Section 6A of the CST Act: Burden of Proof for Inter-State Stock and Branch Transfers

When goods move from one State to another, the movement is not necessarily an inter-State sale. Section 6A of the Central Sales Tax Act, 1956 determines who must prove that the goods were transferred to a branch, agent or principal otherwise than by way of sale.

What is a transfer otherwise than by way of sale?

A branch transfer is a dispatch of goods by a dealer to another place of its own business. A consignment or agency transfer involves dispatch to an agent or principal without an underlying sale occasioning the movement. The legal character of the movement depends on the transaction and supporting records, not merely on its description in the invoice or delivery challan.

Section 3 explains when a sale takes place in the course of inter-State trade or commerce. Section 6 provides for CST liability on qualifying inter-State sales. Section 6A addresses the burden of showing that a movement of goods was not occasioned by a sale.

Section 6A(1): Who bears the burden of proof?

Where a dealer claims that goods moved from one State to another because of a transfer to another place of the dealer's business, or to its agent or principal, and not because of a sale, the burden of proving that claim rests on that dealer.

Section 6A(1) provides for furnishing a declaration in the prescribed Form F, duly completed and signed by the principal officer of the other place of business or by the agent or principal, as applicable, together with evidence of dispatch of the goods. The declaration is to be furnished to the assessing authority in the prescribed manner and within the prescribed time or any permitted extended time.

The provision also contains a statutory consequence for failure to furnish the declaration: for purposes of the CST Act, the movement is deemed to have been occasioned as a result of sale. The applicable statutory text, rules and judicial interpretation must be examined for the assessment period concerned; a dealer should not assume that a stock-transfer label alone defeats CST liability.

Section 6A(2): Inquiry and order of the assessing authority

Under Section 6A(2), the assessing authority may conduct the inquiry considered necessary into the particulars of the declaration furnished under subsection (1). If satisfied that those particulars are true, the authority may record an order to that effect at the time of, or before, assessment. The movement covered by that declaration is then treated, for CST purposes, as having occurred otherwise than as a result of sale.

The section also addresses the consequences of an order and the treatment of the transaction in subsequent proceedings. The Explanation defines assessing authority as the authority competent at the relevant time to assess the dealer's CST liability. The legal effect of any earlier assessment or reassessment must be checked against the applicable version of the law and binding judicial decisions.

Form F, supporting documents and practical compliance

Rule 12(5) of the Central Sales Tax (Registration and Turnover) Rules, 1957 prescribes Form F. For an applicable CST-period branch or consignment transfer, a dealer should preserve records capable of establishing the actual nature of the movement, including:

• Form F declarations, where applicable, with correct particulars and period coverage.
• Dispatch records, stock-transfer invoices, delivery challans, e-way or transport documents where applicable, lorry receipts and goods receipts.
• Branch stock registers, receipt acknowledgments and inventory reconciliation.
• Agency or consignment agreements, accounts, correspondence and evidence of subsequent handling or sales.
• Books of account demonstrating that the movement was not occasioned by a pre-existing sale contract.

The Supreme Court and other courts have considered the scope of the burden and the evidentiary role of Form F in differing factual and statutory contexts. In particular, a dealer should verify the law applicable to the relevant period before relying on older decisions concerning alternative modes of proof.

How does GST affect inter-State branch transfers?

Under GST, movement between distinct persons, including registrations of the same legal entity in different States, may constitute a supply even without consideration under Section 7 read with Schedule I of the Central Goods and Services Tax Act, 2017. For GST-covered goods, relevant GST and IGST provisions, valuation rules and documentation replace the earlier CST Form F approach.

Conversely, Section 6A continues to matter for qualifying movements of goods remaining within the CST framework, and for disputes or assessments relating to periods before the GST transition. Applicability to particular goods should be verified with the current statutory definition of goods in Section 2(d) of the CST Act.

Illustration: Branch dispatch compared with an inter-State sale

If a dealer in Delhi transfers qualifying non-GST goods to its own branch in another State for stockholding, and no sale occasions the movement, Section 6A governs the proof of the claimed branch transfer. If, however, goods move pursuant to a sale contract with a customer in the other State, merely routing the goods through a branch does not automatically make the transaction a non-sale transfer. The contracts, movement, ownership records and relevant statutory tests determine the result.

Official legislation and further reading

• India Code: Central Sales Tax Act, 1956 — Sections 2, 3, 6, 6A and 13.
• Central Sales Tax Act, 1956: official Act PDF.
• Central Board of Indirect Taxes and Customs — GST legislation, rules and notifications.
• India Code — statutory amendments and legislative material.

Updated: 6 October 2026. This overview explains the statutory framework; the applicable assessment year, State rules, amendments, notifications and judicial rulings should be checked for individual cases.