2025-VIL-1095-CESTAT-DEL-CST
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VAT Tribunal

Central Sales Tax Act, 1956 - Section 3(a) & Section 6A - Inter-State Sale or Stock Transfer - Burden of Proof - Occasioning Movement of Goods - Pre-existing Purchase Order – Appellant moved its goods from a mother warehouse in Maharashtra to various Carrying and Forwarding Agents (CFAs) located in other States to maintain pre-determined 'Normative Inventory Levels' at the CFA locations - Appellant furnished Form-F declarations to support its claim of stock transfers under Section 6A of the CST Act, 1956 – Revenue of the case that the integrated supply chain created an inextricable link between the movement of goods from Maharashtra and the eventual sale to distributors, thus constituting an inter-State sale under Section 3(a) of the CST Act - Whether the movement of goods from the company's mother warehouse in one State to its CFAs in other States is an inter-State sale that occasions the movement of goods due to a pre-existing contract of sale under Section 3(a) of the CST Act or if it is a transfer of goods to an agent otherwise than by way of sale, qualifying as a stock transfer under Section 6A of the Act – HELD - The movement of goods from the mother warehouse to the CFAs constitutes a stock transfer and not an inter-State sale. The goods are standard, off-the-shelf products and their movement to CFAs is not occasioned by any pre-existing purchase order from a distributor but is undertaken proactively to maintain inventory at normative levels based on sales forecasts. The appropriation of specific goods against a purchase order occurs only at the CFA's location when a 'Picking List' is prepared for delivery. Until that point, the goods remain unappropriated stock owned by the company, co-mingled with other stock, and can even be transferred from one CFA to another - The fact that delivery from a CFA to a distributor is significantly faster than the transit time from the mother warehouse to the CFA makes it physically impossible for the movement from the mother warehouse to be a direct consequence of a distributor's order. By furnishing Form-F, the company discharged its initial burden of proof under Section 6A, shifting the onus to the revenue to establish a pre-existing sale agreement, which it failed to do. The movement of goods is to place them in the stream of trade for future sales, not in the stream of a concluded sale - the transactions are in the nature of stock transfers falling within the scope of Section 6A of the CST Act and not inter-State sales under Section 3(a) of the Act - The appeals filed by the State are dismissed
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