1. Heard Sri Shubham Agrawal, learned counsel appearing for the revisionist and Sri B.K. Pandey, learned standing counsel for the respondents.
2. These three revisions are with the consent of the learned counsel for the parties taken up for disposal together. They pertain to different seizures effected by the Department upon the premises of the revisionist which describes itself as a "courier service provider".
3. From the facts, which stand recorded and disclosed from the material placed before this Court, it appears that the revisionist had entered into an agreement styled as a 'Logistics Agreement' ("the Agreement") with an online web portal "Naaptol Online Shopping Private Limited" (hereinafter for the sake of brevity referred to as the "web portal"). In terms of this Agreement, the revisionist was liable to collect consignments from the consignor's address furnished by the web portal. The web portal itself is, in the submission of the learned counsel for the revisionist, an ecommerce site which enables individuals situate throughout the length and breadth of the country to place orders for goods displayed upon the website and obtain delivery thereof on payment of consideration either online or by way of cash on delivery. It is not disputed that in the instant case this Court is concerned with the specie of orders which in terms of the Agreement between the web portal and the revisionist were to be paid for on delivery.
4. The premises of the revisionist appear to have been inspected on 26 November 2014 and during the course of the said search, the Department found the presence of various goods which according to it had not entered the State of U.P on the strength of certain Forms 38/39. Upon the revisionist being put to notice, no reply appears to have been submitted till the stage of initiation of proceedings under subsection (7) of Section 47 of U.P. VAT Act, 2008.
5. The revisionist raised various fundamental contentions, inter alia, relating to its exigibility to tax under the 2008 Act as also as to whether it was liable to be treated as a "dealer" under the provisions of the 2008 Act. It was further contended before the authorities that the goods which were seized on 26 November 2014 had all entered the State of U.P from outside the State and therefore the transactions themselves were in the nature of inter-State sales which could not be subjected to taxation under the 2008 Act. The more fundamental issue which the revisionist raised was with regard to the issue of whether it could be said to be engaged in "business" within the State of U.P so as to be covered within the ambit of the 2008 Act.
6. As is evident from the order of the Tribunal, the various contentions, which the revisionist advanced and which are reiterated before this Court, have been answered against it. The Tribunal, while exercising powers under Section 48 of the Act, has proceeded to return and record the following findings:
A. The revisionist is liable to be treated as a "dealer" under the provisions of the 2008 Act.
B. The transaction as effected on the e-commerce web portal and in respect of which moneys are received within the State are not liable to be treated as inter-State sales.
C. The revisionist in the course of carrying on its operation within the State does carry on "business" as defined under the 2008 Act.
7. Sri Agrawal, learned counsel for the revisionist, while assailing the aforesaid findings has drawn the specific attention of the Court to the fact that from the inception of the proceedings taken against it (and which stands reflected even in the order of the Tribunal) the fact that the goods had entered the State of U.P from outside was not disputed by the Department. He submits that at the stage of seizure the revisionist was faulted upon by virtue of the fact that the goods which were found present in the premises did not appear to have entered the State on the back of Forms 38/39. A more serious objection which Sri Agrawal takes is to the findings which stand recorded by the Tribunal with respect to the issue of whether such transactions could be treated to be sales which had taken place within and inside the State of U.P. Referring to the judgment rendered by a Division Bench of the Punjab & Haryana High Court in Prem Payari Aggarwal v. Punjab State, 1966 Sales Tax Cases (Vol. XVIII) 150 he submits that the transaction which fell for scrutiny before the Tribunal was in more ways than one akin to a transaction which in common parlance is known as V.P.P Parcel. Sri Agrawal submits that the judgment of the Punjab & Haryana High Court which itself and in turn was based upon what was held by the Supreme Court in Commissioner of Income-tax, Delhi v. P.M. Rathod and Company, (1959) 10 STC 193 was clearly in favour of the revisionist.
8. Shri Agrawal then refers to the definitions of 'business' and 'dealer' as enumerated in clauses (e) and (h) of Section 2 of 2008 Act to submit that the services rendered by a courier company like the revisionist clearly cannot be envisaged to be a business engaged in the sale or purchase of goods. He stresses upon the fact that clause (e) of Section 2 clearly exorcises from its ambit such entities which are engaged in activities in the nature of providing a mere service. Sri Agrawal further submits that in terms of clause (h) of Section 2, it could not be said that the revisionist was an agent appointed for collection or payment of sale price as envisaged in sub clause (v) thereof. He places reliance upon the provisions of the Agreement and refers specifically to clause 21 to submit that the revisionist was not an agent as envisaged under Section 2 (h) of 2008 Act.
9. On facts Sri Agrawal takes objection to the seizure of the goods on the ground that the shortcomings pointed out pertained to prior consignments and did not relate to the seized goods at all. It was his submission that the seized consignments, which formed subject matter of the two appeals in question presently, were not adversely commented upon and that it was only certain prior transactions which fell for adverse scrutiny and comment and the same has been made a basis for the present seizure. It is his submission that such transactions could not have justified the seizure of the goods in question unless and until the authorities came to a conclusion that the goods which were seized fell within the mischief of Section 48.
10. Shri B.K. Pandey, learned standing counsel, on the other hand, submits that since the revisionist does not dispute the fact that under the Agreement he is obliged to collect monies/payment of price from the consumer, as such he is liable to be treated as a "dealer". He further submits that even otherwise and in the alternative this Court would be justified in holding that the revisionist fell within the ambit of clause (ix) of Section 2 (h) being a "courier service provider" who had failed to disclose the name and complete addresses of its consignees.
11. Shri Pandey then submits that the Tribunal has committed no illegality in proceeding to hold that the sale was completed upon the receipt of price from the consumer within the State of U.P. He submits that the revisionist does not dispute the fact that the consignees have and retain the right to refuse the consignment. He therefore submits that such reservation of rights would clearly rob the transaction of the character of an inter State sale. It is these rival submissions which fall for consideration.
12. It is not disputed that the power exercised by the authorities concerned are referable to Section 48 of the Act. Section 48, it becomes relevant to note, envisages an authorised officer to seize goods where he has reason to believe that the same have not been accounted for by the dealer in his accounts, registers and other documents. A further right is conferred upon the authorised officer to effect seizure of goods where he comes to a conclusion that the goods are not accompanied by a tax or sale invoice or any other document pertaining to the value of the goods or where he comes to a prima facie conclusion that the goods have been undervalued to the extent of more than fifty percent of their actual value. A further power to effect seizure is provisioned for in sub section (2) of Section 48 where the authorised officer who proceeds to seize goods has reason to believe that the goods found in any vehicle, vessel, building or place are not traceable to any bona fide dealer or the documents issued by a bona fide dealer with respect to the accompanying goods contain wrong particulars or that it is doubtful if such goods are properly accounted for by any dealer in his accounts, registers or other documents maintained in the ordinary course of business.
13. From the provisions of Section 48 of the Act, this much is apparent that the enquiry which is liable to be undertaken is with respect to whether the goods, which have been seized, have been duly accounted for in the books of accounts, whether their value has been correctly declared or whether they are traceable to a bona fide dealer or whether the authorised officer finds that it is doubtful if such goods have been accounted for in the records of the dealer.
14. From a reading of the detailed order of the Tribunal, this Court finds that no such finding in respect of the seized goods has come to be recorded. The Tribunal has while considering the issue of seizure of the goods chosen to tread a path and embark upon a course of enquiry which was perhaps not warranted at all. Since the scope of the enquiry itself was expanded by the Tribunal, it appears that the pointed issues which actually fell for or should have fallen for determination and were germane to the exercise of powers under Section 48 of the Act have been lost sight of. More fundamentally the objection which stands raised and which becomes evident from the record is that the Tribunal has completely failed to record any finding with respect to the seized goods having not been duly accounted for in the books of accounts or having not been truly or faithfully recorded in the books maintained by the dealer. The Tribunal in this connection has sought to place reliance upon various previous transactions which according to it were of doubtful character. Doubts with respect to the business practices adopted by the revisionist arose before the Tribunal on account of certain orders placed by persons who were allegedly found to be nonexistent or where mobile numbers were shared by more than one individual. This led the Tribunal to view and paint the transactions and goods which formed the subject matter of the instant seizure with the same brush. It is not disputed before this Court by the learned standing counsel that the various discrepancies which were noticed by the Tribunal were not related to the goods seized but pertained to earlier transactions. This in the opinion of this Court was clearly impermissible. The power to seize goods is not dependent upon the bona fides or characteristics of a past transaction or perceived course of business. It has to be necessarily exercised in the backdrop of whether the goods which are being seized fall within the mischief of Section 48 or not.
15. The further issue which then arises is with respect to the correctness of the findings returned and recorded by the Tribunal with regard to the character of the transactions and whether they were liable to be treated as inter State sales. What appears to have weighed with the Tribunal is the fact that the payment for the goods was made within the State. What the Tribunal clearly lost sight of and unjustifiably chose to ignore was its own record wherein it was admitted that the goods in question had come from outside the State of U
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.P. The Tribunal in its entire order nowhere places reliance or refers to any material which may have cast a shadow of doubt on the said recital which stood recorded in the course of the initial seizure proceedings. Further, the view taken by the Tribunal to the effect that the sale would stand completed only upon the payment for the goods and that the payment of price would be determinative of the issue would also, in the opinion of this Court, appear to be an issue which may not be free from debate. This Court however refrains from commenting further on this aspect. The caveat which stands entered above is primarily on account of the fact that in the opinion of this Court there was no occasion for the Tribunal to have ruled upon this aspect of the matter at all, the proceedings themselves being confined to the validity of seizure. This Court therefore without commenting any further on this aspect refrains from returning or entering any finding which may prejudice the rights and contentions of either of the parties. For the aforesaid reasons, this Court finds itself unable to sustain the order of the Tribunal dated 12 June 2015, which shall stand set aside. The seizure effected by the respondents is also quashed and set aside. 16. The revision is accordingly allowed in terms aforesaid.