JUDGMENT
B.L. Hansarla, C.J.
1. In this petition we are ‘ concerned with the extent of power of the Officer-in-charge of (sic) check-post established pursuant to the power conferred by Section 16-A of the Orissa Sale’s Tax Act, 1947 (shortly called “the Act”) to detain goods and do other connected acts to prevent and check evasion of the tax under the Act.
2. What happened was that the petitioners purchased some goods for renovation, modernisation and expansion of their factory Situated at Brajarajnagar, The purrhase-in-question was precisely for the purposed establishing a plant for captive generation of power to meet the petitioners’ own requirement. Order for the supply of goods was placed on M/s. lsdec John Thompson. The goods supplied were being brought by. road when the same-were intercepted at the Unified.-. Checkgatge Birmmkrapur, on the ground that the prescribed way bill was defective inacomplete ..and there was evasion of tax. The petitioners’ two trucks were to intercepted, and under compulsion the petitioners paid a sum of Rs, 16,908/- towards Oirssa Sales Tax and Rs. 784/ – towards turnover tax for one truck’ and a sum of Rs. 3840/-towards sales tax and Rs 179/- towards turnover tax for the other truck,” as demanded by the Offi’cer-in-charge of the check -post, The legality of the same has been ‘assaifed in this petition.
3. Section 16-A of the Act read with Rule 9.4,of the Orissa-Sales,Tax Rules, 1917 (in short, “The Rules”) deal with the power of the officer-in- charge of a check-post in a case of the present nature. The validity,-,.of these provisions have not been assaileed. before us;- nonetheless, our attention has been invited to Kamal Kumar Goyal v. State of Orissa. (1975) 35 STC 343, wherein validity .of, the power of conffscatip”,..as conferred by Section 16-A (3) had been questioned on the strength of Check Post Officer v. K. P. Ab’duUa,(U71) 27 STC 1. In. that decision, the Apex-Court had declared the power of confiscation as ultra. vires as the power by the concerned Act had been conferred, irrespective of. the fact whether the goods in question were meant for sale or not. The third proviso to Section 16-A (3) of the Ac, having stated that no order of confiscation shall be made in respect of goods which’ are not lliable to payment of tix it was held in Kamal Kumar (supra) that the power was ‘not ultra vires. Nothing Further need be stated on this aspect of the question in any case the goods in the case at hand have not been conffscated.
4. The permissibility of esablishing check-pbsts. ‘ to ”prevent’ evasion had come up for examinition in Sodhi Transport Co. v. State of U.P.(1986) 62 STC 381. That case dealt ‘with a provision requiring transit passes for vehicles carrying goods from a State outside U.P. to another to be delivered at check post of exit. On failure to do so, Section 28-B of the concerned Act permitted a presumption to be raised that the driver or the person In charge of the vehicle had sold the good-; in the’ State.” This proivsion was found to be valid and constitutional and it was ‘held’ that the same did not infringe the freedom of trade and commerce, in the present case we are not concerned with the transport of the goods from one State to another though this State and, as such Sodi Transport (supra) does not help us much to decide the controversy at hand.
4-A. The decision rendered by the Allahabad High Court in Jain Shudh Vanaspati Ltd. v. State of U.P. (I983) 53 STC 54, is also not very relevant except to the extent that as per this decision the goods which are intended to 6e sold alone are liable to by detained at the check-post. This conclusion was arrived at by the Court on the language of Section 28-A of the concerned Act whose validity was upheld.
5. Apart from the aforesaid decisions dealing with the validity of the provisions setting up check-posts or conferring the power of confiscation, etc. on the Officer-in-charge of the check-posts our attention has been invited to three other decisions in the main of this Court Of these two namely, Genelac Ltd. v. Commissioner of Commercial Taxes.:’ (1986) 63 STC 439, Bharat Process and Mechanical Engineers Ltd. v. State of Orissa, (1987) 65 STC 273, have-dealt with the question of obtaining undertiking from carriers.- It was held in both these renderings that there is no statutory provision authorising giving of any undertaking by the Carriers. In the third decision ; Bihar Alloy Steels Ltd. v. State of Orissa (1989) 75 STC 305, it was held that mere non-payment of tax cannot lead to an interence of tax evasion when the concerned person disputes its liability’ before the authorities. It may be stated here that before she final decision was rendered in this case, the person concerned had approached the statutory authority :under the Act and had disputed their liability to pay t.ax under the Act
6. This all all we have to say. by way of referring to precedents of this Court as well as of Giber Courts which have dealt with the question of interception of the goods at the check-posts including validity of some of the provisions relating to detention and confiscation of the goods. In so far as the case at hand is concerned, we find that pursuant to the requirement of Rule 94(4)(a) of the Rules, a notice in Form-VI-B was served on the driver of the truck in question wherein it was stated that the good were meant for works contract. Because of this, Central sales tax and , Orissa sales tax regulation numbers were demanded. Another defect pointed out in the way-bill was that the same had not been signed either by the consignor or the consignee. As to this, it is stated by Shri. Mahanti that the same was non-existent inasmuch as the consignor had duly signed the way-bill as would appear from Annexure-3. As Form No. XXXll, which is the form of way-bill prescribed by Rule 94(3), requires only the signature of the consignee. We are satisfied that the defect found on this score was really not there. As to the observation in Form No. VI-B requring quotation of C. S. T. and S. S. T. numbers non-quoting of which may be said to have been taken as a defect in the way-bill-it may be pointed out that the way bill contains these numbers both of the seller of the goods as well as the purchaser, who in the present case, is petitioner No. 1 We are, therefore, satisfied that the defects mentioned in Form No . VI-B did not really exist and there arose no occasion to demand any amount from the petitioners on this count.
7. The above, however, is not the end of the jourrney inasmuch as the Officer-in-charge of the check-post had asked” the driver to pay varying sums of money as detailed above on account of evasion of tax. Rule 94(4Xa) permits an Officer-in-charge of the check-post to give an opportunity to rectify the defect or omission in the way-bill or an option to pay such amount as indicated by the in-charge. The owner of the goods or any person on behalf of such owner may pay the demanded amount failing which unloading of the goods may be ordered followed by seizure and confiscation of the same. Of course, before confiscating the goods the procedure laid down in Sub-rule (5) has to be complied with. As in the present case the need for confiscation did not arise because of the payment of the demanded amount, we are not required to deal with the requirement of law before confiscation can be ordered by the Officer-in- charge of a check-post.
8. As to the demand of the money on account of evasion of tax, it has to be pointed out that the question of evasion had not arisen by the time the goods were intercepted at the check-post. As to the observation in Form No. VI-B regarding the transaction being in the nature of works contract, it may be pointed out that it was premature for the Officer-in- charge of the check-post to come to this conclusion inasmuch as no transfer of the property in the goods in question had taken place in execution of works contract by the time the goods were intercepted at the check-post. The sale had, therefore, not taken place by that time and so there was no question of evasion of any tax on sale. This apart, in the present case, petitioner No. 1 being a registered dealer, there was hardly any occasion for the Officer-in-charge of the check-post to think of evasion of tax even if the goods were being brought in connection with works contract. If it would have been found subsequently that the goods had been involved in execution of-a.works” contract and if this transaction would have been exigible to-safes-tax under the provisions of the Act, the arms of taw were long’enough to,reach-the petitioners in view of the fact that petitioner No. 1 is a registered dealer. The realisation of the amount in question from the petitioners has, therefore, no, authority of law. So we would “order for” refund of the same.
9. in the result, the petitioners allowed by ordering refund of the two amounts paid by the petitioners at the check-post.
10. Before pitting, we propose to deal with the submission of Shri Mahanti that there is harassment of persons at the check-posts and we should intervene to see that honest: payers are spared, the highhandedness of the persons manning the check posts. Learned Standing Counsel, on the other hand contents that eysicon of tax being rampant and it, being difficult realise tax after the goods have slipped away, the State has to provide for check.-posts to present; or check evasion, his urged ” by’ the learned counsel .that: where officer in-charge .Officer in-charge of a check-post Has to deaf with a large number of .vehicles crossing the check-post, some amount of inconyenice is unviodable. Shri Patnaik would, however, be happy If incervent to parties, can be lessened in any way by educating the in charge, the be ckeck posts about the scope and width” ‘their* power-;in intetercepoting good; while in transit.
11. We have applied our minds to this aspect of the case According to us, much of the inconvenience or harassment would be obviated-if-the-officers would bear in mind the fact that once there is no defect in ‘the way-bill- or the same-is not incomplete, their jurisdiction to detain the goods of would only if there be evasion of tax While stating the law thvs we have excluded from our purview the contibgeney. where the good carried are not fully covered by the way-bill amount such a case – presents no problem. Here too we would like to observe that where the. goods are meant for personal cosumption, it is apparent that-the same are not retjuired to be covered by he way-bill. Corning to the question of the way-bill beirig defetive or mccmplete, we would like to emphasis that great scriurity is called far in this ;regard because of the argument–advanced by Shri Patnaik for ‘the’ department that if the way- bill is. found defetive. or incompelete the same would make the presumption of man effort oon ‘the part of the persons concerned to avoid payment of tax which would c1oth the the Officers charge with the powers of disarming the goods inasmuch as the power has been conferred not only to check evasion of tax but also to prevent evasion. We have spoken about the need of a greater scr tinay because as has been found by us in the present case itself, the two defects pointed out in Form No. VI-B did not really exist and so there was no scope for the Officer-in-charge of the check-post to entertain a reasonable belief that the goods were being transported clandestinely with a view to avoid payment of tax. Once the way-bill is found free from defect and is complete, the question of detention of goods can arise only if there be evasion of tax. As to this, it may be observed that question of evasion arises once the transaction has become taxable which would be when there has been either a sale or a purchase. As to the goods which are brought from outside the State, it is apparent that the same being in the course of inter State trade or commerce, the liability to tax depends upon the situs of the sale. As in most of these , cases the movement of the goods would be pursuant to the contract of sale or purchase, the situs would be outside the State because of which the good would suffer Central sales tax or the State sales tax in the exporting State. So far as this State is concerned, the question of payment of sales tax would arise if after the goods have been brought into the territory, there . is a further sale. The occasion for the same would be after the goods have entered territory and not at the point of entry. So there would be hardly any ocrasion to detain such goods at the check-posts. This apart when in the way-bill the registration number of the buyer of the goods is reflected, there would be no justification for the check-post officers to entertain a belief that the payment of tax would get evaded by such person on his selling the goods subsequently. So, goods of such a person are not to be ordered for unloading except where the goods be such which are not fully covered by the way-bill or the way-bill be defective or incomplete. We would reiterate that on these two conditions being absent, the in-coming goods, specially those being brought by registered dealers, would not be detained at. the check-posts. Any effort of the officer of the check-posts to do the contrary shall be deemed to be an unauthorized act which, it is the duty of the department to see, is not indulged by the concerned officers. Their education in law, as explained by us, should go a long way to meet the genuine grievance of the traders and the same would also protect the revenue of the State by catching the unscrupulous traders at the vulnerable point.
12. While stating the law as above, we are conscious of the contention of the learned Standing Counsel that Under Section 16-A of the Act check-posts are required to be set up not only to check evasion but also to prevent evasion. So if the Officer-in-charge of a check-post reasonably believes that the goods being carried in vehicle or boat would be sold in this State but the seller would not pay the sales tax, the same would authorise the officer to detain the goods at the check-post on failure of the concerned person to pay the indicated amount. As to this submission, we would state that though the Legislature conferred on the State Government the power to set up check-post i for this purpose also, the State Govt. in its wisdom did not confer this power on the Officer-in-charge of the check-post. This follows from the language of Rule 94 (4)(a) of the Rules and what is stated in Form Vl-B. As already indicated, rule 9(4)(a) authorises action only under three contingencies : (i) the goods being carried are not covered by the way-bill; (ii) the way-bill is defective or incomplete, and (iii) there is evasion of tax in respect of the goods carried in the vehicle or boat. This rule has not conferred power’ of detention of goods on the satisfaction of the Officer-in-charge of the check-post that there is likelihood of evasion of tax. Form Vl-B, as prescribed, would also show that any amount can be demanded only when the way bill is defective/incomplete or “there is evasion of tax” in respect of goods carried. It may be stated that the question of evasion of tax would arise Only after tax has become payable, which would be so if the taxable event has already taken place and not where this event has to take place in future.
13. As to why the State Government while framing the rules did not authorise the Officer-in-charge of the check-post to detain goods on its satisfaction that the owner of the goods would avoid payment of tax after selling the goods following entry of the same in the territory of the State. is a matter refatable to the wisdom of the State Government, it may be that it was felt that conferment of such a power would clothe the Officer-in- charge with such drastic power which it would be difficult to control. Needless to say that such a power would have indeed conferred almost unbridled power because it would have been easy in very many cases to say that the good would be sold within the territory of this State and the seller would not pay the required tax. In case of unregistered dealer, such an allegation can be made almost in every case; even registered dealers would not be able to escape easily the grip of the Officer-in-charge. We need to. say nothing further in this regard in this case except to reiterate that the power of the kind asked for by the learned Standing Counsel in favour of the Officer-in-charge has not been conferred in its wisdom even by the Slate Government on such an officer.
14. Another general observation may be made before concluding. The same relates to Form VI-B which requires reasons to be stated in case the way-bill is found defective/incomplete. It would be in consonance with justice if this from also requires the officer-in-Charge to state as to why according to him there is evasion of tax. This would stop arbitrary exercise of power and ensure ungrudging payment of the demanded amount.
S.K. Mohanty, J.
I agree.
