time. State ex rel. Warnick v. Wilson, 178 P. 2d 277, 282,
162 Kan. 507."
87. The expression "For the purpose of this Act", unless the context otherwise requires
would mean "all the purposes" thereof.
8 8 . I n H.L. Sud, Income Tax Officer, Companies Circle 1 (1), Bombay v. Tata
Engineering and Locomotive Co. Ltd. MANU/SC/0086/1968 : [1969]71ITR457(SC), this
Court held:
"The expression "for all purposes", used in Section 43 only indicates that when
an appointment is made for a particular assessment year it is stood for all
purposes as far as that assessment is concerned i.e., for all purposes for
imposing tax liability, determining the quantum of the liability and for
recovering it. The expression does not extend the liability to any other
assessment excepting the liability for the assessment year for which the
appointment is made."
89. The expression "for the purpose of the said Act" must also be given effect to. The
same would ordinarily mean "for the purpose of all the provisions of the said Act".
90. In M.K. Kochu Devassy v. State of Kerala etc. MANU/SC/0117/1978 : 1979CriL J147,
it is stated:
13. We find ourselves wholly unable to accept any of the contentions. The
terms of Section 2 of the 1947 Act as substituted by Section 3 of the Kerala Act
are absolutely clear and unambiguous and when they lay down that the
expression "public servant" shall have a particular meaning for the purposes of
the Act, that meaning must be given to the expression wherever it occurs in the
Act. "For the purposes of the Act" surely means for the purposes of all and not
only some of the provisions of the Act. If the intention was to limit the
applicability of the definition of the expression "public servant" as contended,

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 the language sed would not have been "for the purposes of the Act" but
something like "for the purposes of the Act insofar as they relate to the offences
under Sections 161 to 165 of the Indian Penal Code".
91. In Shrisht Dhawan (supra), the law is stated in the following terms:
"Thus a tenant cannot wait for the entire period of lease and then raise
objection to execution on fraud or collusion unless he is able to establish that it
was not known to him and he came to know of it, for the first time only at the
time of execution. In other words the Controller shall not be justified in
entertaining an objection in execution unless the tenant establishes,
affirmatively, that he was not aware of fraud before expiry of the period of
lease. To the following extent, therefore, the law on procedural aspect should
be taken as settled.
(1) Any objection to the validity of sanction should be raised prior to, expiry of
the lease.
(2) The objection should be made immediately on becoming aware of fraud,
collusion etc.
(3) A tenant may be permitted to raise objection after expiry of lease in
exceptional circumstances only.
(4) Burden to prove fraud or collusion is on the person alleging it."
92. It was further observed :
"...An action is mindless when it is thoughtless or without any care or caution.
In law it is passing of an order without any regard to the provision of law. If
the section requires the authority to pass an order on inquiry or on being
satisfied of existence or non-existence of a fact then the duty cast is higher and
an order which is passed without due regard to duty to investigate then the
order may be mindless..."
93. Furthermore, the expression 'subject to' must be given effect to.
94. In Black's Law Dictionary, Fifth Edition at page 1278 the expression 'Subject to" has
been defined as under :
"Liable, subordinate, subservient, inferior, obedient to; governed or affected
by; provided that; provided, answerable for. Homan v. Employers Reinsurance
Corporation, 345 Mo. 650, 136 S.W. 2d 289, 302"
95. The word "Determination" must also be given its full effect to, which pre-supposes
application of mind and expression of the conclusion. It connotes the official
determination and not a mere opinion of finding.
96. In Law Lexicon by P. Ramanatha Aiyar, Second Edition, it is stated:
"Determination or order. The expression "determination" signifies an effective
expression of opinion which ends a controversy or a dispute by some authority
to whom it is submitted under a valid law for disposal. The expression "order"
must have also a similar meaning, except that it need not operate to end the
dispute, Determination or order must be judicial or quasi-judicial. Jaswant

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 Sugar Mills v. Lakshmi Chand, MANU/SC/0277/1962 : (1963)ILLJ524SC.
[Constitution of India Article 136]"
97. In Black's Law Dictionary, 6th Edition, it is stated:
"A "determination" is a "final judgment" for purposes of appeal when the trial
court has completed its adjudication of the rights of the parties in the action.
Thomas Van Dyken Joint Venture v. Van Dyken, 90 Wis. 236, 279 N.W. 2d 459,
463"
98. It is not in dispute that the principles for determination as to what would cause a
inter-state sale or intra-state sale is to be laid down in terms of the provisions of a
Parliamentary Act having regard to the express provisions contained, in Clause (3) of
Article 269 and Clause (3) of Article 286 of the Constitution. What principles can be
deduced by reason of such a legal fiction has been stated by this Court in Consolidated
Coffee Ltd. (supra) in the following terms:
"A 'principle' means a general guiding rule, and does not include specific
directions, which vary according to the subject-matter per Shearman, J., in M.
Creagh v. Frearson (1922 WN 37.
Similarly in words and phrases, Permanent Edition, Vol. 33-A at page 327 it is
explained that "principle means a general law or rule adopted or professed as a
guide to action. "In other words, as opposed to any specific direction governing
any particular or specific instance, transaction or situation a principle, would be
a guiding rule applicable generally to cases or class of cases. Looked at from
this angle it will be clear that Sub-section (3) of Section 5 formulates a
principle inasmuch as it lays down a general guiding rule applicable to all
penultimate sales that satisfy the two conditions specified therein and not any
specific direction governing any particular or specific transaction of a
penultimate sale. In other words the content of the provision shows that it lays
down a principle."
99. It was opined :
"Two things become clear from this Statement; first, Mohd. Serajuddin decision
MANU/SC/0440/1975 : AIR1975SC1564 is specifically referred to as
necessitating the amendment and secondly, penultimate sales made by small
and medium scale manufacturers to an export canalising agency or private
export house to enable the latter to export those goods in compliance with
existing contracts or orders are regarded as inextricably connected with the
export of the goods and hence, earmarked for conferral of the benefit of the
exemption. But here again, 'existing contract' with whom is not clarified. In
other words, on this crucial point the Statement is silent and does not throw
light on whether the existing contract should be with a foreign buyer or will
include any agreement with a local party containing a covenant to export.
therefore, the question will again depend upon proper construction and as we
have said above, in the matter of construction the two aspects as discussed
earlier show that by necessary implication 'the agreement' spoken of by Section
5(3) refers to the agreement with a foreign buyer."
100. In terms of Clause (3) of Article 269, inter-state sale is contrasted from local sale.
101. An order passed by the statutory authority who has jurisdiction therefore, the

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same would amount to a part of substantive and not procedural law. In addition to this
there is no provision for appeal. Thus, it is only in the limited cases of fraud, mis-
representation etc. that reassessment can be directed and not if there had been a mere
error of judgment.
102. If it is not an inter-State sale provided through a legal fiction, then it amounts to
transfer of stock and this is a finding which has been arrived at by a statutory authority
where for there does not exist any provision for appeal. therefore, it cannot be
reopened on the premise that there was a mere error of judgment or change in opinion.
103. Once it is held that such determination of an issue having regard to legal fiction
created in terms of Sub-section (2) of Section 6A is conclusive, it must a fortiorari
follow that the same is binding.
104. The particulars required to be furnished in Form F clearly manifest that the proof
required is as to whether the goods were factually transferred to the assessee himself or
his branch office or his agent and not to any third party. Any other enquiry is beyond
the realm of the assessing authority.
105. It is true that this Court in Ashok Leyland (supra) upon consideration of the
matter holding that no statutory conclusiveness had been attached by reason of a legal
fiction in terms of Sub-section (2) of Section 6A. This Court opined:
"After all Section 6A is also one of the provisions of this Act. There is no reason
to elevate it to a higher status than the rest of the provisions".
106. With utmost respect, therein the Court did not take into consideration that the
provisions of Section 6A having been provided by way of exclusionary clause subject to
the satisfaction of the conditions precedent contained therein, and, thus, the same stand
at an elevated stage over charging Section 6 of the Act. The assessing authority while
passing an order is required to take into consideration the jurisdictional fact. Once it is
found, having been conferred with a plenary power to determine its own jurisdiction,
that he did not have any jurisdiction under the Act, the opinion of the assessing
authority attains finality. What would be a jurisdictional fact has been noticed by this
Court in Shrisht Dhawan (supra) in the following terms:
"19... A Jurisdictional fact is one on existence or non-existence of which
depends assumption or refusal to assume jurisdiction by a court, tribunal or an
authority. In Back's Legal Dictionary it is explained as a fact, which must exist
before a court can properly assume jurisdiction of a particular case. Mistake of
fact in relation to jurisdiction is an error of jurisdictional fact. No statutory
authority or tribunal can assume jurisdiction in respect of subject matter which
the statute does not confer on it and if by deciding erroneously the fact on
which jurisdiction depends the court or tribunal exercises the jurisdiction then
the order is vitiated. Error of jurisdictional fact renders the order ultra vires and
bad... "
1 0 7 . I n South India Corporation (P) Ltd. v. Secretary. Board of Revenue
MANU/SC/0215/1963 : [1964]4SCR280, this Court has held that special provisions shall
prevail over the general provisions.
108. It is further trite that an administrative authority or a quasi-judicial authority while
adjudicating upon a lis is obligated to pose and answer a right question so as to enable
it to arrive at a conclusion as to whether he has jurisdiction in the matter or not. By

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reason of a legal fiction which becomes attracted in terms of determination made
thereunder, the provisions of the Central Act shall stand excluded.
109. In A.V. Fernandez v. the State of Kerala MANU/SC/0093/1957 : [1957]1SCR837,
this Court observed:
"There is a broad distinction between the provisions contained in the statute in
regard to the exemptions of tax or refund or rebate of tax on the one hand and
in regard to the non-liability to tax or non-imposition of tax on the other. In the
former case, but for the provisions as regards the exemptions or refund or
rebate of tax, the sales or purchases would have to be included in the gross
turnover of the dealer because they are prima facie liable to tax and the only
thing which the dealer is entitled to in respect thereof is the deduction from the
gross turnover in order to arrive at the net turnover on which the tax can be
imposed. In the latter case, the sales or purchases are exempted from taxation
altogether. The Legislature cannot enact a law imposing or authorising the
imposition of a tax thereupon and they are not liable to any such imposition of
tax. If they are thus not liable to tax, no tax can be levied or imposed on them
and they do not come within the purview of the Act at all. The very fact of their
non-liability to tax is sufficient to exclude them from the calculation of the
gross turnover as well as the net turnover on which sales tax can be levied or
imposed."
1 1 0 . I n Sahney Steel (supra) whereupon reliance has placed by the assessing
authority, a contention was raised that the registered office and the branch office were
separately registered as dealers under the sales tax law and transaction effected by the
branch office should not be identified with transactions effected by the registered office,
Pathak, J., as the learned Chief Justice-then was, observed :
"..We are unable to agree. Even if, as in the present case, the buyer places an
order with the branch office and the branch office communicates the terms and
specifications of the orders to the registered office and the branch office itself is
concerned with the sales dispatching, billing and receiving of the sale price, the
conclusion must be that the order placed by the buyer is an order placed with
the Company and for the purpose of fulfilling that order the manufactured
goods commence their journey from the registered office within the State of
Andhra Pradesh to the branch office outside the State for delivery of the goods
to the buyer..."
111. The Court in the facts of that case held that the movement from the head office to
the branch office was for the purpose of delivery to the branch office, thereafter to the
buyer through the branch office. The branch office merely acted as a conduit through
which the goods passed on their way to the buyer. It is, however, relevant to note that
the Court noticed :
"...It would have been a different matter if the particular goods had been
dispatched by the registered office at Hyderabad to the branch office outside
the State for sale in the open market and without reference to any order placed
by the buyer. In such a case if the goods are purchased from the branch office,
it is not a sale under which the goods commenced their movement from
Hyderabad. It is a sale where the goods moved merely from the branch office to
the buyer..."
112. The purpose of verification of the declaration made in Form F, therefore, is as to

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whether the branch office acted merely as a conduit or the transaction took place
independent to the agreement to sell entered into by and between the buyer and the
registered office or the office of the company situated outside the State. The said
decision therefore, does not run counter to our reading of the said provision.
Furthermore, the question which has been, raised before us had not been raised therein.
113. We, therefore, are of the opinion that the observations made by this Court in
Ashok leyland (supra) to the effect that an order passed under Sub-Section (2) of
Section 6A can be subject matter of reopening of a proceeding under Section 16 of the
State Act was not correct.
114. However, we may hasten to add that the same would not mean that even wherein
such an order has been obtained by commission of fraud, collusion, misrepresentation
or suppression of material facts or giving or furnishing false particulars, the order being
vitiated in law would not come within the purview of the aforementioned principle.
115. An order of assessment is albeit passed under the State Act. But once it is held
that the concerned State Act as also the Central Act is not applicable, as a consequence
whereof sales tax would be payable under another State Act, it is doubtful as to whether
the power to reopen the proceedings under the State Act or the Central Act would be
attracted. There does not exist any power in the statute to rectify a mistake. In that
view of the matter, mere change in the opinion of the assessing authority or to have a
re-look at the matter would not confer any jurisdiction upon him to get the proceedings
reopened. Discovery of a new material although may be a ground but that itself may not
be a ground for reopening the proceedings unless and until it is found that by reason of
such discovery, a jurisdictional error has been committed. In other words, when an
order passed in terms of Sub-Section (2) of Section 6A is found to be illegal or void ab
initio or otherwise voidable, the assessing authority derives jurisdiction to direct
reopening of the proceedings and not otherwise.
116. In Shrisht Dhawan (supra) this Court has held:
"20. Fraud and collusion vitiate even the most solemn proceedings in any
civilised system of jurisprudence. It is a concept descriptive of human conduct.
Michael Levi likes a fraudster to Milton's sorcerer, Compus who exulted in his
ability to, 'wing me into the easy-hearted man and trap him into snares'. It has
been defined as an act of trickery or deceit. In Webster's Third New
International Dictionary fraud in equity has been defined as an act or omission
to act or concealment by which one person obtains an advantage against
conscience over another or which equity or public policy forbids as being
prejudicial to another. In Black's Legal Dictionary, fraud is defined as an
intentional perversion of truth for the purpose of inducing another in reliance
upon it to part with some valuable thing belonging to him or surrender a legal
right; a false representation of a matter of fact whether by words of by conduct,
by false or misleading allegations, or by concealment of that which should have
been disclosed, which deceives and is intended to deceive another so that he
shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been
defined as criminal deception, use of false representation to gain unjust
advantage; dishonest artifice or trick. According to Halsbury's Laws of England,
a representation is deemed to have been false, and therefore a
misrepresentation, if it was at the material date false in substance and in fact.
Section 17 of the Contract Act defines fraud as act committed by a party to a
contract with intent to deceive another. From dictionary meaning or even

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 otherwise fraud arises out of deliberate active role of representator about a fact
which he knows to be untrue yet he succeeds in misleading the represented by
making him believe it to be true. The representation to become fraudulent must
be of the fact with knowledge that it was false. In a leading English Case (Derry
v. Peek (1886-90) All ER 1) what constitutes fraud was described thus: (ARR ER
p. 22 B-C):
Fraud is proved when it is shown that a false representation has been made (i)
knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether
it be true or false."
117. This aspect of the matter has been considered recently by this Court in Roshan
Deen v. Preeti Lal MANU/SC/0701/2001 : (2002)ILL J465SC,Smt. Anita v. R. Rambilas
MANU/AP/0874/2002 : AIR2003AP32,Ram Preeti Yadav v. U.P. Board of High School
and Intermediate Education and Ors. MANU/SC/0683/2003 : AIR2003SC4268 andRam
Chandra Singh v. Savitri Devi and Ors. MANU/SC/0802/2003 : (2003)8SCC319
118. Suppression of a material document would also amount to a fraud on the Court.
( S e e Gowrishankar and Anr. v. Joshi Amba Shankar Family Trust and Ors.
MANU/SC/0555/1996 : [1996]2SCR949 andS.P. Chengalvaraya Naidu (Dead) By....
.LRs. v. Jagannath (Dead) by Lrs. and Ors. MANU/SC/0192/1994 : AIR1994SC853.
119. There is no law that only because no appeal is provided the order would not attain
finality. (See Commissioner of Income Tax, Bombay v. Amritlal Bhogilal & Co.
MANU/SC/0083/1958 : [1958]34ITR130(SC)
RES-JUDICATA:
120. The principle of res judicata is a procedural provision. A jurisdictional question if
wrongly decided would not attract the principle of res judicata. When an order is passed
without jurisdiction, the same becomes a nullity. When an order is a nullity, it cannot
be supported by invoking the procedural principles like, estoppel, waiver or res
judicata. This question has since been considered in Sri Ramnik Vallabhdas Madhvani
and Ors. v. Taraben Pravinlal Madhvani MANU/SC/0891/2003 : (2004)1SCC497 wherein
this Court observed in the following terms :
"So far as the question of rate of interest is concerned, it may be noticed that
the High Court itself found that the rate of interest should have been
determined at 6%. The principles of res judicata which according to the High
Court would operate in the case, in our opinion, is not applicable. Principles of
res-judicata is a procedural provision. The same has no application where there
is inherent lack of jurisdiction.
I n Chief Justice of A.P. and Anr. v. L.V.A. Dikshitulu and Ors. etc.
MANU/SC/0416/1978 : [1979]1SCR26, the law is stated in the following terms:
"23. As against the above, Shri Vepa Sarathy appearing for the
respective first respondent in C.A. 2826 of 1977, and in C.A. 278 of
1978 submitted that when his client filed a writ petition (No. 58908 of
1976) under Article 226 of the Constitution in the High Court for
impugning the order of his compulsory retirement passed by the Chief
Justice, he had served, in accordance with Rule 5 of the Andhra
Pradesh High Court (Original Side) Rule, notice on the Chief Justice and
the Government Pleader, and, in consequence, at the preliminary

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 hearing of the writ petition before the Division Bench, the Government,
Pleader appeared on behalf of all the respondents including the Chief
Justice, and raised a preliminary objection that the writ petition was
not maintainable in view of Clause 6 of the Andhra Pradesh
Administrative Tribunal Order made by the President under Article 371D
which had taken away that jurisdiction of the High Court and vested the
same in Administrative Tribunal. This objection was accepted by the
High Court, and as a result, the writ petition was dismissed in limine.
In these circumstances - proceeds the argument - the appellant is now
precluded on principles of res judicata and estoppel from taking up the
position, that the Tribunal's order is without jurisdiction. But, when
Shri Sarathi's attention was invited to the fact that no notice was
actually served on the Chief Justice and that the Government Pleader
who had raised this objection, had not been instructed by the Chief
Justice or the High Court to put in appearance on their behalf, the
counsel did not pursue this contention further. Moreover, this is a pure
question of law depending upon the interpretation of Article 371D. If
the argument. holds good, it will make the decision of the Tribunal as
having been given by an authority suffering from inherent lack of
jurisdiction. Such a decision cannot be sustained merely by the
doctrine of res judicata or estoppel as urged in the case."
I n Dwarka Prasad Agarwal (D) By LRs. and Anr. v. B.D. Agarwal and Ors.
MANU/SC/0450/2003 : AIR2003SC2686, it is stated:
"It is now well-settled that an order passed by a court without
jurisdiction is a nullity. Any order passed or action taken pursuant
thereto or in furtherance thereof would also be nullities. In the instant
case, as the High Court did not have any jurisdiction to record the
compromise for the reasons stated hereinbefore and in particular as no
writ was required to be issued having regard to the fact that public law
remedy could not have been resorted to, the impugned orders must be
held to be illegal and without jurisdiction and are liable to be set aside.
All orders and actions taken pursuant to or in furtherance thereof must
also be declared wholly illegal and without jurisdiction and
consequently are liable to be set aside. They are declared as such. "
121. In a case where an ordinance promulgated by the President of India which had
been rendered invalid by a judgment of the High Court, the question as to whether an
enactment of the Parliament would be barred was negatived in a recent decision of this
Court in Dharam Dutt and Ors. v. Union of India and Ors. MANU/SC/0970/2003 :
AIR2004SC1295. Pointing out that the High Court did not consider the constitutional
questions in the right perspective, this Court observed:
" The doctrine of Separation of Powers and the constitutional convention of the
three organs of the State, having regard and respect for each other, is enough
answer to the plea raised on behalf of the petitioners founded on the doctrine
of Separation of Powers. We cannot strike down a legislation which we have on
an independent scrutiny held to be within the legislative competence of the
enacting legislature merely because the legislature has re-enacted the same
legal provisions into an Act which, ten years before, were incorporated in an
ordinance and were found to be unconstitutional in an erroneous judgment of
the High Court and before the error could be corrected in appeal the Ordinance

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 itself lapsed."
CONCLUSION:
122. For the reasons stated hereinbefore, we are of the opinion that the Appellants
would be entitled to move the High Court for ventilating their grievances, However, if
the Central Government creates a new forum, it would be open to them to approach the
same.
123. We may now consider the fact of the connected matters:
124. In W.P. (C) No. 195 of 1999 merely a show cause notice has been issued in
relation to three assessment years beginning from 1989-1990. This writ petition covers
the period 1989-1990, to 1995-1996. In relation to period 1990-1991, 1991-1992 and
1992-1993 reopening proceedings had been initiated. A fresh cause of action has arisen
in relation to the other assessment years.
125. Having regard to the fact that the question as to whether the finding arrived at by
the STAT would attract the exceptions carved out hereinbefore mainly would revolve
round the question as to whether determination in terms of Sub-section (2) of Section
6A of the Act has been obtained by playing fraud or suppression of record or not
requires a detailed examination. Indisputably, the appellant/ writ petitioner would be
entitled to move the High Court in accordance with law.
CIVIL APPEAL @ SLP (C) No. 5579 of 2001
126. The appellant herein had filed his application praying inter alia for the following
reliefs:
"(a) Grant Special Leave to Appeal against the final Judgment and Order dated
13.11.2000 passed in STA No. 459 of 1999 by the Tamil Nadu Sales Tax
Appellate Tribunal (Additional Bench). Chennai.
(b) Pass such other or further order or orders as this Hon'ble Court may deem
fit and proper in the facts and circumstances of the present case and in the
interest of justice."
127. In the said case, no order of reopening has been issued and as such it is not a
case where we were required to determine a forum in the light of the order passed in
Ashok Leyland (supra).
C.A. No. 944 of 2001
128. The question as to whether the transaction in question constitute inter-state sale
or intra-state "sale has been decided upto Tribunal. They have approached this Court
without availing the statutory remedies provided for under the statutes. We, therefore,
decline to exercise our discretion and direct that the parties may avail the remedies
under the statute.
129. In view of our aforementioned findings, the parties may approach the High Court.
If necessary, the other States wherein the local sales tax had been deposited, may be
impleaded as parties so that the lis may be determined in their presence. However, in
the event, in the meanwhile any forum is created by any Parliamentary Act in terms
whereof the inter se disputes between the parties vis-a-vis the claim of the assessee
may be determined, they may approach the said forum.

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CA No. 943 of 2001 :
1 3 0 . The appellant herein manufactures explosives. It has its factory situated at
Onnalwadi, Hosur, Dharmapuri District. It is registered under the Central Sales Tax Act.
It filed return for the assessment year 1986-87 under the Central Sales Tax Act, 1956
claiming exemption in respect of a sum of Rs. 34,30,302.73 representing transfer of
goods to its branch at Dhanbad in the State of Bihar and a sum of Rs. 13,91,547.18
relating to its branch at Nagpur in the State of Maharashtra. An inspection held by the
Enforcement Wing of the respondent; certain documents were recovered from a perusal
whereof it transpired that the goods were moved against the prior orders and as such
they are not entitled to exemption. The Department contended that it a Coal India
Limited which had placed orders for supply of explosives to its various subsidiary
companies in North India and its projects at Asansol, Dhanbad, Ranchi, Nagpur and
Bilaspur at specified rates and in that view of the matter the transactions constituted
inter-State sales. According to the appellant, however, order placed by M/s Coal India
Limited is not an order intending to purchase but merely a standing offer. The objection
of the appellant was overruled upto the appellate authority. The matter went up to the
Tamil Nadu Sales Tax Tribunal, Coimbatore wherein it was held that the goods being
unascertainable ones must be held to be general and standard goods and tailor made to
the special requirements of any customers. It came to the conclusion that the
transactions were only branch transfers and were not liable to sales tax. It further held
that the transactions having taken place outside the State of Tamil Nadu and the
transactions having been treated as local sales in other States, the State of Tamil Nadu
had no jurisdiction to impose tax in respect thereof. The Tribunal also accepted the
declaration made in terms of Section 6A. The State of Tamil Nadu being aggrieved and
dissatisfied therewith filed Tax Revision Case and by reason of the impugned judgment
dated 2.12.1997 the judgment of the Tribunal was reversed. It, however, did not
interfere with the order of the Tribunal as regard penalty. Questioning the said order,
the appeal has been filed before us. Keeping in view the fact that although more than
one State is involved, having regard to the facts and circumstances of the case, it is
necessary that the question may be examined afresh by the High Court in the light of
the decision of this Court. In the writ petition, it will be open to the parties to implead
the other States so that, if necessary, the matter may be heard out and disposed of in
their presence. However, in the event another forum is created by a Parliamentary Act, it
will be open to the parties to approach the said forum. These appeals and writ petitions
are disposed of with the aforementioned directions and observations. No costs.

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