JUDGMENT
B.N. Mahapatra, J.
1. Both the writ petitions have been filed by the petitioner-Indo Arya Central Transport Ltd. In W.P.(C) No. 13123 of 2004 challenge is made to the order dated 17.8.2004 under Annexure-1 passed by the Addl. Commissioner (Central Zone), Orissa, Cuttack (hereinafter called as “revisional authority”) in upholding the order dated 6.11.2002 (Annexure-8) passed by the Sales Tax Officer, I, West Circle, Cuttack (hereinafter referred to as the “STO) by which direction has been given to the petitioner-company to pay the total sum of Rs. 90,152/- without passing any assessment order as contemplated under second proviso to Sub-section (5) of Section 16-D of the Orissa Sales Tax, 1947 (hereinafter referred to as the S.T.O. Act) and without allowing an opportunity to the petitioner to verify the connected records and to cross-examine the witnesses.
In W.P.(C) No. 13124 of 2004, petitioner’s grievance is that the revisional authority vide his order dated 17.8.2004 under Annexure-1 has illegally upheld the order of the STO dated 12.11.2002 (annexure-2) who without allowing opportunity of being heard to the petitioner and in violation of the principle of natural justice rejected the petitioner’s prayer for verification of the relevant record maintained in respect of detention of the vehicle bearing registration No. AP-16-X-7549.
2. Since the issues involved in both the writ petitions are interconnected, they are disposed of by this common judgment.
3. The facts which give rise to these two writ petitions are as follows:
The petitioner is a limited company having its Inter-Corporate office at 147, Transport Centre, Rohatak Road, New Delhi-110035, and branch office at Haripur Road, Cuttack in the State of Orissa. Its registered office is at 3/2/3, Kabiraj Road, Calcutta. The vehicle bearing registration No. AP-16-X-7549 belonging to the petitioner-company was intercepted by the officers of the Sales Tax Department at Ganesh Ghat on the Ring Road, Cuttack on 16.11.2002 when the process of unloading of goods was about to be started. The examination and inspection revealed that one M/s. Venkatechalapathi Paper and Boards Pvt. Ltd., Ponneri, Taluk in the district of Thiruvallur in the State of Tamilnadu, sold 279 (two hundred seventy nine) bundles of medium paper weighing 16,286 Kg. to M/s. Ashirbad Prakashan (Pvt.) Ltd. Mancheswar, Industrial Estate, Bhubaneswar, which were carried by the said truck. These goods were supported by a sale invoice raised by the seller in the name of the consignee M/s. Ashirbad Prakashan (Pvt) Ltd. Mancheswar, Industrial Estate, Bhubaneswar and was covered by waybills bearing No. BB-0260393 of said M/s. Ashirbad Prakashan (Pvt) Ltd. Mancheswar. But the destination of goods as revealed from the lorry challan No. 361 dated 2.11.2002 was Cuttack. The inspecting officer doubted the activity of the petitioner-transporter when they found that although the invoices and the way bills used for carrying goods from Tamilnadu to Orissa were in the name of one Ashirbad Prakashan Pvt. Ltd., Mancheswar Industrial Estate, Bhubaneswar, the vehicle instead of unloading the goods at Bhubaneswar came to Cuttack. Being interrogated the driver of the vehicle stated that as per the instruction of the transport company he had come to Cuttack to deliver the goods in Cuttack. In this connection he handed over a slip which indicated that the delivery of the goods was to be made to M/s. Bharat Sales Syndicate, Banka Bazar, Cuttack, with the telephone number of the said party written thereon. The driver during the course of interrogation handed over some telephone bills obtained from telephone booths which clearly indicated that the telephone calls were made by the driver to the telephone numbers of the concerned transport company at Cuttack and also to the telephone numbers of the party at Cuttack to whom the delivery was to be made. On detailed verification of documents produced by the driver, the inspecting officers came to know that the goods were meant to be delivered to M/s. Bharat Sales Syndicate, Banka Bazar. Thereafter the STO detained the vehicle and stating the above facts issued show cause notice to the transport office through the driver in charge of the goods vide office letter No. 5546/ CT dated 6.11.2002 to show cause by 12.11.2002 why the petitioner shall not be asked to deposit tax, penalty equivalent to twenty per centum of the values of the goods in terms of Second proviso to Sub-section (5) of Section 16-D of the OST Act and entry tax totalling to Rs. 90,152/- and in the event of its failure, action as deemed proper would be taken against the petitioner.
After receipt of the show cause notice, the petitioner filed applications for issuance of copy of the statement recorded from the driver of the vehicle K. Rabi, statement of Gopal Sharma, Manager of the Transport Company and certified copy of the entire order sheet and to allow the petitioner to verify the connected record maintained in the office of the STO in respect of the detention of vehicle. The STO issued certified copy of the statement as recorded from K. Rabi the driver of the vehicle and copy of the statement of one Paramananda Naik. In response to the show cause notice, the petitioner also filed preliminary objection before the STO. On 14.11.2002. The petitioner filed revision petition before Commissioner of Sales Tax, Orissa, Cuttack, against the order dated 12.11.2002 for not allowing the petitioner to inspect the record maintained in the office of the STO in respect of detention of vehicle bearing registration No. AP-16-X-7549. The revision case was numbered as Revision Case No. CUI 184/2002-03.
Since the preliminary objection was not found to be satisfactory, the STO vide his order dated 16.1.2002 (Annexure-8) asked the petitioner-company for payment of Sales Tax as well as penalty equivalent to 20 per centum of value of the goods and Entry Tax totalling to Rs. 90,152.00 by 18.11.2002 and further intimated that in the event of failure to make the payment, the goods loaded in the vehicle shall be seized as per the provisions of law. Being aggrieved by the said order dated 16.11.2002 of the STO, the petitioner filed revision application before the Commissioner of Sales Tax on 18.11.2002 along with a Misc. Case for release of the vehicle bearing registration No. AP-16-X-7549. The said revision case was numbered as Revision Case No. 186/2002-03. The revisional authority heard the Misc. Case on 18.11.2002. At this stage, the petitioner paid the aforesaid amount of Rs. 90,152/-in the shape of bank draft and deposited the same before the STO, Cuttack. After receipt of the bank draft, the STO released the said vehicle and returned the original document, which was seized by him to the driver of the said vehicle. The revisional authority passed a common order on 17.8.2004 while disposing of the aforesaid two revision cases bearing Nos. CUI-184/2002-2003 and CUI-186/2002-2003. The petitioner being aggrieved by the aforesaid revisional order has filed the above two writ petitions; one is against the order dated 17.8.2004 passed in Revision Case No. CUI-186/2002-2003 and another writ petition against the order passed in Revision Case No. CUI-184/2002-2003. This Court while disposing of the said writ petitions passed following order on 18.1.2005:
Both the writ petitions were taken up together for hearing and final disposal with consent of learned Counsel for the parties, as they are identical in nature.
Heard learned Counsel for the petitioner and the learned Sr. Standing Counsel for the Department.
Perused the records in Revision Cases and the records of Sales Tax Officer, Cuttack-I, West Circle, Cuttack.
The petitioner in this writ petition has prayed to quash the orders dated 17.8.2004 and 16.11.2002 under Annexures-1 and 8 respectively, as the same are violative of principles of natural justice as well as violative of proviso to sub-section (5) of Section 16-D of the Orissa Sales Tax Act.
Learned Counsel for the petitioner submits that the order passed by the Sales Tax Officer under Annexure-8 is not in consonance with the provisions as laid down in the aforesaid proviso as there was no assessment order passed in the prescribed manner and that the order was passed by the Sales Tax Officer demanding the tax and penalty is in terms of the proviso to Sub-section (5) of Section 16-D without giving the petitioner adequate opportunity of hearing and without giving copies of some documents and orders. Learned Senior Standing Counsel, Sales Tax Deptt. Submits that the orders of the Sales Tax Officer under Annexure-8 is in accordance with Section 16-D(5) of the “Act and the revisional order in Annexure-1 also does not suffer from any legal lacuna.
Having heard the learned Counsel for the parties, we do not find any illegality or irregularity in the impugned order dated 17.8.2004 under Annexure-1 passed by the revisional authority warranting interference of this Court. Accordingly, the writ petition stands dismissed.
Being aggrieved by the said order, the petitioner filed two Special leave applications before Hon’ble the Supreme Court of India which were numbered as SLP (C) No. 12017 of 2005 and SLP (C) No. 12018 of 2005 respectively.
On 13.8.2007, after hearing both the sides, Hon’ble Supreme Court passed the following orders/directions:
The short question which arises for determination is what is the effect of the failure on the part of the transporter to account for the goods he is carrying. A transporter is not the “dealer”. He is not found to be a dealer in this case. In the event of his failure to account for the goods he is carrying, seizure of the vehicle and the goods is permissible. To this extent there is no controversy. The issue is – whether the transporter is liable to pay Sales Tax if he is not the dealer ? If so, to what extent is his liability ?
This question has not been answered by the High Court in the impugned judgment by cryptic reasoning the High Court has refused to interfere saying that there is no infirmity in the impugned order passed by the Revisional Authority.
Hence the impugned judgment is set aside and the writ petitions (Nos. 13123 and 13123 of 2004) are ordered to be restored.
We direct the High Court to dispose of the writ petitions in accordance with law.
4. Now, on the basis of Hon’ble Supreme Court’s order, following questions arise for consideration:
i. Whether the transporter is liable to pay Sales Tax if he is not a dealer? If so, to what extent is his liability?
ii. What is the effect of failure on the part of the transporter to account for the goods He is carrying and whether the STO is justified in demanding Rs. 90,152/- from the petitioner to avoid seizure of goods and the revisional authority is also justified to uphold such order of the STO?
5. Learned Counsel for the petitioner strenuously argued that the transporter is not liable to pay Orissa Sales Tax as it is not a “dealer” as defined under the OST Act. There is also constitutional bar for imposing sales tax on the transporter. There is no provision in the OST Act and Rules framed thereunder for making an assessment on transporter as provided under the second proviso to Sub-section (5) of the Section 16-D of the OST Act. In the absence of any rule the second proviso to Sub-section (5) of Section 16-D of the Act is not workable. Emphasis has been laid on the term ‘prescribed’ in Sub-section (5) of Section 16-D of the OST Act. According to the learned Counsel, the term prescribed’ has been defined under Section 2 (e) of the OST Act to mean as prescribed by rules made under the Act. Relying on the judgment of this Court in W.P.(C) No. 2774 of 2007 (Larsen & Tubro Ltd. v. State of Orissa and Ors.) disposed of on 11.10.2007, learned Counsel submitted that taxation by way of administrative instruction which is not backed by any authority of law is illegal and contrary to Article 265 of the Constitution of India. He further relied on the decision of Hon’ble the Supreme Court in Govind Saran Ganga Saran v. Commissioner of Sales Tax, (1985) 60 STC 1, in support of his contention, that in absence of any definite provision prescribed in the rules as provided in the second proviso to Sub-section (5) of Section 16-D of the OST Act, the assessment made on the petitioner-transporter is not sustainable in the eye of law. Further referring to paragraph-32.2 of the revisional order, learned Counsel submitted that the opposite parties have admitted the fact regarding, non-prescription of the manner for making an assessment on the transporter as provided in the second proviso to Sub-section (5) of Section 16-D. He further submitted that the goods carried in 1he vehicle of the petitioner should not be subjected to Orissa Sale Tax as the transaction in question was a sale in course of inter-state trade and thus the State of Orissa has no jurisdiction to levy tax on the goods carried in the vehicle of the petitioner as Article 286(1) of the Constitution of India is a bar. In support of his contention that the transporters are not liable to pay the local tax, the petitioner relied on the judgments of the Hon’ble Supreme Court in Tripura Goods Transport Association v. Commissioner of Taxes reported (1999) 112 STC 609. In concluding his argument, learned Counsel submitted that the entire exercise made by the opposite party to levy and collect OST penalty and Entry tax amounting to Rs. 90,152/- from the petitioner-transporter is illegal and without the authority of law and violative of the rules of natural justice.
6. Per contra, learned Counsel appearing on behalf of the opposite parties submitted that as per the invoices raised by the seller and the Department supplied waybills, the goods were to be delivered to the consignee M/s. Ashirbad Prakashan Pvt. Ltd. Mancheswar, Industrial Estate at Bhubaneswar. Instead of doing so, the goods had been brought to Cuttack in the vehicle. The destination of the goods as evident from the consignment note and the lorry challan was also to Cuttack. Further the statement of the driver of the vehicle and from the slip handed over by the driver to the inspecting officer revealed that goods were to be delivered to M/s. Bharat Sales Syndicate, Banka Bazar, Cuttack. On the basis of the above facts, learned Counsel submitted that the movement of goods from Tamilnadu for delivery to a party at Banka Bazar, Cuttack was not accounted for in any document and records of the transporter as required under Section-16-D of the OST Act. The vehicle was standing at Ganesh Ghat, Cuttack to deliver the goods to Bharat Sales Syndicate, Banka Bazar, Cuttack. Thus, there was reason to suspect that the transporter was attempting to evade legitimate tax due to the Government by contravening the provisions of Sub-section (1) of Section 16-D. He further contended that the detention of the vehicle was justified and that in the circumstance of the case, the STO is justified to demand Rs. 90,152/which comprises of the amount of sales tax, surcharge leviable on the value of the goods carried in the vehicle and penalty equivalent to 20 per cent and Entry Tax @ 1 per cent of the value of the goods. Learned Counsel further vehemently argued that transporter having chosen to pay the said amount to avoid seizure of the goods and release of the vehicle, thereafter the transporter’s’ challenge to such levy was illegal. He further submitted that the constitutional validity of the Second proviso to Section 16-D(5) had not been called in question by the petitioner. In the absence of any challenge to such provision, action taken in terms of the said provision cannot be assailed, more so, after acting, in terms of the said provisions. To the challenge of violation of the principles of natural justice, learned Counsel contended that the STO issued a notice on 6.11.2002 to the petitioner through the driver of the vehicle indicating the facts of the case and asked it to show cause by 12.11.2002 why it should not be asked to pay Rs. 90,152/- in terms of Second proviso to Section 16-D(5). The petitioner instead of replying to show cause filed an application on 8.12.2002 before the STO for issuance of copies of the statements of the driver of the vehicle and other persons recorded by the inspecting officers. Another application was sent to the STO by speed post to allow the petitioner to verify the connecting record maintained in his office relating to detention of the vehicle. Certified copies of the statement of the driver and other persons available on record were issued to the petitioner on 12.11.2002. As regards the request to verify the records in respect of the detention of the vehicle, the same was disallowed as the proceeding was not finalized. Further on an application dated 15.11.2002 certified copies of the order passed in the order sheet from 12.11.2002 to 15.11.2002 and certified copy of the statements of Shri Gopal Sharma son of Shri H.K. Sharma, Manager of the Local Branch of the petitioner’s company recorded by the STO were also issued to the petitioner. The earlier date of show cause being 12.11.2002 was extended to 15.11.2002 on the request of the petitioner, but the petitioner did not give any reply to the show cause notice dated 6.11.2002. In the absence of show cause reply, the STO passed the impugned order on 16.11.2002 under Annexure-8. With the above submission, learned Counsel concluded that it could not be said that the principles of natural justice have been violated and prayed for dismissal of the two writ petitions.
7. A transporter who is exclusively engaged in the activity of transporting goods from one place to another certainly is not a dealer as defined in Section 2(c) of the OST Act. He is not assessable to tax under the Sales Tax Act in respect of goods he carries as a transporter. ‘Dealer’ as defined under Section 2(c) of the OST Act is closely inter related with the ingredient constituting the essentials of business. Only a person who carries on the business of purchasing, selling, supplying or distributing goods directly or otherwise for cash or deferred payment or for commission, remuneration or other valuable consideration can be treated as a dealer. A transporter who is not involved in the business of such purchase and sale of goods cannot be assessed to tax as a dealer under the Sales Tax Laws. The constitutional provisions are amply clear on this point. Entry 54 of List II of the Seventh Schedule and Entry 92A of List I of First Schedule of the Constitution of India authorize levy of tax only on sale and purchase of goods other than newspaper. For ready reference, the said entries are quoted below:
Entry 54 Schedule-VII (II):-“Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I.”
xx xx xx xx Entry 92A of Schedule-VII (I):-"Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade and commerce.
However, if a transporter besides its transport business has indulged in purchasing and selling and supplying and distributing goods as defined under Section 2(c) of the OST Act he is assessable to tax in respect of its trading business. Hon’ble Supreme Court of India in the case of State of Orissa v. Orissa Road Transport Corporation Ltd. (1997) 107 STC 204 while considering the business activity of the Corporation observed that besides running the business of providing transport facility, the Transport Company disposed of unserviceable, old, obsolete and unutilized parts from its store at yearly intervals. As these sales were occasional sales of a business nature, the company has been held as casual dealer within the meaning of Section 2(bb) of the OST Act.
We are, therefore, of the view that a Transporter who is not engaged in the business of purchase, sale of goods besides its transport business is not a dealer friable to pay Sales Tax in respect of the goods he carries from one place to another as a transporter. However under Section 16-D every transporter is required to maintain true and correct account of goods received for transport, transported or delivered. The Commissioner is authorized to enter into and search any vehicle, office, warehouse, godown etc. and examine goods kept therein and inspect all records relating thereto. The transporter is required to give all facilities for such examination and inspection and shall produce the bills of Sale or such other documents as may be required relating to the goods and give name and address.
8. To deal with question No. (ii) it is necessary to know what is contemplated in Section 16-D of the OST Act with regard to transporter. Section 16-D is reproduced below:
16-D. Production and inspection of accounts and documents in certain cases-
(1) Without prejudice to the provisions contained in Sections 16-A and 16-B, where a transporter or a bailer or the owner or lessee of a warehouse to whom goods are delivered for transmission keeps such goods, before delivery thereof is taken from him, in any office, shop, warehouse, godown, vessel, boat, receptacle, vehicle or any other place, the Commissioner shall have the power to enter into and search such office, shop, godown, vessel, receptacle, vehicle or other place, as the case may be, and to examine the goods and inspect all records relating thereto and, in every such case, the transporter, bailee, owner or lessee of the warehouse or the person-in-charge of such goods and records shall give all facilities for such examination and inspection and shall produce the bills of sale or such other documents as may be required relating to the goods and give his name and address and the name and address of the transporter, bailee, owner or lessee of the warehouse or the person-in-charge of such goods and records, as the case may be.
Explanation-I: For the purpose of this section-
(i) “transporter” means the owner or any person having possession or control of a goods vehicle, who transports on account of any other person for hire or on his own account, any goods from one place to another, and includes any persons whose name is entered in the permit issued under the Motor Vehicles Act, 1988 as the holder thereof, the driver or any other person in-charge of such vehicle:
(ii) “bailee” means the person to whom goods are delivered:
(iii) “lessee” means the person to whom the lease of goods is granted by the Messor; and
(iv) “goods vehicle” means a goods carriage as defined in the Motor Vehicles Act, 1988.
Explanation-II: For the purpose of this Section, where goods are delivered to a transporter, bailee or the owner or lessee of a warehouse for transmission, the movement of the goods shall be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from the transporter, bailee or the owner or lessee of the warehouse, as the case may be.
(2) If the Commissioner has reason to suspect that any transporter, bailee or the owner or lessee of a warehouse is attempting to contravene the provisions of Sub-section (1) or to evade payment of any tax due from him under this Act, he may, for reasons to be recorded in writing, seize such accounts, registers or documents of the transporter, bailee or, as the case may be, the owner or lessee of the warehouse, as may be necessary, granting a receipt for the same and shall retain the same as long as may reasonably be necessary for examination thereof or for a prosecution.
(3) The power conferred under Sub-section (2), shall include the power to break open any box, almirah or other receptacle in which any account, register or other documents of the transporter, bailee or the owner or lessee of a warehouse or to break open the doors of any premises where any such account, register or documents or any goods may be kept.
(4) The powers exercisable under Sub-section (3) shall not be delegated to any officer below the rank of a Sales Tax Officer appointed under this Act or the rules made thereunder.
(5) The Commissioner shall have the power to seize any goods vehicle or seize and confiscate any goods of any transporter, bailee or the owner or lessee of a warehouse, which are found in any office, shop, godown, vehicle or vessel or any other place while on transit but not accounted for by the transporter, bailee or the owner or lessee of the warehouse, as the case may be, in his accounts, registers and other documents maintained in respect of such goods:
Provided that before taking action for the confiscation of goods under this Sub-section, the Commissioner shall give the person affected an opportunity of being heard and make an enquiry in the prescribed manner:
Provided further that where the person affected makes payment to the Commissioner the amount of tax at the appropriate rate payable in respect of such goods to be assessed in the prescribed manner with a penalty equivalent to twenty per centum of the value of the goods seized, the goods and the vehicle seized as aforesaid shall be released.
9. Under Section 16-D(1) every transporter is required to maintain correct account of goods received for transport, transported or delivered. The Commissioner is authorized to enter into and search any vehicle and examine goods kept therein and inspect all records relating thereto. The transporter is required to give all facilities for such examination and inspection and shall produce the bills or such other documents as may be required relating to the goods and give its name and address. Under Sub-section (2) of the said Section, if the Commissioner has reason to suspect that the transporter, is attempting to contravene the provisions contained in Sub-section (1) or evade payment of tax, he shall, for reasons to be recorded, have the power to seize such accounts, registers or the documents of the transporter. Under Sub-section (3) the power conferred under Sub-section (2) also includes power to break open any box, almirah or other receptacle in which any account, register, or other documents of the transporter may be kept. Under Sub-section (4) the powers exercisable under Sub-section (3) shall not be delegated to any officer below the rank of a Sales Tax Officer appointed under this Act or the rules made thereunder. Sub-section (5) empowers the Commissioner to seize any goods, vehicle or seize and confiscate any goods of any transporter which are found in any vehicle or vessel or any other place while on transit, but not accounted for by the transporter in their accounts registers and other documents maintained in respect of the goods. However, before taking action for confiscation of goods, under Sub-section (5), the Commissioner is required to give the persons affected an opportunity of being heard and make enquiry in the prescribed manner. Under the Second proviso to Sub-section (5) of Section 16-D where the person affected makes payment to the Commissioner, the amount of tax payable on the goods in question with a penalty equivalent to 20 per centum of the value of the goods seized, the goods and vehicle seized shall be seized.
10. The writ petitioner in its two writ petitions has not challenged the constitutional validity of any of the provisions of Section 16-D of the OST Act. However, Hon’ble Supreme Court has examined the constitutional validity of Sections 42, 44 and 46A of the Assam General Sales Tax, 1993 which provides for maintenance, production of accounts by the transporters and inspection of the same by Sales Tax authorities in the case of A.B.C. (India) Ltd. v. State of Assam and Anr. (2005)142 STC 88. In the said case Hon’ble Apex Court held:
…In our view, under Section 42 of the Act, it is an obligation on every clearing, booking or forwarding agent or any other person transporting goods who during the course of its business handles documents of titles to the goods for or on behalf of any dealer or person holding certificates under Section 14 of the said Act to furnish to the prescribed authority true and complete accounts, register, documents, etc. The said Section also provides for levy of penalty at the rate of three times of tax calculated on the value of the goods in respect of which no particulars or information have been furnished under Section 42(1) of the Act or no cash memo or challan has been produced before the competent authority under Section 42(3) or Rs. 1000 whichever is greater. The said Section empowers the appointed authority to enter and search any place of business of any dealer if he has reason to believe that any dealer is attempting to evade tax or that any person transporting goods for any other person who has kept his accounts in such a manner as is likely to cause evasion of tax. As per the accepted norms of taxation the jurisdiction whatever is ancillary or subsidiary provision necessary for achieving the object of a tax statute is covered by entry 54 of List II of the Seventh Schedule to the Constitution of India. The entries in the legislative List have a very wide meaning and scope and should have a broad interpretation so as to make provisions in the Act workable and in the interest of the revenue. The obligation imposed upon the transporters under Sections 42 and 44 of the Act is also a part of such preventive measures against any evasion of taxes and the same should not be read in a narrow sense.
xx xx xx xx In our opinion, there cannot be any irregularity to call for books of accounts, documents, evidence, etc., as the same is necessary for the tax authorities to make proper verification and scrutiny of the genuineness of the transactions. Issuance of notice for verification of a transaction is a formal step and the same is required for proper verification and scrutiny of the genuineness of the transaction to safeguard the interest of the State revenue. xx xx xx xx
We have perused Section 46A which, in our view, has been inserted only for achieving the objective of sealing loopholes of avoidance and evasion of sales tax by the fictitious dealers with the help of transport companies. Normally the transporters are not liable to pay tax but liability of the transport arises only if the transporter or carrier does not disclose the particulars required under Section 46A of the said Act read with Rule 21A of the Rules thereunder. The newly inserted Section 46A of the Act, in our view, is legally sound and analogous to Section 38B of the Tripura Sales Tax Act, 1976. It is also pertinent to mention that Section 38B of the Tripura Sales Tax Act, 1976 has been upheld by this Court in the case of Tripura Goods Transport Association v. Commissioner of Taxes.
In our view, the obligation imposed upon the transporters under Sections 42, 44 and 46A of the “Assam Act is also a part of such preventive measures against any evasion of taxes and the same should not be read in a narrow sense. Section 46A and Rule 21A of the Assam Act and the rules framed thereunder respectively are valid piece of legislation for the purpose of checking evasion of taxes by making the transporters/carriers accountable for the part they play in the transaction of sale and purchase of goods.
11. In view of the above, it is obligatory on the part of the transporters to maintain true account of the goods they carry for transportation purpose as required under Section 16-D of the OST Act. Failure to maintain such account will lead to seizure of goods and vehicle and seizure and confiscation of the goods carried by them. This can be avoided if the person affected for such seizure and confiscation makes payment to the Commissioner the amount of tax assessable in respect of goods carried and penalty equivalent to 20 per centum of the value of the goods carried.
12. The petitioner challenges the action of the STO demanding Rs. 90,152/- from the petitioner for release of the vehicle along with goods. According to him, in absence of any rule for making assessment as provided in Second proviso to Sub-section (5) of Section 16-D of the OST Act, the tax and penalty amounting to Rs. 90,152/- as demanded by the STO from the petitioner is not sustainable in law. In support of his contention he relied on the judgment of this Court in W.P. (C) No. 2774 of 2007 in Larsen and Tubro’s case (supra) and the judgment of Hon’ble Apex Court in Govind Saran’s case (supra).
Learned Counsel for the petitioner has advanced his entire argument on wrong premises that Sub-section (5) of Section 16-D envisages imposition of tax on transporters. Such a plea is misconceived. It does not envisage treating a transporter as a dealer and levy tax on the transporter by way of passing any assessment order. The Second proviso to Sub-section (5) of Section 16-D provides the basis of computation of amount required to be paid by the affected person for avoiding seizure and confiscation of the goods and the release of vehicle and goods. No assessment of tax on a transporter has been prescribed in the Second proviso to Sub-section (5) of Section 16-D. Section 16-D is meant to check tax evasion and it should not be read in a narrow sense. It is intended to take care of cases where there is a collusion between the transporter and consignee for evading payment of legitimate tax due. The language used in the Second proviso to Section 16-D (5) to extent “tax at the appropriate rate payable in respect of such goads to be assessed in prescribed manner” connotes that the amount required to be paid for release of the goods would be the amount of tax payable in respect of goods in question if it would have been assessed in the prescribed manner. This is provided to safe guard the interest of the person affected. In view of such a provision, the Revenue authorities are restrained from demanding any unjust and unreasonable amount from any affected person for not confiscating his goods ,in question and to release the vehicle. The provision stipulates the measure for quantification of the amount which can be demanded. This provision further ensures that while quantifying the amount of tax involved in the goods in question which is likely to be evaded, the deduction shall be allowed in respect of tax free goods, tax suffered goods etc., if any, from the total goods in question which are allowed in regular assessment. Payment already made, if any, towards tax at any check gate under Rule 36 of the Orissa Sales Tax Rules and provision relating to computation of tax in respect of goods of special importance are to be taken care of. Thus the amount payable under the Second proviso to Sub-section (5) of Section 16-D shall be in the manner prescribed for assessment under the OST Act and Rules framed thereunder. The contention that there is no prescribed manner is not sustainable.
Referring to paragraph-32.2 of the revisional order, learned Counsel for the petitioner submitted that opposite Parties have admitted the fact regarding non-prescription of the manner for making assessment on the transporter. This assertion of the learned Counsel for the petitioner is without any basis. On the other hand, the revisional authority in paragraph-32.2 of this order categorically held that levy of penalty, OST and surcharge under the OST Act was made keeping in view proviso to Sub-section (5) of Section 16-D of the OST Act. Apart from the above, in paragraph 18-B of the counter it is stated that the petitioner has entirely misconceived the provisions under Section 16-D(5) of the OST Act which is a Section meant for prevention of evasion of taxes rather than a. regular assessment of tax. The provision of Section 16-D(5) is concerned with arresting the mischief of evasion of taxes through a transporter.
13. The decision of this Court in Larsen and Tubro Ltd. (supra) in W.P. (C) Nos. 94 and 2774 of 2007 and decision of Hon’ble Supreme Court in Govind Saran and Ganga Saran (supra) relied upon by the petitioner have no application to the present case of the petitioner since Sub-section (5) of Section 16-D of the OST Act does contemplate imposition of tax on any person. In Larsen and Tubro Ltd. (supra), Hon’ble Orissa High Court set aside a circular on the basis of which assessment orders were passed holding that assessee is liable to pay tax whereas in order to assess tax the State has to act in accordance with statutory prescription by framing rules in exercise of its rule making power under Section 29 of the OST Act. In Govind Saran’s case (supra] Hon’ble Supreme Court held that the necessary components for imposing tax were not clearly and definitely ascertainable. In that case the Hon’ble Apex Court further held that any uncertainty or vagueness in the legislative scheme defining necessary components of levying tax will be fatal to its validity. Since in Sub-section (5) of Section 16-D no provision has been made to levy tax on the transporter as alleged by the petitioner, this case is of no help to the petitioner. The judgments of the Hon’ble Supreme Court in A.B.C. (India) Ltd. (supra) and Tripura Goods Transport Association v. Commissioner (supra) on the other hand support the case of the Revenue.
14. The further case of the petitioner is that in view of the restriction prescribed under Article 286(1) of the Constitution of India, the State of Orissa has no jurisdiction to levy tax on the goods carried in the vehicle of the petitioner as the transaction in question was a sale in course of inter-state trade. This assertion of the petitioner has no substance. First of all no tax has been imposed on the petitioner. Secondly, as per the way bill used for transportation of goods from Tamilnadu and the sale invoice raised by the seller, the inter-state journey of the goods terminates in Bhubaneswar in the State of Orissa. The vehicle was intercepted in Cuttack by exercising jurisdiction under Section 16-D of the OST Act i.e. beyond the territorial jurisdiction of Bhubaneswar Municipal Corporation when the process of unloading the goods was about to start in Cuttack. On examination and inspection it was found that the goods were transported to Cuttack fraudulently as discussed above in detail. Needless to say that under the guise of any constitutional provision, which has also no application or relevance, no person is permitted to carry on fraudulent transaction by evading legitimate tax due to the State.
The further claim of the petitioner for inspection of record and cross-examination of any person and violation of principle of natural justice is not supported by any reason whatsoever. Copies of all documents were handed over to driver of the vehicle. The petitioner was supplied with the certified copies of the complete statement recorded from different persons. Copies of order sheet of the record of proceedings were also given as applied for. From these, the petitioner could find rebuttal evidence and could lead evidence to demolish the case against it. The petitioner’s grievance that it did not have copy of full documents before asking it to make payment of Rs. 90,152/- for releasing the vehicle is really of no consequence because all the documents supplied as per its request were pressed into service by the petitioner before the revisional authority and also this Court. But it could not be shown as to how the documents which were supplied lent any support to the petitioner. On the other hand, the petitioner voluntarily made payment of Rs. 90,152/- on 18.11.2002 to get the vehicle and goods released.
Moreover, before passing the order vide Annexure-8 asking the petitioner to deposit Rs. 90,152/- to avoid seizure of the goods, notice was issued to the petitioner to show cause by 12.11.2002 why it should not be asked to pay Rs. 90,152/- in terms of the Second proviso to Section 16-D. On 1-2.11.2002 no reply to show cause was filed. On the request of the petitioner the date of show cause was extended to 15.11.2002. On this date also, no show cause was filed. Thereafter only on 16.11.2002 the STO on the basis of documentary evidence and result of examination and inspection conducted which clearly proved that goods were transported to Cuttack fraudulently by the petitioner to evade tax due to the State, passed impugned order under Annexure-8.
15. In the present case, it is not disputed that the petitioner carried 279 bundles of Medium Printing Paper weighing 16286 kg. from M/s. Venkatechalpati Paper and Boards Pvt. Ltd. ponneri-Taluk in the district of Thiruvallur, Tamilnadu to Cuttack. For the purpose of transportation of goods way bill No. BB-0260393 of Ashirbad Prakashan Pvt. Ltd. Mancheswar, Industrial Estate, Bhubaneswar was used. Sale invoice was also issued by the seller in the name of Ashirbad Prakashan Pvt. Ltd. Mancheswar, Industrial Estate, Bhubaneswar. According to the way bill and the sale invoice, the consignee was Ashirbad Prakashan Pvt. Ltd. Mancheswar, Industrial Estate, Bhubaneswar to whom goods were to be delivered. But, the destination of the goods as evident from the lorry challan was Cuttack and the goods also were brought to Cuttack by the transporter. From the statement of the driver it reveals that the goods were brought to Cuttack for delivery to M/s. Bharat Sales Syndicate, Banka Bazar, Cuttack. In course of inspection, the driver handed over some telephone slips and the slips containing the name of the party at Cuttack i.e. M/s. Bharat Sales Syndicate, Banka Bazar, Cuttack. From this, it is clearly evident that delivery of goods to M/s. Bharat Sales Syndicate, Banka Bazar, Cuttack, was not supported by any genuine documents like way bill, sale invoice etc. without having such documents the transporter carried the goods to Cuttack. For this reason, the Revenue authorities suspected evasion of tax on the said consignment. Sub-section (5) of Section 16-D empowers the Commissioner to seize any goods vehicle or seize and confiscate the goods of any transporter, which is found in the vehicle or vessel or any other place while in transit, but not accounted for by the transporter in his account register and other documents maintained in respect of such goods. Admittedly, in this case the goods brought to Cuttack for delivery to M/s. Bharat Sales Syndicate, Banka Bazar, Cuttack, were not accounted for in any account, register and other documents maintained by the transporter. On the other hand, the invoice issued by the seller and the waybill utilized for transporting the goods showed some other name as consignee i.e. M/s. Ashirbad Prakashan Pvt. Ltd. Mancheswar, Industrial Estate, Bhubaneswar. Surprisingly, neither M/s. Bharat Sales Syndicate, Banka Bazar, Cuttack nor M/s. Ashirbad Prakashan Pvt. Ltd. Mancheswar, Industrial Estate, Bhubaneswar, voluntarily came forward and appeared before the Revenue authorities who detained the vehicle and claimed ownership of the goods. The transporter itself is also not interested to produce the consignee before the Sales Tax authorities. In the State of West Bengal v. Eita India Ltd. (2003) 131 STC 111, the Hon’ble Supreme Court held:
Every prudent bona fide transporter is expected to know the particulars of consignor of goods for transportation and of the consignee to whom the goods have to be delivered in West Bengal. Similarly, every reasonable transporter is expected to have a copy of the challan, transport receipt or consignment note or document of like nature in respect of goods which are being transported. The requirement to furnish these particulars cannot, therefore, be treated as requiring the transporter to furnish information which is beyond his capacity or control. So also a prudent and reasonable owner or lessee of the warehouse where such goods are stored is expected to know the name and address of the owner of such goods and requiring him to furnish those particulars cannot be said to be either oppressive, irrelevant or arbitrary.
Here the transporter alone is showing interest for release of the goods vehicle as an affected person. It volunteered itself and paid the amount of Rs. 92,152/- as demanded by the STO and got the vehicle released along with goods as the persons affected for such detention. This clearly shows that the petitioner-transporter is a party to the present fictitious transaction for the sole purpose of evasion of tax. This is not uncommon in the case of transporters. The Hon’ble Apex Court in case of A.B.C. (India) Ltd. (supra) observed as follows:
In our view, the transporters are not strangers to the sale or purchase of goods; to the contrary are parts and parcels and are directly involved in storing the goods purchased or sold by, and in many cases such, transactions are fictitiously carried on in false name and address besides false classifications vis-a-vis transportation of such goods in and outside the State making themselves party to the episode of such fictitious transactions for the sole purpose of evasion of tax by the dealers purchasing and selling such goods.
As per the provisions of Sub-section (2) of Section 3 of the Entry Tax Act, 1999, any person who brings or causes to be brought into a local area any scheduled goods on his account or on account of the principal or customer he is liable to pay entry tax. The transporter having caused the entry of goods into the local area of Cuttack is liable to pay entry tax.
16. After giving our thoughtful consideration to the submissions made by the Counsel of the respective parties, we are of the view that the STO has not committed any illegality in demanding Rs. 90,152/-which he calculated applying the basis indicated in the Second proviso to Sub-section (5) of Section 16-D and entry tax leviable on entry of such goods into local area of Cuttack without seizing and confiscating the goods loaded in the vehicle. The revisional authority has rightly upheld such order of the STO. In view of the above, both the writ petitions are dismissed. There shall be no order as to costs.
A.K. Ganguly, C.J.
17. I agree.