Common Order: (G. Rohini, J.)
The petitioner in these two writ petitions is a registered dealer on the rolls of the 2nd respondent – Commercial Tax Officer, Special Commodity Circle, Rangareddy District, both under A.P. Value Added Tax Act, 2005 and the Central Sales Tax Act, 1956.
Two oil tankers bearing Nos.KA02AA763 and KA28A5232 by which the petitioner was transporting Cotton Seed Oil to the respondent No.4 at Puducherry were intercepted and seized by the Regional Vigilance and Enforcement Officer, Nellore (respondent No.3) on 27.12.2011 at Hindupur and the same were handed over to the first respondent – Deputy Commercial Tax Officer, Anantapur.
It is pleaded in the writ petition that on 28.12.2011 the respondent No.4 appeared before the first respondent and requested to release the goods bringing to his notice that the petitioner is a registered dealer and that the transactions in question are duly recorded in the books of accounts and the goods were being carried accompanied by all necessary documents. It is alleged that the first respondent insisted upon payment of tax @ 5% of the value of goods together with two times penalty alleging that the consignments were not covered by proper documents. As the goods are subject to natural decay, the petitioner was constrained to pay the tax and penalty as demanded and got the goods released.
Subsequently, these two writ petitions came to be filed on 26.04.2012 seeking a declaration that the action of the respondents 1 to 3 in collecting the tax and penalty is arbitrary, illegal and without jurisdiction.
It is alleged in the writ petition that nothing was communicated to the petitioner as to how the petitioner was made liable to pay the tax and penalty and that even the documents that were allegedly not produced at the time of check of the vehicles when they were intercepted at Hindupur were not specified either by the respondent No.1 or by the respondent No.3.
The respondent No.1 – Deputy Commercial Tax Officer in his counter-affidavits denied all the averments in the writ petitions and contended that the petitioner is a total stranger and the tax and penalty was neither demanded by the respondent No.1 nor paid by the petitioner. It is sought to be explained that the respondent No.4 approached the first respondent and voluntarily paid the tax and penalty on 29.12.2011 as the consignments were not covered by proper documents. It was also stated that the vehicles in question were passing through Hindupur only to avoid check post as no proper documents were being carried, and therefore the Vigilance Officials calculated the tax and penalty and sent a report dated 29.12.2011 to the respondent No.1 for necessary action. On 29.12.2011 itself the representatives of the respondent No.4 attended the office of the respondent No.1 and paid the tax and penalty without any protest. The said tax and penalty were collected by the respondent No.1 treating the respondent No.4 as a casual dealer and accordingly receipts were also issued for the said amounts. Thus, it is contended that the allegation that the first respondent had forcibly collected the tax and penalty from the petitioner without there being any authority under law is absolutely false and without any basis.
The respondent No.3 – the Regional Vigilance and Enforcement Officer, Anantapur, filed a counter-affidavit stating that during the course of route check conducted in Hindupur on 28.12.2011 the officials consisting of the Regional Vigilance and Enforcement Unit, Deputy Commercial Tax officer and Agricultural Officer, stopped the two tankers in question as the said vehicles were passing through a route (via Hindupur) which is not the normal route to reach Puducherry from Hyderabad. On verification of the records, it was found by the officials that the vehicles were transporting Cotton Seed Oil from Hyderabad to Puducherry without any valid documents. Therefore, the vehicles were intercepted and kept at Rural Police Station, Hindupur, on 28.12.2011 for safe custody. On the same day the vehicles were handed over to the Commercial Tax officer, Anantapur, for taking necessary action. On 29.12.2011 a representative of the Consignee attended the office of the first respondent and paid tax and penalty as levied by the respondent No.1. On production of receipt of the said payment, the respondent No.3 by release order dated 29.12.2011 requested the Station House Officer, Hindupur, to release the vehicles and accordingly the vehicles were released on 29.12.2011. Thus, it is contended that the allegations in the writ petitions are untenable.
We have heard the learned counsel for both the parties and perused the material available on record.
The learned counsel for the petitioner while placing reliance upon the decisions of this Court in AMBICA LAMP HOUSE, RAJAHMUNDRY v. COMMERCIAL TAX OFFICER (INT)-I ENFORCEMENT, HYDERABAD (2004 (40) APSTJ 56) and GOODHEALTH AGRO TECH LIMITED v. CTO, MAHABOOBNAGAR (1996 (22) APSTJ 78) vehemently contended that the impugned action of the respondents 1 & 3 in collecting the tax and penalty without there being an order of assessment is arbitrary and illegal and therefore the amounts collected together with interest shall be directed to be refunded to the petitioner.
On the other hand, it is contended by the learned Special Standing Counsel for Commercial Taxes appearing for the respondents 1, 2 & 5 and the learned Government Pleader for General Administration Department appearing for the respondent No.3 that as the vehicles were found to be transporting the goods which were not covered by proper documents to establish payment of tax, the same were detained in accordance with law and thereafter the consignee himself having voluntarily paid the tax and penalty, obtained the release. Thus it is sought to be contended that the impugned action cannot be held to be illegal on any ground whatsoever.
The question as to whether the assessing authorities and the officers of the Vigilance Wing at the time of inspection of the vehicles have power to resort to spot collection of the tax and compounding fee without passing any order as to the tax liability has been considered by a Full Bench of this Court in AMBICA LAMP HOUSE, RAJAHMUNDRY v. COMMERCIAL TAX OFFICER (INT)-I ENFORCEMENT, HYDERABAD (1 supra). After referring to the relevant provisions of the A.P. General Sales Tax Act, 1957 and after reviewing the decided cases on the issue, the Full Bench answered the reference with the following observations and directions:
(i) Under the provisions of the Act and Rules, the Officers of the Vigilance Intelligence Wing of the Department can exercise the powers that are conferred, such as inspection of the business premises, books of accounts, stock verification etc., apart from recording any statement from any of the responsible person of the business concern;
(ii) Basing on such information, if any of the officer of the said Vigilance or Intelligence Department is empowered to make assessments, such Officer can proceed to frame assessments basing on the material and such assessments could be completed only after complying the procedure provided under the provisions of the Act and Rules i.e., granting sufficient opportunity to adduce evidence by the dealer for the proposed assessment i.e., as to the quantum as well as valuation of the stocks etc., otherwise such material or information can be forwarded to the assessing authority having jurisdiction for taking appropriate action including the assessment, re-assessment etc.
(iii) There shall be at least a gap of one week between the date of an order of assessment, or demand notice, as the case may be, and an order compounding the offence, wherever the dealer comes forward with such an offer.
(iv) The judgments in S.R. Traders & Bhavani Traders v. The ACCT & Ors., [(1993) 17 APSTJ 125]; Kaki Butchi Raju Son v. State of A.P., [(1994) 19 APSTJ 19]; Badrinath Oil Company v. Asst., Commissioner [(1995) 21 APSTJ 28]; Bharat Metals v. Special ACTO & Anr. [(1998) 27 APSTJ 72]; and Sri Lakshmi Venkata Raghava Traders v. CTO (Int. & Enforcement Wing) [W.P.No.10668/1993] cannot be said to be the authorities for the proposition that the inspecting officials of the Commercial Tax Department are empowered to pass orders compounding the alleged offences on the same day of inspection and to collect the amount specified in such orders, on the same day.
(v) After completion of the assessment, it is open to the department to issue a demand notice along with assessment order by providing time as contemplated under the provisions of the Act for collection of the tax.
(vi) If any penalty proceedings are initiated by the competent authorities, even such proceedings are to be completed after giving notice and sufficient opportunity to the dealers, and thereafter the penalty order could be served along with a notice of demand, giving sufficient time for payment of the amount of penalty, if levied.
(vii) If the penalty proposed is unrelated to the assessment of the tax liability, such penalty could be levied independent of the assessment proceedings, but if penalty is related to assessable tax, such penalty proceedings could initiated and completed only after completion of the assessment and not before.
(viii) The petitioners shall be refunded the amounts collected from them, or be provided with an option to agree for adjustment of the same towards payment of the tax in future.
(ix) If the inspecting authorities are of the opinion that the books of account are required to be seized, they can do so only in accordance with the procedure contemplated under the Act and the Rules and not otherwise. Similarly even with reference to the seizure of the goods, the same is to be done as per the procedure provided, and in such cases, the dealer can also avail the benefit of getting the release of the goods on furnishing security as provided under the provisions of the Act and the Rules.
(x) The Commissioner of Commercial Taxes is further directed to issue necessary circular to comply the directions of this Court by all the concerned officers.'
It is clear from the ratio laid down by the Full Bench that until and unless the assessment is made no liability can be fastened on the dealer and the Commercial Tax Department is not entitled to collect tax/penalty/compounding fee by coercion at the time of inspection alleging suppression of turnover or such other irregularities.
Coming to the case on hand, the petitioner is a registered dealer on the rolls of the respondent No.2 under the A.P. VAT Act, 2005 and the Central Sales Tax Act, 1956. The Cotton Seed Oil was dispatched by the petitioner from Hyderabad. The consignee – respondent No.4 is at Puducherry and it is a registered dealer under the provisions of Puducherry Value Added Tax Act, 2007 and Central Sales Tax Act, 1956. It is claimed by the petitioner that the respondent No.4 is its Consignment Agent and the Cotton Seed Oil was dispatched by way of stock transfer but it was not by way of sale. To substantiate the claim that the movement of the Cotton Seed Oil from Andhra Pradesh to Puducherry was occasioned by way of transfer to his agent (respondent No.4) and not by reason of sale and therefore he is not liable to pay tax, the petitioner has placed before this Court along with his reply affidavit the Form-F certificate dated 13.02.2012 issued by the respondent No.4 in terms of Section 6-A of the Central Sales Tax Act, 1956 read with Rule 12 (5) of the Central Sales Tax (Registration and Turnover) Rules, 1957.
As per Section 6-A of the Central Sales Tax Act, 1956, the burden of proof in case of transfer of goods claimed otherwise than by way of sale is on the dealer who claims that he is not liable to pay tax under the said Act and for the said purpose he has to furnish to the assessing authority within the prescribed time a declaration in Form-F duly filled in and signed by the Principal Officer of the place of business or his agent or principal as the case may be and if the dealer fails to furnish such declaration, then the movement of such goods shall be deemed for all purposes of the Central Sales Tax Act to have been occasioned as a result of sale.
Rule 12 (7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 provides that the declaration in Form-F shall be furnished to the prescribed authority within three (3) months after the end of the period to which the declaration or the certificate relates to and that such period may be extended by the prescribed authority if he is satisfied that a sufficient cause is shown.
In the light of the above said provisions, we find force in the submission of the learned counsel for the petitioner that it is not open to the respondents 1 & 3 to arrive at a conclusion as to the petitioner’s tax liability immediately after interception of the vehicles in question. The contention of the respondents that the writ petitioner is a stranger to the transaction is untenable since the petitioner is the registered dealer and the burden is on the petit
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ioner to prove that the transaction in question is not an Inter-State sale and that the transaction is not liable to be taxed in terms of Section 6-A of the Central Sales Tax Act. Such liability can be determined only after complying the procedure prescribed under the Act and till such determination is made collection of tax and penalty is undisputedly without authority of law. Merely because the respondent No.4 paid the tax, it is not open to the respondents 1 to 3 to contend that the petitioner is a stranger to the transaction, particularly in view of the admitted fact that the respondent No.4 is none other than the consignee. The further contention advanced on behalf of the respondents that the tax and penalty was paid voluntarily by the respondent No.4 does not appear to be credible and is not at all convincing in the facts and circumstances noticed above and therefore we are unable to accept the said plea. For the aforesaid reasons, both the Writ Petitions are allowed as prayed for. There shall be a direction to the respondents 1 to 3 & 5 to refund to the petitioner the amounts collected while releasing the vehicles in question, together with interest at 6% per annum within eight (8) weeks from the date of receipt of this order or to adjust the same against the petitioner’s tax liability, if any, existing as of today. Consequently the miscellaneous petitions if any pending in the writ petition shall stand closed.