A FORTNIGHTLY VAT/GST LAW REPORTER 2002 NTN

Transcription

1 2002 (Vol.20)-385 [ALLAHABAD HIGH COURT] Hon'ble R.B. Misra, J. Trade Tax Revision No. 6 of 2002 M/s Jagannath Prasad Kailash Chandra Allahabad vs. The Commissioner of Trade Tax, U.P. Lucknow. Date of Decision : 10th May, 2002 For the Revisionist : Sri Rajes Kumar, Advocate For the Respondent : Standing Counsel Penalty - Essential ingredient - U. P. Trade Tax Act, 1948 Section 13-A(4) - The dealer engaged in business of Soap and Seenk effected sales of goods through challans made on letter head - The authorities detained the goods - The dealer produced account books wherein sales was entered - However authorities seized the goods - The Assessing Authority imposed penalty under Section 13-A(4) of the Act which was confirmed by authorities below - Whether penalty under Section 13-A(4) can be imposed if transaction is recorded in the account books? - Held - No - The authorities were free to verify entries in account books immediately after detention of goods - When they failed to utilize the mobility provided by the State and became immobile and asked the dealer to come to him, the entries in account can not be rejected - Judicial decisions discussed and followed. In (M/s Malhotra Iron Stores, Meerut vs. Commissioner of Sales Tax 1996 UPTC 39) this court has held : "that there is no legal requirement that the bill and challan should be of the same date or that a bill cannot be prepared subsequently i.e., after the preparation of challan. The S.T.O., Mobile Squad is silent about the books of accounts and has made a vague observation that because of the above circumstances the existence of entries in the books of accounts was doubtful. Where was the occasion for such an observation when the books had been laid before him. The law does not authorise seizure of goods for such reasons. It was the duty of the officer to record a categorical finding that the goods are not accounted for by the dealer in its books of accounts, registers, etc." In order that, the tax authority would record such a finding, it was necessary for him to use the mobility provided to him by the State and immediately on interception of the truck to proceed to the dealer's place and verify, before the dealer had any opportunity to make alteration, whether the transaction had been duly recorded in the books of accounts, but the tax authority did not do so. On the other hand he became immobile and asked the dealer to come him. The Tribunal has also made an observation that the goods seem to have been recorded later on, how such a finding could be given when the officer moved leisurely and the books produced were containing appropriate entries. The mere fact that the challan was not on a letter head or that there was no bill accompanying with the consignments could give cause for verification but could not be grounds for holding that the entries in the books of accounts were made subsequently. (Para 11, 12)

2 The account books were not produced before the lower tax authorities as none appeared at the time of hearing. The main ground of suspicion that the tax authorities intercepting the goods was that any cash memo or bill was not accompanying with the goods. Only a challan on the letter pad was found which did not have serial number. The authorities inferred that the party could have destroyed the aforesaid challan and would have avoided payment of tax. It was also inferred by the tax authorities that these goods were imported from out side State ignoring a vital aspect that even in absence of the satisfactory papers it can not be presumed that the goods were imported from out side State, there were no evidence before the tax authorities to infer that the import of goods was made from outside State. The challan on the letter pad of the dealer had full address of the firm which had sold these goods and the tax authorities could have verified from the dealer whether actually these goods had been sold by him or not but no such attempt was ever made to verify the genuineness of the goods nor the authorities cared to verify it. The record shows that the goods in question were traceable to a bonafide registered dealer and have been duly accounted for in the documents accompanying the consignment and in the account books duly maintained in the course of business. No omission has been found. Conjectures and suspicions cannot take the place of record. Findings of fact, even though concurrent being contrary to record and founded on suspicions and conjectures cannot be upheld on a judicial review and have to be set aside. (Para 15) Cases referred : J.J. Enterprises, Deoband, Saharanpur vs. C. S. T (Vol. 7) 319 (M/s Gajanand Ramanand Arhati vs. T. T. T 1997 (Vol. 11) 465 Bharat Rolling Mills vs. Trade Tax Tribunal and others 1997 UPTC 395 Malhotra Iron Stores vs. C. S. T UPTC 39 Ashoka Silicate Trading Co. T. T. T. STI 1995 All. H. C. 549 Radhey Shyam Paper Stores vs. C. S. T UPTC 35 JUDGMENT The present revision has been preferred under Section 11 of U.P. Trade Tax Act (in short called 'Act' hereinafter) by the applicant-revisionist against the order dated rejecting the Second Appeal No. 429/99 (90-91) by the Tribunal affirming the penalty, preferred against the order dated of Assistant Commissioner (Judicial) Allahabad passed in first appeal No (90-91) filed against the order dated of Trade Tax Officer-1 Allahabad under Section 13-A(4) of the 'Act' imposing penalty of Rs. 45,00/-. 1. I have heard Sri Rajes Kumar, learned counsel for the applicant-revisionist and learned Standing Counsel for the respondent and the consent of the parties the revision above mentioned is being finally disposed of at the initial stage. 2. The relevant facts necessary for adjudication in the present revision are that the applicant is a registered dealer under 'Act', dealing the business of 'Life buoy soap', a product of Hindustan Lever Limited, Varanasi. The applicant has also purchased 'Seenk' from the registered dealer of U. P. on bill no. 653 dated The applicant has sold 135 pieces of Life Buoy soap for Rs. 6,410/- to M/s. Girish Kumar, Chilbila, Pratapgarh and by bill no. 358 dated sold kg. 'Seenk' for Rs. 6,900/- (Annexure-1 collectively to this revision) after making the entry of both the invoices in the cash book of (Annexure-2). Proper transport facility was not available at Pratapgarh,

3 therefore, the goods were sent to Muthiganj by common carrier in which goods of M/s. Mittal Kirana Company was also loaded. For the purposes of identification two challans in letterhead were issued (the of two challans are enclosed as Annexure-3 collectively to this revision). The Trade Tax Officer, Mobile Squad intercepted the Truck No. UGV 385 carrying 30 numbers of 'Seenk' Jhala and 15 boxes of Life Buoy Soap from Phaphamau. On checking the relevant papers could not be produced therefore a show cause notice dated was issued and reply dated (Annexure-4) submitted by the applicant was not found satisfactory accordingly the goods were seized and security of Rs. 45,00/- by cash or by bank draft was demanded. 3. An appeal before Assistant Commissioner (Executive) was dismissed. In the second appeal No. 102/91 ( ) preferred before learned Tribunal under Section 13- A(6) of the Act, learned Tribunal by its order dated directed to release the goods in favour of the applicant after taking an indeminity bond of Rs. 4,500/- only. 4. The Assessing Authority did not accept the plea of the applicant under Section13-A (4) by its order dated (Annexure-7) imposing a penalty of Rs. 4500/- on the estimated value of the goods of Rs. 15,000/-. Against the above order the First Appeal no. 315/93 was also confirmed by Assistant Commissioner (Judicial) in his order dated Trade Tax (Annexure-8). The Second Appeal No. 429/99 ( ) preferred under Section 10 of the 'Act' before Tribunal was also affirmed by order dated (Annexure-9). 5. In the concurrent findings of trade tax authorities the goods in question were being transported not accompanied with the serialised challans. It was challan on the letter pad and there was possibility that entry of these transaction might not have been made in the account book and goods were transported with the purpose of evading the payment of tax. According to the applicant revisionist the goods were tax paid and duly entered in the books of account and the challan registration of the applicant accompanied details of goods with mentioning of bills. The accounts books were produced before the Sales Tax Officer, therefore, there was no occasion to infer that the goods were not entered in the books of account. In case of any doubt entry of the books of accounts, Sales/Trade Tax Officer is supposed to visit the shop of the applicant. In absence of these material no adverse inference could be drawn in respect of imposition of penalty. 6. Learned Standing Counsel for the respondent has reiterated the stand taken by the tax authorities below. The relevant provisions of Section 13-A (1) and 13-A(4) of 'Act' are reproduced below for ready reference: 13-A. Power to seize-(1) An officer authorised under sub-section (2) of Section 13 shall have the powers to seize any goods. (i) Which are found in the dealer's place of business of vehicle or any other building or place; or (ii) which such officer has reason to believe to belong to the dealer and which are found in any place of business or vehicle or building or place. but are not accounted for by the dealer in his accounts or registers or other documents maintained in course of his business;

4 Provided that a list of all goods seized under this sub-section shall be prepared by such officer and be signed by the officer and not less than two respectable witness. (1-A) Whether any officer empowered by the State Government in this behalf has reason to believe that the goods found in any vehicle (***) building or place are not traced to any bona fide dealer 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 course of his business, he shall have power to seize such goods and the remaining provisions of this section shall mutatis mutandis apply in relation to such seizure. * * * * * * * * * * * (4) If such authority, after taking into consideration the explanation, if any, of the dealer, or as the case may be, the person incharge giving him an opportunity of being shown in the accounts, registers and other documents referred to in sub-section (1) it shall pass an order imposing a penalty not exceeding forty per cent of the value of such goods as he deems fit." 7. Learned counsel for the applicant has placed reliance on M/s J.J. Enterprises, Deoband, Saharanpur vs. Commissioner of Sales Tax, U.P. Lucknow (1995 (Vol. 7) Allahabad High Court-319) para 6 where it was observed; "under Section 13-A(4) of the U.P. Sales Tax Act penalty can be levied if after taking into consideration the explanation, if any, or the dealer... the Authority referred to in Section 13-A(1) is satisfied that the goods were omitted from being shown in the accounts, registers or the documents referred to in sub-section (1). Therefore, a positive finding has to be recorded that the goods were omitted from being shown in the accounts registers and other documents. In this case, no such finding has been recorded. The officer who passed the penalty order dated 24 th August, 1987, has noted that the goods were duly recorded in the books of accounts but he was of the view that those entries were made after the goods had been intercepted. This view is based on the mere fact that the goods were not accompanied by a bill. The penalty order does not state that when the goods were intercepted by the Sales Tax Officer (Mobil Squad) Ghaziabad, any information was transmitted to the dealer's assessing officer at Deoband to immediately check up whether the goods mentioned in the challan had been recorded in the books of accounts and that such officer found that the goods were not so recorded or that the assessee did not produce the accounts. No document has been annexed with the counter affidavit to show that the Sales Tax Officer (Mobile Squad) Ghaziabad, while passing the order seizing the goods and requiring furnishing of security recorded a finding that the goods were not recorded in the regular books of accounts of the assessee." 8. In reference to the above judgment in M/s J.J. Enterprises, Deoband, Saharanpur (Supra) learned counsel for the applicant submitted that challan were accompanied the goods. Therefore, there is no legal justification for the levy of penalty. 9. Learned counsel for the applicant has placed reliance on (M/s Gajanand Ramanand Arhati, Philibhit vs. Trade Tax Tribunal Bareilly Bench-I and another 1997 (Vol. 11) 465; 1997 UPTC 960) where the levy of penalty was quashed. There was no basis for the

5 authorities below to assume that the goods were being carried in the truck were not related to the documents accompanying the consignment and the penalty in question was taken to be based exclusively on imagination and conjecture and held not sustainable when the authorities below had failed to establish by cogent material that the goods in question were omitted from being shown in the account books of the petitioner. 10. Learned counsel for the applicant has referred (M/s Bharat Rolling Mills vs. Trade Tax Tribunal and others 1997 UPTC 395) where the order of Tribunal upholding imposition of penalty was quashed by this court by noting that the challan and the bills accompanying the goods were prepared after the goods had been weighed at a dharmkanta. In para 6 of M/s Bharat Rolling Mills. (Supra) it was noticed that the levy of penalty under sub-section 13-A of 'Act' is dependent on the fact that the relevant authority is satisfied that the goods seized, were omitted from being shown in the accounts, registers and other documents maintained in due course of business. It has also been noticed that the provisions with which are concerned are penal in nature and are to be construed strictly. No penalty can be imposed unless the case clearly falls within the four corners of that provisions. Having regard to the normal human behaviour a person would not conduct himself in breach of law except for some gain or under some compelling circumstances. This court has expressed that the M/s Bharat Rolling Mills the writ petitioner was entitled to the benefit of doubt and more so when the disputed goods were accompanied by a receipt about weight issued by dhrmkanta and at the Check-post the goods were not weighed after unloading them from the vehicle. 11. In (M/s Malhotra Iron Stores, Meerut vs. Commissioner of Sales Tax 1996 UPTC 39) this court has held : "that there is no legal requirement that the bill and challan should be of the same date or that a bill cannot be prepared subsequently i.e., after the preparation of challan. The S.T.O., Mobile Squad is silent about the books of accounts and has made a vague observation that because of the above circumstances the existence of entries in the books of accounts was doubtful. Where was the occasion for such an observation when the books had been laid before him. The law does not authorise seizure of goods for such reasons. It was the duty of the officer to record a categorical finding that the goods are not accounted for by the dealer in its books of accounts, registers, etc." 12. In order that, the tax authority would record such a finding, it was necessary for him to use the mobility provided to him by the State and immediately on interception of the truck to proceed to the dealer's place and verify, before the deler had any opportunity to make alteration, whether the transaction had been duly recorded in the books of accounts, but the tax authority did not do so. On the other hand he became immobile and asked the dealer to come him. The Tribunal has also made an observation that the goods seem to have been recorded later on, how such a finding could be given when the officer moved leisurely and the books produced were containing appropriate entries. The mere fact that the challan was not on a letter head or that there was no bill accompanying with the consignments could give cause for verification but could not be grounds for holding that the entries in the books of accounts were made subsequently. 13. In (M/s Ashoka Silicate Trading Co. Juhi Kanpur, through its Partner Sri Kailas Nath vs. The Trade Tax Tribunal, Kanpur Bench-II, Kanpur, STI 1995 Allahabad High

6 Court, 549, the petitioner-dealer carrying on business of purchase and sale of washing soap and its raw material had sold one tanker of oil to one Moti Soap Factory, Delhi, while the said oil was in transit, the S.T.O (M.S.), Etah checked the said oil and after noticing the difference in the Carbon Copy of the bill from the original bill detained the said goods and after rejecting the explanation given by the assessee in this regard imposed the penalty upon the assessee under Section 13-A(4) of 'Act' the appellate authorities upheld the penalty order on revision; this court has held that: "The fact there are concurrent findings of fact by the lower authorities relating to the suspicious transaction does not absolve this Court from its responsibility of enforcing the correct position of law on the authorities for the proper appraisal of the facts and circumstances. Record shows that the goods in question were traceable to a bonafide registered dealer and have been duly accounted for in the documents accompanying the consignment and in the account books duly maintained in the course of business. No omission has been found. Conjectures and suspicions cannot take the place of record. Findings of facts, even though concurrent being contrary to record to record and founded on suspicions and conjectures cannot be upheld on a judicial review and have to be set aside. The penalty order is, therefore, set aside." 14. In (M/s Radhey Shyam Paper Stores vs. Commissioner of Sales Tax 1994 UPTC 35) where this court has held that: "may be the dealer did not produce its books of account to show to the Seizing Officer that the goods were duly accounted for in its books of account, but that does not adversely affect the dealer because that is not the reason given by the Seizing Officer as the cause for ordering seizure. The seizure was made because of a doubt about the nature of the transaction which according to the Seizing Officer was an intra-state sale. The A.C., Check Post was of the view that transaction was an inter-state sale. Whether it was inter-state sale because of Section (a) or 3(b) of Sales Tax Act had no relevance so far as the tax liability is concerned. The Tribunal was therefore not justified in such circumstances to upheld the seizure of goods in question. The seizure was not authorised because it was not based on the reasons for which seizure can be made under Section 13-A of the Act. The goods in question were ordered to be released forthwith." 15. The account books were not produced before the lower tax authorities as none appeared at the time of hearing. The main ground of suspicion that the tax authorities intercepting the goods was that any cash memo or bill was not accompanying with the goods. Only a challan on the letter pad was found which did not have serial number. The authorities inferred that the party could have destroyed the aforesaid challan and would have avoided payment of tax. It was also inferred by the tax authorities that these goods were imported from out side State ignoring a vital aspect that even in absence of the satisfactory papers it can not be presumed that the goods were imported from out side State, there were no evidence before the tax authorities to infer that the import of goods was made from outside State. The challan on the letter pad of the dealer had full address of the firm which had sold these goods and the tax authorities could have verified from the dealer whether actually these goods had been sold by him or not but no such attempt was ever made to verify the genuineness of the goods nor the authorities cared to verify it. The record shows that the goods in question were traceable to a bonafide registered dealer and have been duly

7 accounted for in the documents accompanying the consignment and in the account books duly maintained in the course of business. No omission has been found. Conjectures and suspicions cannot take the place of record. Findings of fact, even though concurrent being contrary to record and founded on suspicions and conjectures cannot be upheld on a judicial review and have to be set aside. 16. In view of the foregoing submissions made by the counsel for the applicant I find that the penalty has not been imposed correctly therefore, the order dated passed by the Trade Tax Tribunal is set aside and the learned Tribunal and tax authorities are directed to pass appropriate order for making adjustment of penalty in the tax to be paid by the applicant-revisionist concerned and the question involved is dealt with affirmatively