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