Supreme Court of India
ASHOK LEYLAND LIMITED ETC.versusUNION OF INDIA AND ORS.
- Citation
- 1997 INSC 164
- Decided
- 20 February 1997
- Disposal
- Dismissed
- Bench
- B P JEEVAN REDDY
Holding
Section 6‑A does not create a conclusive presumption; an order accepting Form F is part of the assessment and may be reopened under the relevant State sales‑tax provisions, leaving the inter‑State versus intra‑State nature of the transactions to be decided by the Sales Tax Appellate Tribunal.
Summary
Ashok Leyland Ltd., a manufacturer of trucks, sold vehicles to state transport undertakings and other buyers through its regional sales offices (RSOs) across India. The company filed Form ‘F’ with the Tamil Nadu sales‑tax authority, claiming the movement of goods to RSOs was a transfer, not a sale, and paid sales tax in the destination states. Tamil Nadu later reopened the assessments, treating the transfers as inter‑State sales liable to Central Sales Tax, leading to alleged double taxation. The Supreme Court held that Section 6‑A of the Central Sales Tax Act does not create a conclusive presumption; an order accepting Form F is part of the assessment and can be reopened under the Tamil Nadu Sales Tax Act and Section 9(2) of the Central Sales Tax Act. The question of whether the transactions are inter‑State or intra‑State sales is a factual issue for the Sales Tax Appellate Tribunal. The Court dismissed the appeals, directing the appellant to approach the Tribunal and, if the Tribunal finds inter‑State sales, to stay Tamil Nadu’s demand for eight weeks and to refrain from levying Central Sales Tax pending proof of tax paid elsewhere.
Issues considered
- The effect of Section 6‑A of the Central Sales Tax Act – whether it creates a conclusive presumption that the movement of goods is not a sale.
- Whether an order accepting Form F under Section 6‑A is amenable to reopening/revision under Section 16/32 of the Tamil Nadu General Sales Tax Act and Section 9(2) of the Central Sales Tax Act.
- Whether the sale of vehicles transferred to RSOs constitutes an inter‑State sale under the Central Sales Tax Act.
- Whether the appellant can be subjected to double taxation by both Tamil Nadu and the destination state.
- Whether a central mechanism is required to resolve inter‑State sales tax disputes.
Legislation cited
- Central Sales Tax Act, 1956s. 3, s. 4, s. 5, s. 6, s. 6A, s. 8(2-A), s. 9(1), s. 9(2), s. 9(2A)
- Constitution of Indias. Article 269, s. Article 286
Subjects
Central Sales TaxSection 6-AForm Finter‑State saleintra‑State saledouble taxationsales‑tax assessmentreopening of assessmentTamil Nadu Sales Tax ActArticle 269Article 286central mechanisminter‑State trade and commerce
Judgment
A ASHOK LEYLAND LIMITED ETC.
v:
UNION OF INDIA AND ORS.
B
FEBRUARY 20, 1997 --
[B.P. JEEVAN REDDY AND S.B. MAJMUDAR, JJ.]
Tamil Nadu General Sales TaxAct-Ss. 16(1a & b)(2)(3)(4)(5)(6), 32,
55-Sales Tax paid in the respective states where the sales took place on sale
of trucks to State organisations and others through the manufacturing
C Company's R.S.O. 's in different States after receipt of the vehicles from Tamil
Nadu-The State under S. 6(A) has power to reopen assessment, even after
acceptance of Fonn 'F', though this power should not be mechanically exer-
cised-Appeal against assessment order is possible-In the present case, in
view of practical difficulties, Appellants to apply to Tribunal if assessing
D authorities hold against them.
Central Sales Tax Act 1956-Ss. 3,4,5,6(A), 9(1)(2) & (2A)-Question
whether goods manufactured in one State and sold ·In other States through
R.S.O.'s is inter-State or Intra-State trade-Question left open.
E Central Sales Tax (Registration and Tum-over) Rules, 1957-Rule
12(5), (6), (7) & (Ba)-Constitlltion of India-Arts. 269, 286-Cls I & 2;
Entry 92-B of the Union List.
Inter-State Trade and Commerce :
F Inter-State disputes-Deciding of-Creation of a Central mechanism--
Worth considerint;-Suggestion given.
...
The Appellant have been manufacturing vehicles in Tamil Nadu and
selling them all over India, in different State, through their R.S.0.'s to
both State Corporations and others. They had also been supplying 'F' form
G to the Sale Tax authorities in T.N., if the veh.icle is manufactured in that
State, and paying sales tax in the State where the vehicle was ultimately
sold. The T.N. Sale Tax authorities, though they had accepted the 'F'
forms, sought to reopen concluded assessments on the ground that as per
S. 3(a) of the Central Sales Tax Act such sales were inter-State trade. The
H Appellants challenged the action of the T.N. Govt. before the Madras High
224
ASH OK LEYLAND LTD. v. U.O.L 225
Court by a writ petition alleging inter alia, that there was no inter-State A
trade, that the action of the Tamil Nadu Government has resulted in
double taxation, and that the reopening of assessments after a long gap
was making it difficult for them to carry on business. They prayed for a
direction to the various State Govts. to whom they had paid the sales tax
already to refund the same. The High Court was pleased to dismiss the B
said Writ Petitions by holding that the appellants have to approach the
State Govts. in the matter of refund of tax and that the Court cannot give
directions to State Govts. in this matter; the acceptance of form 'F' is a
part of the normal assessment proceedings and the provisions of S. 6A
have no special status and therefore cannot be raised to a constitutional
position; the reopening of assessment, on mere change of opinion is not C
sufficient reason, but can be only in accordance with the provisions of Ss.
16, 32 and 55 of the T.N. Sales Tax Act read with S. 9(2) and (2A) of the
Central Sales Tax Act. The Appellants were directed to file appeals before
the appropriate Appellate authority.
D
The Appellants thereupon filed an appeal against the order of the
Hon'bie High Court before this Court contending, inter a/ia, that S. 6A
creates a conclusive presumption based on the truth of the facts set out in
Form 'F'. Once the truth of form 'F' is accepted and order is passed, the
Govt. cannot reopen/revise the assessment since the consequences of ac-
cepting the form cannot be rectified the sale ofvehicle is only an intra-state E
- sale and is taxed on thafbasis. If the T.N. G.ovt. reopens the assessment
on the basis that it is inter-state sale then there will be double taxation by
two different States under two enactments though in reality there is only
one sale. The show cause notice also does not allege two sales, the
provisions of S. 6-A are independent and is not subject to appeal/revision; F
even if the Govt. has power to re open the assessment under S. 16 of the
T.N. General Sales Tax Act read with S. 9(2) of the Central Sales Tax Act,
they cannot do so unless there is a reasonable ground for doubting the
facts in facts in form 'F' though the sales are effected to both S.T.U.'s and
others in the variou_s States, only cases of sale to S.T.U.'s is reopened. The
States are interested in having the sale conducted in the State in which G
purchase is made since the orders are large and they stand to gain by the
sales tax levied on the said sales and this is the reason for the Appellants
in opening R.S.O.'s in the various States; the principle relating to place of
sale as set out in S. 4 of the Central Sales Tax Act and the Sale of Goods
Act are variance. A sale takes place only when goods are appropriated H
226 SUPREME COURT REPORTS [1997] 2 S.C.R.
A towards the order which takes place only when vehicles are specially
earmarked for such sale. This appropriation always takes place in the state
where the vehicles are delivered. It was also submitted that in the absence
of a Central Machinery to resolve disputes, an assessment should not be
reopened once the truth of form 'F' has been accepted. Ir reopened the
B Court should allow the Petitioner to implead the concerned States. A
prayer for direction. to the Union Govt. to set up a Central machinery to
deal with such problems was also made.
On behalf of the Union of India it was stated that the High Court
was right in holding that an order under S. 6-A is not something special
C but is made in the normal course of assessment; the questions relating to
movement of goods from one State to another before or after a contract
were questions of fact and not law which has to be decided by the ap-
propriate authority; and that the Appellant did not follow the usual
procedure.
D Dismissing the Appeals, this Court
HELD: 1. The Tamil Nadu Sales Tax authorities should first decide·
the matters before them. Thereafter, if the orders are against the Appel-
lant, he may file the Appeal(s) directly before the Tribunal. If the Tribunal
E decides in favour of the Appellant, to wit, if it bolds that the sale of vehicles
to the S.T.U.'s ofvarious States are inter state sales and ifit 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, if by that time
no central mechanism to meet the situation come. into existence. In the
-
F circumstance of the case, it is further directed that in case the Tamil Nadu
Sales Tax Appellate Tribunal comes to the conclusion that the transactions
in question are inter-state sales upon which the Central Sales tax is
Ieviable in State of Tamil Nadu, the State of Tamil Nadu shall not enforce
their demand for a period of eight weeks from the date of the decision of
G the Tribunal. Further till the issue is decided by the Sales Tax Appellate
Tribunal, no Central Sales Tax shall be demanded from the Appellant
provided it is established by the Appellant that in respect of the same
transaction, the Appellant bas paid tax in another State Treating it as an
Intra- State sale in that other State. (251-C-E]
H 2. By virtue of Clause (1) of Article 286 of the Constitution State
ASHOKLEYLAND LTD. v. U.0.1. 227
Legislature has no power to levy tax on a sale which takes place outside A
that or which takes place in course of import of goods into or export of
goods out of the territory of India. Clause. (2) empowers the Parliament to
formulate, by making a law, principles for determining when a sale or
purchase of goods takes place outside the State or in the course of import
or export, as the case may be. (237-F)
B
3. It's well known that Article286 has been thoroughly recast by the
Constitution (sixth Amendment) Act, 1956 which also amended Article 286
substantially. It is in persuance of the said Articles, as recast/amended by
Constitution (sixth Amendment) Act, that the Parliament that the Parlia-
ment enacted the Central Sales Tax Act, 1956. S. 6-A provides that where C
any dealer claims that he is not liable to pay tax under the Central Sales
Tax Act in respect of any goods on the ground that the movement of such
goods from one State to another was occasioned by reason of transfer of
such goods by him to any other place of his business or to his agent or
principal, as the case may be, and not by reason of sales, the burden of D
providing the said fact shall be upon him. For that purpose, he may
furnish to the assessing authority, within the prescribed time, a declara-
tion duly filled and signed by the principal officer of the other place of
business or by his agent or principal, as the case may be, containing the
. prescribed particulars, along with the evidence of dispatch of such goods.
Forms 'F' have to be obtained from the prescribed authority. The section E
further provides that if the assessing authority is satisfied after such
enquiry as he may deem necessary, that the particulars contained in the
declaration furnished by the dealer are true, he may, at the time of or at
any other time before the assessment of the tax payable by the dealer under
the Central Sales Tax Act, make an order to that effect. Thereupon, the F
movement of the 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. [237-G-H, 238-A-E]
Tata Engineering and Locomotive Company Limited v. Assistant Com-
missioner of Commercial Tax, Jamshedpur & Am:, (1970) 20 S.T.C 354, G
referred to.
4. The Central Sales Tax Act has not created a machinery of its own
to assess and collect the tax levied thereunder, probably because the tax
will ultimately go to the State in which the said tax is Ieviable.'Sub-sec- H
228 SUPREME COURT REPORTS [1997] 2 S.C.R.
A tions(2) and (2A) of S. 9 provides that the machinery provisions under the
respective State Sales tax enactment shall be treated as the machinery
provisions under this Act for all purposes. Sub-section (1) of S. 9 provides
that the Central Sales Tax shall be levied by the State from which the
movement of the goods commences. This provision is evidently relatable
B to Clause (2) of Article 269. [239-E]
5. Rule 12 of the Central Sales Tax (Registration and Turn-over)
Rules, 1957 is the rule made persuant to S. 6-A. In other words, Form 'F'
has to be issued by the person in charge of the R.S.O. receiving the vehicles
from Tamil Nadu • and sent to the appellant. The appellant in turn, has
C "to produce the same before his assessing authority who shall pass an order
accepting it if he is satisfied, after making the necessary enquiry that the
facts stated in said form are true. Such an order means that the movement
of the goods mentioned in the said Form from Tamil Nadu to the other
State is not by reason of sale but a mere transfer • to wit, not an inter-state
D sale attracting Central Sales Tax. [240-C-D]
6. By virtue of sub-section (2) of Section 9, the machinery provisions
under the Tamil Nadu General Sales TaxAct are imported into the Central
Sales Tax Act, S. 16 of the Tamil Nadu Act provides for reopening of '
assessment. S. 32 confers upon the Deputy Commissioner the power to
E revise the orderii or proceedings of any subordinate authority made under
the provisions specified therein. This power can be exercised suo moto and
only "where the order is prejudicial to the interests of Revenue, this power
has also to be exercised within five years from the date of the order
proposed to be revised. [240-E, 241-C-DJ
F
7. It is true that if the particulars stated in the declaration Form 'F'
are found to be true, the assessing authority shall pass an order, either at
the time of making of the assessment or at any time before, that the
contents of Form 'F' are accepted as true. On such order being made, it
shall be deemed that the movement of goods to which the form relates has
G been occasioned otherwise than as a result of sale. But there are no words .
in S. 6-A which can be said to create a conclusive presumption or clothe
the "deemed" fact with a conclusive character. All that it says is that if the
particulars stated in Form 'F' are true, certain fact shall be presumed or
shall be or deemed to have taken place, as the case may be. It is not
H possible to agree that the word "deemed" in sub-section (2) of Section 6-A
ASH OK LEYLAND LTD. v. U.0.1. 229
can be understood as creating a conclusive presumption nor is it possible A
to agree that "deemed" is final and conclusive. S. 6-A merely states a rule
of evidence. It states that where a dealer claims that certain goods have
been moved from one State to another and that such movement has
occasioned otherwise than as a result of sale, the.. burden of proving the
same lies upon him. Besides creating the said rules of evidence, the section B
also sets out how the said burden can be discharged. It can be discharged
by producing Form 'F' and on the particular stated in the said form being
found true on being enquired into by the assessing officer. From this it
does not follow that once an order is made accepting Froio 'F' as true, it
is not subject to the power of reopening or revision contained in Ss. 16 and
32 of the Tamil Nadu General Sales Tax Act read with S. 92 of the Central C
Sales Tax Act. After all, S. 6-A is also one of the provisions in this Act.
There is no reason to elevate it to a higher status than the rest of the
provisions. If it were the intention of Parliament to invest the "deemed"
fact with the status of a conclusive presumption, the Parliament would
have said so. The court cannot supply that requirement. Ordinarily speak- D
ing, an order accepting· or rejecting· Form 'F' as true will be passed only
during the assessment proceedings. There. may be case where such an
order is passed earlier to the making of the assessment. Even so, such an
order is incidental to an integrally connected with the assessment of the
dealer. If the very assessment is subject to the power of reopening or
revision, it is on-understandable as to how an order under Section 6-A(2) E
is not similarly amenable. The power to reopen can be exercised under S.
- 16 of the Tamil Nadu General Sales Tax Act ''where for any reason the
whole or any part of the turnover of business of a dealer has escaped
assessment to tax". The power is very wide, though .it may that it should
not be mechanically or lightly exercised. [241-E-H, 242-A-E] F
Izhar Ahmad Khan v. Union of India, [1962) Suppl 3 S.C.R. 235;
Mahant Dharam Das v. State of Punjab, [1975) 3 S.C.R. 160; Sodhi
Transport v. State of Uttar Pradesh, [1986) 1 S.C.R. 939; Balahagas Bulas-
chand & Anr. v. State of Orissa, (1976) 37 S.T.C. 207; Sahney Steel and Press
Works Ltd. & Anr. v. Commercial Tax Officer & Ors., (1985) 60 S.T.C. 301 G
and Chunni Lal Parshadi Lal v. Commissioner of Sales Tax Lucknow, (1986)
S.T.C. 112, referred to.
8. Section 6-A does not create a conclusive presumption and an order
accepting Form 'F', whether passed during the assessment or at any point H
230 SUPREME COURT REPORTS [1997] 2 S.C.R.
A earlier thereto, is ultimately a part and parcel of the order of assessment.
Its amenability to power of reopening and revision depends upon the
provisions of the concerned Sales tax enactment by virtue of S. 9(2). It is
also not possible to agree that an order under S. 6-A(2) has an independent
existence. It does not have. An order refusing to accept Form 'F' may or
B may not be appealable independently depending upon the provisions of the
local sales tax enactment but it is certainly capable of being questioned in
the appeal preferred against the order of assessment for the simple reason
that an order accepting or rejecting Form 'F' does affect the quantum of
turnover taxable under the Act. So far as the power of reopening is
concerned, if the order(s) accepting Form 'F' is sought to be reopened, it
C can be done as part of reopening of assessment or, may be, independently-
that depends upon the language of the relevant provision in the local sales
tax enactment. In the present case, the provision relevant is S. 16 of the
Tamil Nadu General Sales Tax Act. From the language of S.16, it appears
that it may be possible to reopen an order accepting Form 'F' as true
D without, at the same time, reopening the assessment. Even so, it must be
noticed that such a reopening necessarily leads to revision/modification of
the assessment order. It is equally obvious that if the reopening is confined
to the order accepting Form 'F' as true, the inquiry shall be confined to
the matters relevant thereto. Whether that power has been exercised
validly in these cases does not fall for consideration. The fact that the
E assessments are sought to be reopened only in respect of turnover relating
to sale of vehicles to State Transport Undertakings in various States but
F
not with respect to turnover relating to sales to persons other than S.T.U.'s
cannot be a ground to invalidate the proceedings taken. [247-A-E]
9. Whether the contract of sale was in respect of unascertained or
-
future goods and if it is the latter, when did the appropriation of the goods
to the contract of sale take place are all questions of fact which do not
arise for consideration. According to the respondents, the sale that has
taken place is an inter-state sale. This is yet again a question of fact.
[247-H, 248-A-B]
G
10. The situation faced by the appellant is real, which may indeed
put it in good amount of jeopardy. If the vehicles which has been sold to,
say Maharashtra S.T.U. have been moved to the appellant's R.S.O. in
Maharashtra and that R.S.O. has issued Form 'F' which Form 'F'. has been
-
H accepted by the Tamil Nadu authorities during the course of assessment
ASHOKLEYLAND LID. v. U.O.I. [B.P.JEEVAN REDDY, J.] 231
of the appellant for the relevant assessment year, reopening the said A
assessment/orders accepting Forms 'F' after a number of years, seeking to
treat the said movement of goods as consequent upon or incidental to
contract(s) of sale (and, therefore, amounting to inter-state sale taxable in
the State of Tamil Nadu) does present the appellant with the serious
problem inasmuch as it says that it has already paid tax on sale of said B
vehicles in Maharashtra under the Bombay Sales Tax Act. [248-D-E]
11. This case brings to the fore the advisability or necessity of having
a Central mechanism which would decide oiice and for all questions of this
nature. In the interest of inter-state trade and commerce, the suggestion
for creation of a central mechanism to decide such disputes which are C
really in nature of inter-state dispute, 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 Govt. of India to consider this aspect
and take necessary decision in that behalf. [251-B]
Bharat Heavy Electricals Limited v. Union of India, [1996) 4 S.C.C. D
230, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 999-1005
of 1997 Etc. Etc.
E
From the Judgment and Order dated 13.6.96 of the Madras High
Court in W.P. Nos. 14245-49/92, 5470 and 5471 of 1995.
K. Parasaran, C. Natarajan, AK. Ganguli, B.A Mohanty, V.N. Gan-
pule, AS. Nambiar, C. Seetharamiah, K.N. Shukla, Santosh Hegde, V. F
Balaj~ P.N. Ramalingam, AT.M. Sampath, S.N. Bhat, KK. Man~ R.L.
Ramani, V. Krishnamurthy, T. Harish Kumar, P.R. Kovlan, Ms. Kirti
Mishra, Shanta Kumar P. Mahale, G. Prakash, Ms. Beena Prakash, S.M.
Jadhav, D.S. Mehra, V.K Verma, Ms. Binu Tamta, Adhyaru Y.P., Ms. H.
Wahi, Ms. Neetu Singh, P.K. Manohar, K. Ram Kumar, Ms. Asha Nair, C.
Balasubramaniam, Niraj Sharma, Satish K. Agnihotri, M. Mannan, V.G. G
-- Pragasam, Dilip Sinha, D. Krishnan and J.R. Das for the appearing parties.
The Judgment of the Court was delivered by
B.P. JEEVAN REDDY, J Leave granted. H
.-
232 SUPREME COURT REPORTS [1997] 2 S.C.R.
A Ashok Leyland Limited, the appellant herein*, is one of the major
manufactures of trucks and other motor vehicles in India. Its registered
office is at Madras (Chennai). The plants manufacturing trucks and motor
vehicles are situated in the State of Tamil Nadu as well as in other States.
The trucks and vehicles manufactured by it are sold all over the country.
B For its business purposes, it maintains Regional Sales Offices (R.S.O_s.) in
different parts of the country like, Bangalore, Trivandrum, Vijayawada
Pune, Nagpur, Indore, Calcutta, Bhuvaneshwar, Gauhat~ Pondicherry, and
so on. The appellant says that each of these R.S.Os. maintains an office, a
stock yard and other necessary paraphernalia for receiving, stocking,
repairing and delivering motor vehicles to their customers. The appellant
C says that almost seventy percent of its sales are to parties other than State
Transport Undertakings (S.T.Us.). The sales to S.T.Us. are in the region
of thirty percent of its production. The R.S.Os., the appellant says, contact
the local purchasers and the S.T.Us., book the orders and also deliver the
vehicles to them pursuant to sal~s effected by them. The appellant always
D keeps the R.S.Os. well stocked having regard to their requirements. By way
of illustration, it is stated, the R.S.O. at Hyderabad receives vehicles from
Tamil Nadu from time to time. In respect of vehicles sold in Andhra
Pradesh - whether to Andhra Pradesh State Road Transport Corporation
or to other parties - sales tax is levied and collected by the State of Andhra
E Pradesh inasmuch as they are intra-State sales for the purpose of the
Andhra Pradesh General Sales Tax Act. Over the years, the appellant says,
it has been sending the trucks, chassis and other vehicles to RS.Os. all over
the country under 'F' Form and at no time was the correctness of the 'F'
Forms produced by it questioned by any one. However, the State of Tamil
Nadu has been seeking, in the recent times, to reopen the concluded
F assessments contending that the transfer of vehicles from Tamil Nadu to
other States was not mere consignments (without effecting sales) but
constitute inter-State sales within the meaning of clause (a) of Section 3 of
the Central Sales Tax Act, which are taxable in the State of Tamil Nadu
--
by virtue of the provisions of the Central Sales Tax Act. The attempt of
G the State of Tamil Nadu is to treat the said movement of vehicles as
inter-State sales and tax them which would ultimately go back to that State
by virtue of the provisions contained in Articles 269 and 286 of the
Though several other dealers are the petitioners/appellants herein, we shall refer to
--
Ashok Leyland as a representative dealer. The discussion and directions made in this
H judgment shall, however, govern all the petitioners/appellants herein.
ASHOKLEYLANDLID.v. U.0.1.(B.P.JEEVANREDDY, J.] 233
Constitution and the Central Sales Tax Act. The appellant says that it did A
not effect any inter-State sales and that there was only one sate in the other
State which has already been taxed under the sales tax law of that other
·State. The appellant complains that the same transaction cannot be taxed
twice, once as an intra-State sale by one State and again by the State of
Tamil Nadu as an inter-State sale. The appellant complains that the B
reopening of assessments - in some cases, even the re-assessment has been
made and Central sales tax levied - and trucing the same transaction once
against (by the State of Tamil Nadu is causing serious harassment to the
appellant, making it impossible for it to carry on its business operations in
a smooth and orderly manner, it approached the Madras High Court with
the said grievance. Though a number of factual issues were a!So raised in .C
the writ petitions filed by the appellant, it was stated by their counsel at
the time of hearing that they do not propose to invite the decision of the
High Court on these factual issues and that they would confining their
submissions only to the questions of law, viz., the interpretation of Section
6-A of the Central Sales Tax Act and the power to reopen the ordets D
accepting 'F' Forms. In certain other writ petitions filed by the appellant,
several State governments were impleaded as respondents. The Prayer in
these writ Petitions was that inasmuch as sales to S.T.Us. of those States
are being treated .and taxed as mter-State sales by the State of Tamil Nadu,
the levy of tax under the other State sales tax enactments treating the very E
sales as intra-State sales within those respective States is unsustainable,
--- and, therefore, those State governments should be directed to refund the
tax collected by them to the appellant. The High Court has dismissed the
writ petitions holding that (i) the Madras High Court cannot direct the
other State government to refund the tax levied and coilected under their
F
respective State sales tax enactments. The appellant has to approach the
authorities under those Acts or the courts in those States for such relief,
if they are so advised. (ii) the provisions contained in Section 6-A have no
special status or content and cannot be elevated to the status of a constitu-
tional provisions; it is like any other provision under the Central Sales Tax
Act. The order accepting Form 'f'.is nothing more than a step-in-aid of, G
or a part and parcel of, the assessment proceedings. (iii) an order passed
by the assessing authority accepting Form 'F' cannot be reopened except
in accordance with Sections 16, 32.and 55 of the Tamil Nadu General Sales
·Tax Act read with sub-sections (2) and (2A) of Section 9 of the Central
Sales Tax Act. A mere change of opinion is nat sufficient to reopen the H
234 SUPREME COURT REPORTS [1997] 2 S.C.R.
A order accepting Form 'F'. Having declared the law thus, the High Court
directed the appellant to prefer appeals before the appropriate appellate
authority where an order of assessment has been made and to go and show ·
cause to the assessing authority where the appellant has approached the
, High Court at the stage of show-cause notice.
B Sri K. Parasaran, learned counsel for the appellant, urged the follow-
ing contentions :
(1) Section 6-A creates a conclusive presumption which comes into
play on proof of the truth of facts stated in Form 'F'. This conclusive
C presumption cannot be defeated by resorting to the power of reopening
conferred upon the authorities by Section 16 of the Tamil Nadu General
Sales Tax Act read with Section 9(2) of the Central Sales Tax Act. The
order accepting Form 'F' as true cannot also be reopened for the reason
that such order of acceptance gives rise to certain consequences which
D cannot be rectified even if the order accepting Form 'F' is reopened and
revised. The vehicles have been transferred/consigned to the appellant's
R.S.Os. in various States which R.S.Os. have issued Forms 'F' in that behalf
and which, on being produced by the appellant before its assessing
authority, have been accepted as true. This means that the sale of the said
vehicles in the other State is an intra-State sale in that State and has in fact
E been taxed as such. Now if the Tamil Nadu Sales Tax authorities propose
to reopen the said orders accepting the said Forms 'F' and levy Central
sale tax treating the said movement of vehicles to other States as inter-State
sales, the consequence would be that though there is only one sale, it is
being taxed by two different States under two different enactments. This
F cannot be. The show-cause notices issued by the Tamil Nadu authorities
do not say that there was a sale by the appellant to its R.S.O. and another
sale by the R.S.O. to the Sate Transport Undertakings. Indeed, there
cannot be a sale between the appellant and its own R.S.O. A person cannot
sell to hii:nself.
G (2)(a} Section 6-A is an independent provision. An order passed
thereunder is not a part of the assessment order. An order under Section
6-A has an independent existence of its own. It is neither subject to appeal
nor is it amenable to power of revision. The order under Section 6-A is
the result of a conscious adjudication. For all these reasons too, it mustbe
H held that an order accepting Form 'F', once made, is conclusive and is not
ASHOKLEYLANDLTD.v. U.O.I.[B.P.JEEVANREDDY, J.] 235
liable to be reopened. A
(b) even if it is held by a process of reasoning that an order accepting
Form 'F as true is amenable to power of reopening under Section 16 of .
the Tamil Nadu General Sales Tax Act read with Section 9(2) of the
Central Saks Tax Act, even then it must be held that until and unless
reasonable grounds exist for ·doubting the truth of the statements contained B
in Form 'F', it cannot be reopened. Merely because an assessment is
reopened, the orders accepting Forms 'F' cannot automatically be held
amenable to the power of reopening.
(3) All the sales effected by R.S.Os. in various other States are all of C
the same pattern, whether the sale is to S.T.U. or to any other person.
Curiously enough, the impugned reopening notices are confined only to
sales effected in favour of various State Transport Undertakings in several
States. No such attempt to reopen is made in respect of sales effected to
persons other then S.T.Us. As a matter of fact, the S.T.Us. are nothing but D
manifestations of their respective State governments. Since tne
S.T.Us./State governments purchase vehicles in bulk, they insist that the
sale of vehicles should take place within their respective State so that they
may be able to derive income in the shape of sales tax on those sales.
Unless the sales are effected within their State and tax is paid thereon
under the sales tax enactment of that State, that State government or E
S.T.U. is not prepared to purchase vehicles from the appellant. Indeed, it
is for this reason also that the appellant maintains R.S.Os. almost in all the
States in the country. Simply because the orders are booked by the R.S.Os.
and sent to Head Office, it does not follow that the movement of vehicles
is in pursuance of or is an incident of a contract of sale. F
(4) Section 4 of the Central Sales Tax Act provides clearly that (a)
in the case of specific or ascertained goods, the sale of goods shall be
deemed to take place inside a State if the goods are within that State at
the time of the contract of sale and (b) in the case of unascertained or
future goods, the sale of goods should be deemed to take place inside a G
State when the goods are appropriated to the contract of sale by the seller
------- or by the buyer, whether the assent of the other party is prior or subsequent
to such appropriation. This principle is at variance with the general prin-
ciple contained in the Sale of Goods Act. It must, therefore, be held that
sale of vehicles takes place only when they are appropriated towards their H
236 SUPREME COURT REPORTS (1997)2S.C.R.
A order and the appropriation is only when the vehicles are earmarked for
delivery to tlie S.T.Us. The vehicles so appropriated are always in the State
to the S.T.U: of which the vehicles are earmarked and delivered.
11
(5) in the absence of any Central machinery which can decide
·disputes between the States, viz., where one State claims that a particular
B ·I
transaction is an inter-State sale and the other State claims that it is an
intra-State sale (within that State, i.e., itself), an order once made accepting
Form 'F' as true must not be allowed to be reopened. If it is allow1!d to be
reopened, this Court may provide that the appellant-assessee is entitled to
implead the other State (which has levied tax upon the same transaction
1
C treating it as an' intra-State sale within that State) as a party-respondent
before the assessing authorities in Tamil Nadu (acting under Central Sales
Tax Act) so that an effective adjudication can be made as to the true nature
of the transaction/sale. This Court may also consider whether a direction
should be given to the Unior(of India to create. such a machinery in the
D interest of inter-State trade and commerce and to ensure that the a1ssessees
_are not har~s~~d '.111d prejudiced by trucing the same transaction twice over.
Sri .AK. Ganguly, learned counsel for the State of Tamil Nadu,
disputed thb correctness of the various submissions put fol'Ward by Sri
Parasaran. He supported the reasoning and conclusion of the Madras High
E Court and ~ubmitted that an order under Section 6-A accepting Form 'F'
as true will ordinarily be passed in the course of assessni.ent proceedings
and as partI of the assessment order. There is no reason . to treat an order
under Section 6-A as something different from any other order under the
Act. It is as much amenable to power of reopening as any other order
F under the Act. Whether a particular movement of goods across the boun-
daries of one State to another is a mere movement (i.e., in this case, a
consignment I
of goods by the Head Office to its R.S.O.) or whether the
movement is occasioned by a contract of sale, is a question of fact and is
not a question of law. The said question has to be decided by the ap-
propriate authority in each case having regard to the relevant facts and
G circumstances. The appellant was ill-advised to approach the Madras High
Court by way of writ petitions at the initial stage of proceedings. Nothing •
-
I
prevented the appellant to satisfy the Tamil Nadu authorities that it has
effected no inter-State sales and that the transfer of vehicles was only a
. transfer without effecting a sale. If it succeeds in establishing the said fact,
H ·it is obvious that no Central sales tax will be levied by the Tamil Nadu
ASHOKLEYLANDLID.v. U.0.1.(B.P.JEEVANREDDY, J.) 237
authorities. A
- Article 269 of the Constitution says that "taxes on the sale or pur-
chase of goods other than newspapers, where such sale or purchase takes
place in the course of inter-State trade or commerce", among other taxes, ·
shall be levied and coilected by the Government of India tut shall be
assigned to the States in the manner provided in clause (2) of the said B
Article (vide Article 269(1)(g). "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" is one of the taxes mentioned in clause (1) of Article 269. The
power to levy consignment tax, however, is conferred upon the Parliament c
by virtue of entry 92-B of the Union List. So far no such tax has been levied
by the Parliament. Clause (2) of Article 269 provides that the net proceeds
in. any financial year of any duty or tax mentioned in clause (1) shall not
form part of the Consolidated Fund of India but shall be assigned to the
States within which that duty or tax is leviable in that year and that the D
same shall be distributed among those States in accordance with such
principles of distribution as may be formulated by Parliament by law.
Clause (3) further provides that "Parliament may by law formulate prin-
ciples for determining when a sale or purchase of, or consignment of, goods •
takes place in the course of inter-State trade or commerce".
E
By virtue of clause (1) of Article 286 of the Constitution, the State
- legislature has no power to levy tax on a sale which takes place outside that
State or which takes place in the course of import of goods into or export
of goods out of the territory of India. Clause (2) empowers the Parliament
to formulate, by making a law, principles for determining when a sale or p
purchase of goods takes place outside the State or in the course of import
or export, as the case may be. Clause (3) of Article 286 need not be noticed
for the purposes of this case.
It is well-known that Article 286 has been thoroughly recast by the
Constitution (Sixth Amendment) Act, 1956 which also amended Article 269 G
substantially. It is in pursuance of the said Article, as recast/amended by
Constitution (Sixth Amendment) Act, that the Parliament enacted the
Central Sales Tax Act, 1956. Section 3 defines an. "inter-State sale". Section
4 sets out when a sale or purchase of goods can be said to have taken place
outside a State and Section 5 provides when a sale or purchase of goods ·H
238 . SUPREMECOURTREPORTS (1997] 2 S.C.R.
A can be said to have taken place in the course of import or export. It is
evident that:1these provisions have been made pursuant to Article 286 as
well as clause (3) of Article 269. Section 6 of the Central Sales Tax Act is
the charging section. Section 6-A has been inserted by the Amendment Act ...
61 of 1972 with effect from April 1, 1973. This provision appears to have
B been enacted in the light of the judgment of this Court in Tata Engineering
and Locomofive Company Limited v. Assistant Commissioner of Commer-
cial Tax, Jamshedpur & Anr., (1970) 20 S.T.C. 354. Section 6"A provides
that where any dealer claims that he is not liable to pay tax under the
Central Sales Tax Act in respect of any goods on the ground that the
movement of such goods from one State to another was occasioned by
C reason of trahsfer 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 the said fact shall be upon hini. For that purpose,
he may furnish to the assessing authority, within the prescribed time,· a
declaration duly filled and signed by the principal officer of the other place
D of business o~ by his agent or principal, as the. case may be, containing the
prescribed particulars, along with the evidence of despatch of such goods.
Forms 'F have to be obtained from the prescribed authority. The section
further provides that if the assessing authority is satisfied after such enquiry
• as he may deem necessary, that the particulars contained in the declaration
furnished by the dealer are trne, he may, at the time of or at any time before
E the assessment of the tax payable by the dealer under the Central Sales
Tax Act, make an order to that effect. Thereupon, the movement of goods
to which the declaration relates shall be deemed, for the purpose of this
Act, to have ibeen occasioned otherwise than as a result of sale. It would
be appropricite to set out the section in its entirety :
F
"6A. Burden of proof, etc., in case of transfer of goods claimed
otherwise than by way of sale - (1) Where any dealer claim that he
is nqt liable to pay tax under this Act, in respect of any goods, on
the ground that the movement of such goods from one State to
another was occasioned by reason of transfer of such goods by him
G 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
H as that authority may, for sufficient cause, permit, a declaration,
ASHOKLEYLANDLID.v. U.0.1.[B.P.JEEVANREDDY, J.] 239
duly filled and signed by the principal officer of the other place of A
business, or his agent or principal, as the case may be, containing
the prescribed particulars in the prescribed form obtained from
the prescribed authority, along with the evidence of despatch of
such goods.
(2) If the assessing authority is satisfied after making such inquiry B
- as he may deem necessary that the particulars contained in the
declaration furnished by a dealer under-subsection (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 decla- C
ration related 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 a
·dealer, means the authority for the time being competent to assess
the tax payable by the dealer under this Act." D
The Central Sales Tax Act has not created a machinery of its own to
assess and collect the tax levied thereunder. Probably because the tax will
ultimately go to the Seate in which the said tax is leviable, sub-sections (2)
and (2A) of Section 9 provide that the machinery provisions under the E
respective State sale tax enactment shall be treated as the machinery
provisions under this Act for all purposes. Sub-section (1) of Section 9
provides that the Central sales tax shall be levied by the State from which
the movement of the goods commences. This provision is evidently
relatable to clause (2) of Article 269. Section 13 confers the rule-making
power upon the Central Government for certain purposes and upon State F
government for certain other purposes. (It is not necessary to refer to the
other provisions of the Act for the purposes of this Case.)
Rule 12 of the Central Sales Tax (Registration and Turn-Over)
Rules, 1957 is the rule made pursuant to Section 6-A among other sections
of the Act. Sub-rule (5) of Rule 12 says that the declaration referred to in G
sub-section (1) of Section 6-A shall be in Form 'F'. Sub-rule (6) says that
Form 'F' referred to in sub-rule (5) of Rule 12, shall be the one obtained
by the transferee in the State in which the goods covered by such Form are
delivered. Sub-rule (7) says that the declaration in ·Form 'F' shall be
furnished by the dealer to the prescribed authority upto the time of H
240 SUPREME COURT REPORTS (1997) 2 S.C.R.
A assessment. by the first assessing authority. Clause (a) of sub-rule (8) says
that only the person referred to in Rule 3(1)(a) shall be competent to sign
the declaration/Form 'F'. The Rules also prescribe the form in which Form
'F' shall be!issued. It is in triplicate. It is issued by the prescribed authority
and contains his seal. It has to be signed by the transferee and is addressed
B to the transferor affirming that "the goods transferred to me/us as per
details below have been received and. duly accounted for". The person
signing it is obligated to mention his status in relation to the trans/eror. In
other words, Form 'F in the case before us has to be issued by the person
in charge of the R.S.O. receiving the vehicles from Tamil Nadu - and sent
-
to the app~llant. The appellant, in turn, has to produce the same before
C his assessing authority who shall pass an order accepting it if he is satisfied,
after making the necessary inquiry that the facts stated in the said Form
are true. Su.ch an order means that the movement of goods mentioned in
the said Form from Tamil Nadu to the other State is not by reason of sale
but a mere ltransfer - to wit, not an inter-State sale attracting Central sales
D tax.
By virtue of sub-section (2) of Section 9, the machinery provisions
under the 'I]amil Nadu General Sales Tax Act are imported into the Central
Sales Tax Act, as already noticed. Section 16 of the Tamil Nadu Act
provides for reopening of assessments. It would be sufficient. to notice
E sub-Section (1) of Section 16 which comprises two clauses (a) and (b). The
sub-section ! reads :
"16~ Assessment of escaped turnover. -- (l)(a) Where, for ~ny
reason, the whole or any part of the turnover of business of a dealer
F has c;:scaped 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 expiry of the year to which the tax relates,
determine to the best of its judgment the turnover which has
--
escaped assessment and assess the tax payable on such turnover
aftJr making enquiry as it may consider necessary and after giving
G the dealer a reasonable opportunity to show cause against such
assessment.
(b)lwhere,for any reason, the whole or any part of the turnovei:"-
of business of a dealer has been assessed at a rate lower than the
H rate at which it is assessable, the assessing authority may, at any
ASHOKLEYLANDLTD.v. U.O.L [B.P.JEEVANREDDY, J.] 241
time within a period of five years from the expiry of the year to A
which the tax relates, re-assess the tax due after making such
enquiry a> it may consider necessary and after giving the dealer a
reasonable opportunity to show cause against such re-assessment."
(Emphasis added) B
Sub-section (2) provides that where the escapement of income is due
to wilful non-disclosure of the dealer, penalty can also be levied. Sub-sec-
tion (3) says that the power under section (1) can be exercised. even if the
order of assessment is the subject~ matter of revision or appeal. Sub-sec-
tions (4), (5) and (6) deal with the manner in which the period of limitation C
prescribed by the section should be computed. Section 32 confers upon the
Deputy Commissioner the power to revise the orders or proceedings of any
subordinate authority made under the provisions specified therein. This
power can be exercised suo moto· only where the order is prejudicial to the
interests of Revenue. This power has also to be exercised within five years D
from the date of the order proposed tci be revised. The contentions urged
by Sri Parasaran have to be examined in the light of the above provisions
of law and certain decisions, to which he has invited our attention.
We find difficult to agree with Sri Parasaran that Section 6-A creates
a conclusive presumption. It is true that if the particulars stated in the E
declaration/Form 'F' are found to be true, the assessing authority shall pass
an order, either at the time of making of the assessment or at any time
before, that the contents of Form 'F' are accepted as true. On such order
being made, it shall be deemed that the movement of goods to which the
form relates has been occasioned otherwise than as a result of sale. But p
there are no words in Section 6-A which can be said to create a conclusive
presumption or clothe the "deemed" fact with a conclusive character. All
that it says is that if the particulars stated in Form 'F' are true, certain fact
shall be presumed - or shall be or deemed to have taken place, as the case
may be. It is not possible to agree that the word "deemed" in sub-section
(2) of Section 6-A can be understood as creating a conclusive presumption G
nor is it possible to agree that the fact "deemed" is final and conclusive.
Section 6-A merely states a rule of evidence. It says that where a dealer
claims that certain goods have been moved from one State to another and
that such movement has occasioned otherwise than as a result of sale, the
burden of proving the same lies upon him. Besides creating the said rule H
242 SUPREME COURT REPORTS [1997] 2 S.C.R.
A of evidence, the section also sets out how the said burden can be dis-
charged. It can be discharged by producing Form 'F' and on the particulars
stated in the said form being found true on being enquired into by the
assessing officer. From this it does not follow that once an order is made
accepting Form 'F' as true, it is not subject to the power of reopening or
B revision contained in Section 16 and 32 of the Tamil Nadu General Sales
Tax Act read with Section 92 of the Central Sales Tax Act. After all,
Section 6-A is also one of the provisions in this Act. There is no reason to
elevate it to a higher status than the rest of the provisions. If it were the
intention of the Parliament to invest the "deemed" fact with the status of a
conclusive presumption, the Parliament would have said so. The Court
C cannot supply that requirement. Ordinarily speaking, an order accepting -
or rejecting - Form
I
'F' as true will be passed only during the assessment
proceedings. T/lere may be cases where such an order is passed earlier to
the making of the assessment. Even so, such an order is incidental to and
,integrally connected with the assessment of the dealer. The High Court has
D characterised the said provision as a step-in-aid of assessment. Be that as
it may, if the very assessment is subject to the power ·of reopening or
revision, it is un-understandable as to how an order under Section 6-A(2)
is not similarly amenable. The power to reopen can be exercised under
Section 16 of the Tamil Nadu General Sales Tax Act "where for any reason,
the whole or any part of the turnover of business of a dealer has escaped
E assessment to tax". The power is very wide, though it may be that it should
not be mechanibilly or lightly exercised.
'11 .
Sri Parasaran has relied upon certain decisions in support of his
contention. The first decision relied upon is in Izhar Ahmad Khan v. Union
F of India, [1962) Suppl. 3 S.C.R. 235, which dealt inter alia with Section 9
of the Citizenship Act, 1955. Sub-section. (1) of Section 9 provides that if
any citizen of India voluntarily acquires citizenship of another country, he
shall cease to be a citizen of India with effect from the date of such
acquisition. Sub-section (2) says that if any question arises as to whether,
when or how any person has acquired citizenship of another country, it
G shall be determined by such authority in such manner and having regard
to such rules ot'1 evidence as may be prescribed in that behalf. Rule 30 of
the Rules fram~d under the Act prescribes Central Government as the
authority to decide the said question while Rule 3 incorporates a conch1sive
presumption, According to it, "the fact that a citizen of India has obtained
H on any date a passport from the government of any other country shall be
ASHOKLEYLANDLID.v. U.O.I.[B.P.JEEVANREDDY, J.) 243
conclusive proof of his having voluntarily acquired the citizenship of the A
country before that date". The petitioners challenged the validity of Rule
3 saying that Rule 3 was not a mere rule of evidence but a rule of
substantive law and, therefore, outside the purview of the delegated
authority conferred by Section 9(2) as well as general rule-making power
conferred upon the Central Government by Section 18. Indeed, Section B
9(2) itself was impugned on the ground that it purported to deprive the
petitioners of their fundamental right under Article 19(1)(e) of the Con-
stitution. All these contentions were rejected. We are unable to see how
the ratio of or discussion in this decision is of any help to the appellant
herein. Rule 3 of the Citizenship Act expressly enacts a conclusive
presumption and that called for a discussion as to the nature of presump- C
tions, the types of presumptions and their evidentiary value.
Mahant Dharam Das v. State of Punjab, [1975] 3 S.C.R. 160 dealt with
certain provisions of the Sikh Gurudwara Act, 1925. Section 3(4) of the
Act uiade the declaration in the notification issued under Section 3(2) that D
a parlicular institution is a Sikh Gurudwara conclusive and beyond chal-
lenge. The constitutionality of the said provision along with certain other
provision was challenged by the appellants before this Court This Court
examined the historical background to the said Act, the scheme of the Act
and its object and repelled the challenge to the validity of its provisions.
The court held that the determination under Section 3(4) is not a judicial E
determination and that it was designed to obviate the prospect of a
protracted litigation in a matter involving the religious sentiments of a large
section of a sensitive people proud of their heritage. Creation of the said
conclusive presumption by the statute, the Court held, was neither incom-
petent nor discriminatory. We may again point out that this decision also F
dealt with a statutory provision which expressly created a conclusive
presumption unlike the case before us.
Section 29-B of the Uttar Pradesh Sales Tax Act, considered by this
Court in Sodhi Transport v. State of Uttar Pradesh, [1986] 1 S.C.R. 939,
provided that "when a vehicle coming from any place outside the State and G
bound for any other place outside the State passes through the State, the
driver or other person in charge of such vehicle shall obtain in the
prescribed manner a transit pass from the officer in charge of the first
check post or barrier after his entry into the State and deliver it to the
officer in charge of the check post or barrier before his exit from the State, H
244 SUPREME COURT REPORTS [1997) 2 S.C.R.
A failing which it shall be presumed that the goods carried thereby have been
sold within the State by the owner or person in charge of the vehicle". It is
relevant to notice that the said provisions did not create a conclusive
presumption but only a rebuttable presumption of law. Since the said
provision did not create a conclusive presumption but permitted the person
B concerned to rebut the said presumption by such evidence, as he may place
before the authority, the validity of the said provision was held to be beyond
challenge. This decisions, in our opinion, in equally of no help to the
appellant herein.
Sri Parasaran then relied upon the decision in Balabhagas Hulas-
C chand & Anr. v. State of Orissa, (1976) 37 S.T.C. 207. At Page 214, Faz! ·
Ali, J. set out certain situations to illustrate when does an inter-State sale
take place or for that matter it does not. Case No. II reads thus :
"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
D 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 tci
sell rior is the movement occasioned by the sale. The seller himself
E take~ the goods to State Y and sells the goods there. This is,
ther~fore, 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 Aot being an inter-State sale." ·
I
Sri Par~saran says that the facts of his case fall squarely within the
F said Case No .. II. It is, however, relevant to riutice that "Case No. II" in this
decision has been explained in a later decision of this Court in Sahney Steel
and Press Works Ltd. & Anr. v. Commercial Tax Officer & Ors., (1985) 60
S.T.C. 301. This is how the said illustrative Case No. II in Balabhagas
Hulasd1and has been dealt with in Salmey Steel and Press :
G "Considerable reliance has been placed by the petitioners on one
of the illustrations given by this Court in Balabhagas Hulaschand
v. State of Orissa, (1976) 37 STC 207 (SC) where case No. II was
set out as follows :
H 'Case No. II. -- A, who is a dealer in State X, agrees to sell goods
ASHOKLEYLANDLTD.v. U.O.I.[B.P.JEEVANREDDY, J.] 245
to B, but he books the goods from State X to State Y in his own A
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 B
takes the goods 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 sales.'
It is not clear from this illustration whether the goods were C
particular and specific goods earmarked for delivery to the buyer
when they commenced their movement from State X. Apparently
not, because it is pointed out that the movement of the goods was
neither in pursuance of the agreement to sell nor was the move-
ment occasioned by the sale. The case is distinguishable from the D
present one where particular goods where manufactured in
Hyderabad in satisfaction of an order placed by the buyer who
desired delivery outside the State. The goods moved from the
registered office at Hyderabad as a result of a. covenant in the
contract of sale or an incident of that contract that the goods
manufactured at Hyderabad according to the specifications stipu- E
lated by the buyer should be the very goods delivered to him
.outside the State."
Indeed, the decision in Sahney steel and Press is precisely, what the
Tamil Nadu State says is, the factual position in cases where notices to F
- reopen the assessments has been given. The facts of Sahney Steel and Press
are the following : the petitioner-company was engaged in the manufacture
and sale of certain steel products which were utilised as raw-material for
making electronic motors, transformers etc. ·The petitioner's registered
office and factory was at Hyderabad in Andhra Pradesh. It had branches
in Bombay, Calcutta and Coimbatore which were engaged in effecting sales G
and looking after sales promotion and liaison work. The branches received
orders from customers within and outside their respective States for the
supply of goods conforming to definite specifications and drawings and
advised the registered office at Hyderabad. The petitioner thereupon
manufactured the goods according to the said design and specifications, at H
246 SUPREME COURT REPORTS [1997] 2 S.C.R.
A Hyderabad,I and despatched them to the respective branches by way of
transfer of stock. Such goods were booked to "self' and sent by lorries. The
goods received by the branches were entered iuto the stock account of the
branches ~nd kept in stock for ultimate delivery to the customers, The
customerslexamined the goods at such branches and accepted them. The
B branches ~aised the bills and received the sale price. They also furnished
from 'F' to the registered officer at Hyderabad. On these facts, the question
arose wh~ther it is an inter-State sale taxable in the State of Andhra
Pradesh o~ whether it is an intra-State sale in the other State where the
goods are I delivered. It was held that it was a case of an intra-State sale
and that the movement of goods from Hyderabad in Andhra Pradesh to
C the other $tate was as a result of and an incident of the contract of sale.
Of course,: it was a case where the goods were manufactured according to
the design' and specifications supplied by customers and then despatched
from Hyderabad to such other State. Be that it may, since we are not
concerned' with the facts in these appeals, it is not for us to what is the
D factual situation in the matters now pending before the assessing
authorities and what is the proper inference to be drawn therefrorm.
The last decision relied upon by Sri Parasaran is in Chunni Lal
Parshadi Lal v. Commissioner of Sales Tax, Lucknow, (1986) 62 S.T.C. 112.
Where a dealer sold the goods to another registered dealer and if the
E purchasing dealer furnished the certificate in Form III-A (which means
that the goods purchased were intended for resale in the same condition)
the selling dealer was not liable to pay tax under the Uttar Pradesh Sales
Tax Act. In that case, the purchasing dealer furnished Form III-A which
was produced by the assessee-dealer and on that basis, his sale was not
F taxed. Subsequently, it was found that the purchasing dealer did not resell
those goods but used them otherwise. On that basis, the assessment of the ·
selling dealer was sought to be reopened. It was held by this Court that the
reopening of assessment was incompetent in law inasmuch as there was no
finding that there was collusion between the selling dealer and the purchas-
ing dealer. It was held that the mere fact that the purchasing dealer is
G subsequently found to have issued Form III-A wrongly does not confer
upon the assessing authority the jurisdiction to reopen the assessment of
the selling dealer. The principle of this decision, we find, has no analogy
to the situation in the appeals before us.
H Wear~, therefore, of the opinion that Section 6-A does not create a
-.(\
ASHOK LEYLAND LTD. v. U.O.I. [B.P. JEEVAN REDDY, J.] 247
conclusive presumption and that an order accepting Form 'F', whether A
passed during the assessment or at any point earlier thereto, is ultimately
a part and parcel of the· order of assessment. Its amenability to power of
reopening and revision depends upon the provisions of the concerned State
sales tax enactment by virtue of Section 9(2). It is also not possible to agree
that an order under Section 6-A(2) has an independent existence. It does B
not have. An order refusing to accept Form 'F' may or may not be
appeallable independently depending upon the proviSions of the local sales
tax enactment but it is certainly capable of being questioned in the appeal
preferred against the order of assessment - for the simple reason that an
order accepting or rejecting Form 'F' does affect the quantum of turnover
- taxable under the Act. So far as the power of reopening is concerned, it is C
enough for us to say that if the order(s) a.ccepting Form(s) 'F' is sought to
be reopened, it can be done as part of reopening of assessment or, may
be, independently - that depends upon the language of the relevant
provision in the local sales tax enactment. In the present case, the provision
relevant is Section 16 of the Tamil Nadu General Sales Tax Act. From the D
language of Section 16, it appears that it may be possible to reopen an
order accepting Form 'F' as true without, at the same time, reopening the
assessment. Even so, it must be noticed that such a reopening necessarily
leads to revision/modification of the assessment order. It is equally obvious
that if the reopening is confined to the order accepting Form 'F' as true,
the inquiry shall be confined to the matters relevant thereto. Whether that E
power has been exercised validly in these cases does not fall for our.
consideration. Hence, no opinion need be expressed on that aspect. The
fact that the assessments are sought to be reopened only in respect of the
turnover relating to sale of vehicles to State Transport Undertakings in
various State but not with respect to turnover relating to sales to persons F
other than S.T.Us. cannot be a ground to invalidate the proceedings taken.
Sri Parasaran laid stre.~s upon the meaning and content of Section 4
of the Central Sales Tax Act. He submitted that the law is different in the
case of specific or ascertained goods and unascertained or future goods.
According to the principles of this section, Sri Parasaran says, the sale of G
vehicles must be held to have taken place in the State in which they are
delivered (to the S.T.U. concerned). But this is again a question of fact
upon which no opinion can be expressed in these proceedings. Whether
the contract of sale was in respect of specific or ascertained goods or
whether it was in respect of unascertained or future goods and if it is the H
248 SUPREME COURT REPORTS (1997) 2 S.C.R.
A latter, when did the appropriation of the goods to the contract of sale take
plade are all questions of fact which do not arise for consideration in these
appeals. Sri Parasaran says that even according to the show-cause notices
issued by the Tamil Nadu authorities under Section 16 of the Tamil Nadu
General Sales Tax Act read with Section 9(2) of the Central Saids Tax Act,
there is only one sale, namely, the sale to the S.T.U. in the other State
B concerned. This sale, according to the learned counsel, has taken place in
the other State. May be or may not be. According to the respondents, the
sale that has taken place is an inter-State sale. This is yet again a question
of fact..
C Having thus disposed of the main contentions of the appellant, we
must yet say that the situation the appellant is facing is no doubt real, which
may indeed put it in good amount of jeopardy. If the vehicles which have
been sold to, say, Maharashtra S.T.U. have been moved to the appellant's
R.S.O. in Maharashtra and that R.S.O. has issued Form 'F' (which Form
D 'F' has been accepted by the Tamil Nadu authorities during the course of
assessment of the appellant for the relevant assessment year) reopeping the
said assessment/orders accepting Forms 'F' after a number of year's, seek-
ing to treat the said movement of goods as consequent upon or incidental
to contract(s) of sale (and, therefore, amounting to inter-State sale taxable
in the State of Tamil Nadu does present the appellant with a serious
E problem inasmuch as it says that it has already paid tax on sale of said
vehicles in Maharashtra under the Bombay Sales Tax Act. Sri Parasaran
submits that unless the sales are effected within the purchasing State, those
States (and their S .T .Us.) are not willing to purchase from the appellant.
Learned counsel suggests that inasmuch as the State governments, general-
F ly speaking, are strapped for funds and since sales tax is the major source
of revenue for all of them, every State is trying to derive the maximum
revenue on this account and because the Central sales tax levied and
collected in a State ultimately goes back to that State, the Tamil Nadu State
is anxious to treat the consignment/transfer of vehicles as inter-State sales.
The learned counsel bitterly complains about the attitude adopted by the
G Sales Tax authorities in Tamil Nadu who, according to him, are pre-deter-
mined to treat the transactions as inter-State sales and levy tax thereon
ignoring the true facts and the correct legal situation. While we do not
express any opinion on the correctness or otherwise of this submission, this
case brings to the fore the advisability or necessity of having a. Central
H mechanism which would decide once for all questions· of this nature. We
ASHOKLEYLANDLTD.v. U.0.1.(B.P.JEEVANREDDY, J.) 249
may elucidate the point. The Maharashtra State has levied tax upon the A
sale of vehicles by the appellant to Maharashtra S.T.U. under the Bombay
Sales Tax Act treating them as sales effected in the State of Maharashtra.
Those orders have become final, now the Tamil Nadu authorities are
seeking to reopen the assessment and proposing to treat the said movement
of vehicle from Tamil Nadu to Maharashtra as inter-State sales. Suppose,
tomorrow it is held by the Tamil Nadu authorities that they were indeed B
inter-State sales and tax is levied and collected by the Tamil Nadu State,
can the appellant go and legitimately ask the Maharashtra authorities to
refund the tax paid by it on the sale of vehicles in Maharashtra? It may not
be able to do so, as the law now stands. The Maharashtra authorities may
well tell the appellant that those orders have become final .and their orders C
cannot be reopened because authorities of another State have taken a
contrary view. We are not sure whether it is possible to stipulate that while
deciding the question whether the 'said transfer of vehicles constitutes
inter-State sale or not, the Tamil Nadu authorities shall give notice to,
implead the Maharashtra Sales Tax authorities, hear them and decide so D
that their decision would be binding upon the Maharashtra authorities. The
law as now in force does not appear to permit such a course more
paTticularly in a situation whether the orders of Maharashtra Sales Tax
authorities have become final, as stated .above. The Maharashtra
authorities may well refuse to appear before the Tamil Nadu authorities.
They may not accept the jurisdiction of Tamil Nadu authorities over them E
or over the orders passed by them. They may also refuse to submit to the
jurisdiction of the Tamil Nadu authorities. On this aspect, we must, how-
ever, notice an observation in a recent decision of this Court in Bharat
Heavy Electricals Limited v. Union of India, (1996] 4 S.C.C. 230, wherein
the following observation occurs at Page 239 : F
"If a dispute arises in which State is the tax lawfully leviable, the
authorities under the Act have got to decide it. If, in a given case,
an assessee says that the particular transaction which is sought to
be taxed in State 'A' has already been taxed in State 'B', nothing
prevents him from impleading State 'B' in proceedings in St&te 'A' G
and have the matter decided in the presence of all parties. It must
be remembered that while acting under the Central Sales Tax Act,
the State machinery acts as the machinery of the Central Govern-
ment and not as the machinery of the State Government; in law,
it is as if it belongs to the Central Government. This view of ours H
250 SUPREME COURT REPORTS [1997] 2 S.C.R.
A get reinforced if one keeps the provisions in Section 8(2-A) of the
Central Sales Tax Act view."
The said observation, no doubt, projects a point of view, but it has to be
understood in the particular facts of that case. In that case, orders of Sales ·
B Tax authorities of any particular State had not become final. When more
than one State sought to tax the same transaction on different bases,
B.H.E.L. came to this Court by way of a writ petition under Article 32 of
the Constitution and certain directions were made by this Court. Moreover,
the matter there was decided by the High Court and the various State
C governments who were impleaded as respondents did not object to the
jurisdiction of the High Court to decide the dispute - dispute as to the true
nature of the transaction and who should tax it. In this matter, the situation
is different. The orders of several State authorities have become final and
there is no way provided by the Act following which the finality of those
orders can be undone and the question of the true nature of the transaction
D decided afresh with participation of ilie State authorities of both the States.
There is yet another fact, viz., the state governments are objecting to the
jurisdiction of Tamil Nadu Sale Tax authorities to summon them and
decide the question which may require them to revise their own orders.
This situation did not arise in B.H.E.L. It is in this situation that the idea
E of a Central mechanism has come to fore. This does not of course, mean
that this court cannot devise an appropriate method to meet the interests
of justice. It can. Appropriate directions can always be given to both the
concerned States to submit to the jurisdiction of a particular designated
Court or Tribunal which will decide the question regarding the true nature
p of the transaction after hearing all the afk::ted parties. The fact that those
orders of authorities in certain proceedings have become final may not
stand in the way of this Court giving appropriate directions under Article
32 or 136 or 142, as the case may be, but that situation has not yel arisen
in this case. Let the Tamil Nadu assessing authorities first decide the
G matters before them. Thereafter, if the orders 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 ifit decides against the appellant, to wit, if it holds that the sale
of vehicles to the S.T.Us. of various States are inter-State sales and if it is
found that those very transactions have also been taxed as intra-State sales
H under the State sales tax enactments of another State, that would be the
stage for considering the advisability of giving appropriate directions of the
ASHOK LEYLAND LTD. v. U.0.1. (B.P. JEEVAN REDDY, J.] 251
nature contemplated above by this Court - that is, of course, if by that time, A
no c~,ntral mechanism to meet such a situation comes into existence.
In the interest of inter-State trade and commerce, the suggestion for
creation of a central mechanism to decide such dispute - which are really
in nature of inter-State disputes - may be well worth considering; every
dealer affected may not be in a position to approach this Court for B
appropriate directions. It is for the Government of India to consider this
aspect and take necessary decision in that behalf.
In the light of the above discussion, we dismiss these appeals. If the
assessing authorities decide against the appellant, it shall be open to them
to file appeal(s) before the Tribunal directly. (This direction is given to C
shorten the litigation and in the interests of justice.) If and when the
Tribunal decides against the appellant, it shall be open to the appellant to
approach this Court for appropriate directions. In the circumstances of the
case, it is further directed that in case the Tamil N~du Sales Tax Appellate
Tribunal comes to the conclusion that the transactions in question are D
inter-State sales upon which Central sales tax is leviable in the State of
Tamil Nadu, the State of Tamil Nadu shall not enforce their demand for
a period of eight weeks from the date of the decision of the Tribunal.
Further, till the issue is decided by the Sales Tax Appellate Tribunal, no
Central sales tax shall be demanded from .the appellant, provided it is E
established by the appellant that in respect of the same tr~saction, the
appellant has paid tax in another State treating it as an intra-State sale in
that other State.
The appeals are accordingly dismissed. No. costs.
l.M.A. Appeals dismissed.
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