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Capital Power Systems Limited v/s Commissioner of Trade Tax

    Trade Tax Revision Appeal No. 456 of 2002

    Decided On, 23 August 2002

    At, High Court of Judicature at Allahabad

    By, THE HONOURABLE MR. JUSTICE R.B. MISRA & THE HONOURABLE MR. JUSTICE J. CHELAMESWAR

    For the Appearing Parties: B.K. Pandey, Kunwar Saxena, Advocates.



Judgment Text

R.B. MISRA, J.


(1) THIS present trade tax revision has been preferred under Section 11 of the U. P. Trade Tax Act, 1948 (in short called "the Act") against the order dated June 26, 2002 passed in Second Appeal no, 332 of 2002 (2002-2003)--Section 13-A (6) of "the Act". Heard Sri Kunwar Saxona, learned counsel for the applicant/ revisionist and Sri B. K. Pandey, learned Standing Counsel for the Commissioner of Trade Tax/revenue and with the consent of the parties, this revision is disposed of finally at this stage under second proviso to Rule 2 of chapter XXII of the Allahabad High Court Rules, 1952.


(2) THE facts necessary for adjudication of the present revision are that the applicant is a public limited company and is registered under U. P. as well as Central Sales Tax Act as also Central excise Act and is engaged in the manufacture and sale of energy measuring instruments (electric meters) of State Electricity Board and other public sector enterprises as the buyers. It appears that the applicant/ revisionist purchased component parts of the meters, such as, frames and magnet yoke, valued at Rs. 3,31,808 from Auto and General Castings Private Ltd. , Delhi, a regular supplier of the applicant for which a "form 31" No. 2278535 was despatched, however, the goods in question were being transported through truck No. DL-1l/c-8997. On interception trade Tax Officer, Mobile Squad, on April 8, 2002 found that the consignment was not accompanied with the declaration "form No. 31". Therefore, a notice purported to have been issued under Section 28-A of "the Act". The reply of the applicant/revisionist was not satisfactory ; therefore, goods were seized on April 10, 2002 on the estimated value of Rs. 3,32,000 and security three times to the tax payable, i. e. , Rs. 99,600 was demanded to release the goods. Against the above order a representation under Section 13-A (6) of "the Act" was filed before the Assistant Commissioner (Enforcement) which was rejected on April 15, 2002. Being aggrieved appeal was filed before the Trade Tax Tribunal, where it was contended on behalf of the applicant/revisionist that there was no check-post established on way from Delhi to Noida where goods were being transported and since "form No. 31" has already been despatched and by inadvertence it was not handed over to the person-in-charge of the vehicle, therefore, the omission on the part of the supplier/driver could not be taken to be an intention to evade payment of tax on the part of the applicant. It was contended that goods in nature are raw material, component parts and were not meant for resale as such the goods being transported without "form No. 31" could not be considered to be an attempt to evade payment of tax. According to the applicant/revisionist the entire sales were made to State Electricity Board and not to the general customers and therefore the applicant was entitled to the benefit of "cenvat" under Central Excise Act, 1944 on declaring the import of goods. However, learned tribunal by its order dated June 22, 2002 dismissed the appeal.


(3) IN 1998 UPTC 640 (Commissioner of Sales Tax v. Toni Electronics Ltd.), this Court observed that


"a division Bench of the High Court in Jain Shudh Vanaspati Ltd. , Ghaziabad v. State of u. P. [1983) 53 STC 54 ; 1983 UPTC 198 has held that the absence of the requisite documents which are required to be accompanied the goods sought to be imported in terms of Section 28-A of 'the Act' by itself may not be sufficient to sustain the penalty in a given case. It was pointed out that in addition it must be shown that there was material on record to indicate that the goods were imported in an attempt to evade assessment or payment of tax due or likely to be due under the Act. In other words unless the twin conditions, namely, the absence of relevant document and the intention to evade assessment or payment of tax are established, no penalty can be imposed. "


(4) LEARNED counsel for the applicant/revisionist has placed reliance on 1998 UPTC 640 (Commissioner of Sales Tax v. Toni Electronics Ltd. , Noida), where the opposite party dealer was a business of manufacture and sale of video cassettes and video magnetic tape, etc. , and has established new unit and had been claiming exemption from sales tax under Section 4-A of "the act". The respondent dealer was importing some material for business without form Nos. 31/32 in contravention of Section 28-A of "the Act" where the seized goods were subsequently released against the security and penalty was imposed under Section 15-A (1) of "the Act". First appeal was rejected and the second appeal was also allowed and the penalty was knocked off. The revision of revenue was dismissed following the decision of Jain Shudh Vanaspati [1983] 53 stc 54 (All.); 1983 UPTC 198 with observation that


"in the instant case the charge against the assessee was, as already stated, that the goods were imported without 'form 31'. This has also been held concurrently by the first appellate authority and thereafter in second appeal by the trade Tax Tribunal. The first appellate authority had sustained the penalty on the finding that mens rea was not an essential ingredient in the imposition of penalty under Section 15-A (1) (o) of 'the Act'".


(5) IN reference to Jain Shudh Vanaspati [1983] 53 STC 54 (All); 1983 UPTC 198 this Court has observed that


"the Tribunal has in categorical terms recorded a finding that there was no intention to evade payment of tax when the goods were sought to be imported without 'form 31'. It has held that in the period to which the transaction related, the turnover of the assessee was exempt from the payment of tax because of the eligibility certificate granted to it under Section 4-A of 'the Act'. It further held that the goods sought to be imported were spare parts of certain machinery and were meant to be used as such in the machinery installed by the assessee. The assessee was not a dealer in spare parts and their import was not for the purpose of carrying on business. This factual position is also not controverted by the Revenue nor was disputed before this Court by the Standing Counsel".


(6) LEARNED Counsel for the applicant/revisionist has referred and relied on 1998 UPTC 642 (Commissioner of Sales Tax v. Super Cassette Industries Ltd. , Noida) where the respondent-dealer was dealing manufacture and sale of T. V. sets and other electrical goods; seized goods while importing without form No. 31/32 was accompanied in contravention of section 28-A of "the Act" which was subsequently released against the security. The penalty imposed by the assessing authority was partly allowed in first appeal and in second appeal it was fully allowed ; the revision by Revenue was dismissed and penalty was knocked off, following the decision of Jain Shudh Vanaspati [1983] 53 STC 54 (All.); 1983 UPTC 198 as well as prakash Pipes and Industries, New Delhi v. Commissioner of Sales Tax, U. P. , Lucknow 1997 uptc 328.


(7) LEARNED Counsel for the applicant/revisionist has submitted that this honourable Court has examined the provisions of subsection (6) of Section 28-A of "the. Act" in a series of cases, some of which were decided subsequent to the aforesaid amendment by U. P. Act No. 31 of 1995. In the case of Deshraj Singh v. Commissioner of Trade Tax 1995 UPTC 871 and Elder pharmaceuticals Limited v. Commissioner of Trade Tax [1999] 115 STC 448 (All.); 1999 UPTC 931, the goods were seized on October 24, 1994 and June 12, 1999 respectively, i. e. , on a date subsequent to the amendment by U. P. Act No. 31 of 1995. In both these cases it was held that the seizure of goods was not justified even when the goods were not accompanied with form No. 31 for the reason that in the facts and circumstances of the case there was no material to believe that an attempt to evade payment of tax was being made.


(8) IN the recent case Indian Trading Co. v. Commissioner of Trade Tax 2002 UPTC 593, this honourable Court again held that the seizure of goods on the ground that the consignment was not accompanied with form No. 31 was unjustified if, in the facts and circumstances of the case, there appeared to be no intention to evade payment of tax.


(9) ACCORDING to the applicant/revisionist by a series of decisions right from judgment in the case of Jain Shudh Vanaspati Ltd. v. State of U. P. [1983] 53 STC 54 (All.); 1983 UPTC 198 down to indian Trading Co. v. Commissioner of Trade Tax 2002 UPTC 593 the consistent view of this honourable Court has been that the two conditions must co-exist for seizure of goods, namely, (1) the consignment is not accompanied with proper and genuine documents and (2) there are reasons to be satisfied that the goods were being transported in an attempt to evade payment of tax due or likely to be due under the "act". Mere absence of form No. 31 was not sufficient to justify seizure of goods. The seizure of goods could be made only in the circumstance that there was an attempt to evade payment of tax.


(10) ACCORDING to the applicant/revisionist that this honourable Court has already taken the view in the case of Commissioner of Sales Tax v. Seth Industrial Corporation 1994 UPTC 140 that judicial powers cannot be permitted to be pre-empted by passing a penalty order. The authorities therefore retained their powers to release the goods in spite of penalty order having already been passed.


(11) IN a similar situation this honourable Court in the case of Lucknow Banda Transport Co. v. Commissioner of Sales Tax 1992 UPTC 803 directed release of goods where a penalty order had been passed and on appeal being filed, the realisation of penalty was stayed on certain conditions and the conditions of the stay order were complied with. In the facts of the present case also, the conditions of the stay order passed in penalty proceedings have been complied with fully. Since security demanded is in lien of penalty liable to be imposed, therefore, in the circumstances of the present case, the goods are liable to be released without insisting upon the deposit of the security amount demanded by the authorities below,


(12) IN the case of Lucknow Banda Transport Co. v. Commissioner of Sales Tax 1992 UPTC 803 this Court has observed as follows :


"the goods in question, i. e. , Supari, Halai, Kali Mirch, Kalaunji (packed in gunny bags), while being transported by applicant were detained under Section 13-A (6) of the U. P. Sales Tax Act on august 18, 1991, at Kanpur, by the Sales Tax Officer (Mobile Squad) and the goods were seized and an amount of Rs. 2,65,000 was demanded from the applicant for release of the goods which was not deposited. Against this order the applicant moved the higher authority and filed appeal before the Tribunal, but it did not prove helpful to the applicant. Ultimately, proceedings under section 15-A (1) (o) of "the Act" were initiated and a penalty of Rs. 2,65,000 was imposed against which appeal was filed, however, the applicant had deposited 5 per cent cash of the said penalty and had furnished bank guarantee for the balance. The revision was filed initially against the order of the Tribunal refusing to release the goods unless the applicant had deposited Rs. 2,65,000. Since the provisions of Section 13-A (6) of the Act are made to safeguard the interest of the revenue, that is, for the realisation of the amount of tax and penalty was likely to be imposed, and as the applicant had already furnished bank guarantee and had paid some amount in cash and further as the goods were packed in gunny bags which were likely to deteriorate, therefore, it was ordered that these goods to be released in favour of the applicant without further security within three days of the production of the copy of the order. "


(13) ACCORDING to the learned counsel for the applicant/revisionist he himself in the relevant financial year has used 1,264 form No. 31 and out of these has got only one "form No. 31" passed and checked from the check-post. Undisputedly in the present case goods were being transported without "form No. 31" regardless of fact that the applicant/revisionist is a registered dealer and paying tax regularly but on interception by the mobile squad of trade tax officer it was found that the goods being transported were not accompanied by "form No. 31" it was not a bona fide on the part of the applicant/ revisionist, he has himself to disclose "form No. 31" or are not availability of the check-post on the way Delhi to its destination.


(14) THE applicant/revisionist could not bring the transaction to disclose to the check-post authority. Rule 83 (4) of the U. P. Trade Tax provides as under :


" (a) The owner, driver or any other person-in-charge of the vehicle or vessel shall, in respect of such goods carried in the vehicle or vessel as are notified under or referred in Sub-section (1) of section 28-A and as exceed the quantity, measure or value specified in the notification therein, carry with him the following documents (i) form of declaration for import or certificate in form XXXII, hereinafter in the Rules in this chapter referred to as declaration or certificate, as the case may be, in duplicate ; (ii) cash memo, bill or challan ; (iii) authorisation for transfer of goods/goods challan hereinafter referred to as trip sheet in triplicate. (b) The owner, driver or any other person-in-charge of the vehicle or vessel shall in respect of all other goods carried in such vehicle or vessel carry with him a trip sheet in triplicate. "


(15) ACCORDING to the "act 11 of 2001" dated January 29, 2001 the amendment was brought under Sub-clause (2) of Section 28-A of "the Act" whereby if the goods are being imported from out of the State by a route where check-post is not established in that condition the "form No. 31" and other documents have to be taken to the nearest check-post for endorsement.


(16) IT is contended on behalf of the Revenue that Noida is only about 15 km from Delhi and the respondent-dealer is transporting the goods in question without "form No. 31" whereas the "form no. 31" issued in favour of the purchaser and countersigned by the seller with full mentioned of the transaction in question was to be accompanied with the goods being transported by the vehicle and the respondent-dealer has always been making defiance of the provisions of the "act". In this circumstances the seizure in question which was made by the trade tax department was justified. In this respect learned counsel for the Revenue has placed reliance on True brothers v. Commissioner of Trade Tax 1999 STJ 101.


(17) ACCORDING to the learned counsel for the Revenue has referred in Kothari Pouches Ltd. v. Commissioner of Trade Tax 2002 STJ 211 where unclassified goods were being imported goods, the goods estimated value of about 15 lacs was released on demand of Rs. 4 lacs.


(18) ACCORDING to the Rule 83 (4) of U. P. Trade Tax Rules, the above documents would be accompanied while the goods being transported. The stand of the applicant/revisionist that there was no attempt on the part to evade payment

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of tax due or likely to be paid due prima facie is not accepted in absence of "form No. 31" and prima facie for payment of security to release of the goods. However, in the facts and circumstances in reference to the order dated June 22, 2002 of the Tribunal the security was not deposited as demanded by the tax authorities as such they proceeded under Section 15-A (4) of "the Act" and have imposed penalty equivalent to the demand of security and in appeal under Section 9 of "the Act" by the order dated May 29, 2002 of the Assistant Commissioner imposing the penalty was upheld ; however, the Deputy commissioner by his order dated June 24, 2002 has stayed 85 per cent of the disputed amount of tax of penalty of Rs. 99,600 before hearing the first appeal. In compliance to the order dated June 24, 2002 the applicant/revisionist has already deposited Rs. 14,640 as is evident from (annexure 9). In view of the circumstances and in the light of Section 13-A (6) of "the Act" the penalty which was to be paid has already been paid in cash. Therefore, on the facts and circumstances and in the interest of justice the seized goods on April 10, 2002 is directed to be released forthwith in favour of the applicant/revisionist without any further demand of security. (19) IN view of the above the questions of law are dealt with accordingly. The trade tax revision is disposed of. However, the proceedings for finalisation of the penalty may be made before deputy Commissioner and the above trade tax authority including the Trade Tax Tribunal and the observation made by this Court in the present case shall not sway over any proceedings before the trade tax authority. Revision disposed of accordingly.
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