Reserved Case :- SALES/TRADE TAX REVISION No. - 1693 of 2006 Petitioner :- S.G. Express Respondent :- Commissioner Trade Tax Petitioner Counsel :- Kunwar Saksena Respondent Counsel :- S.C. Hon'ble Pankaj Mithal,J.
The assessee is a transporter. He has filed this revision against the
order of the tribunal dated 2.8.2006 passed in second appeal no.134 of
2006, Commissioner, Trade Tax, U.P. Vs. S/s. S.G.Express, Vishnu Gali,
Vishwas Nagar, Sahadara, Delhi whereby the tribunal after setting aside
the order of the first appellate authority allowed the appeal and upheld the
penalty of Rs.80,000/- imposed by the assessing authority in exercise of
the power under Section 13A(4) of the U.P. Trade Tax Act (hereinafter
referred to as “the Act”).
The dispute of penalty relates to assessment year 2005-06. The
assessee was transporting 1026 suit cases allegedly from Delhi to
Guwahati vide trucks no. HR 55 B/3185 and DEL 1E/3625. He produced
the relevant documents at the central check-post, T.P. Nagar, Ghaziabad
showing the name of the consigner as Ashish Attachi Centre, 12/6
Mangolpuri, Delhi and insisted for issuance of the necessary Transit Form
34 in accordance with Section 28-B of the Act. The officer-in-charge of the
check-post instead of issuing Transit Form detained the goods on the
ground that the consigner as disclosed in the documents produced is fake
and non-existent. The goods so seized were directed to be released on
furnishing security of Rs.80,000/-. On second appeal to the tribunal,
though the seizure was upheld but the security was reduced to
Rs.20,000/-. The assessee on furnishing security and on release of the
goods applied for Transit Form whereupon Transit Pass No.2859 dated
8.9.2005 was issued by the officer-in-charge of the check-post after due
verification of the documents which were found to be proper and in order.
The assessee surrendered the aforesaid Transit Pass at the exist check-
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post while leaving U.P. on 8.9.2005. Even though the assessee was
issued a Transit Pass which he had validly submitted at the exit check-
post, penalty proceedings under Section 13A(4) of the Act were drawn
against him and a penalty of Rs.80,000/- was imposed. The said penalty
order on appeal was set aside by the Joint Commissioner (Appeal), Trade
Tax, Ghaziabad vide order dated 15.2.2006. However, on the second
appeal preferred by the department, the penalty order has been restored.
Thus, this revision under Section 11 of the Act has been preferred by the
assessee.
I have heard Sri Kunwar Saxena, learned counsel for the assessee
and Sri Bipin Kumar Pandey, learned Standing Counsel for the
respondents.
Sri Saxena has argued that once the Transit Form was issued to
the assessee and the same was duly submitted at the exist point, the
presumption is that the goods have passed through U.P. on valid
documents and, as such, there is no question of imposing penalty.
The submission of learned Standing Counsel in reply, is that as the
consigner on enquiry was found to be fake and non-existent the authorities
rightly believed that the goods were being transported from within the
State of U.P. to outside with the intention to avoid trade tax.
Section 28-B of the Act is not a charging Section but it provides for
a machinery to check evasion of trade tax and to ensure that the goods
which are being carried from one place to another through the State of
U.P. are not sold within the State of U.P. The aforesaid Section reads as
under:
“28-B. Transit of goods by road through
the State and issue of authorisation for transit of
goods. – When a vehicle coming from any place
outside the State and bound for any other place
outside the State, and carrying goods referred to in
sub-section (1) of Section 28-A, passes through the
State, the driver or other person-in-charge of such
vehicle shall obtain in the prescribed manner an
authorisation for transit of goods from the officer-in-
charge of the first check-post or barrier after his entry
into the State and deliver it to the officer-in-charge of
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the last check-post or barrier before his exit from the
State, failing which it shall be presumed that the goods
carried thereby have been sold within the State of the
owner or person-in-charge of the vehicle:
Provided that where the goods carried by such
vehicle are, after their entry into the State, transported
outside the State by any other vehicle or conveyance,
the onus of proving that goods have actually moved
out of the State shall be on the owner or person-in-
charge of the vehicle.
Explanation. – For the purpose of this section,
the hirer of the vehicle shall also be deemed to be the
owner of the vehicle.”
From a plain reading of Section 28-B of the Act it is evident that for
drawing the presumption of sale of goods within the State of U.P. two
conditions are necessarily to be satisfied. First, the owner or the person-in-
charge of the vehicle have failed to obtain the transit pass from the first
check-post or barrier; or/and secondly he has failed to deliver it to the
officer-in-charge of exit check-post while leaving the state of U.P. The
aforesaid provision nowhere provides that any irregular or incorrect
description in the documents submitted for the purpose of obtaining transit
form or non-existent of the consigner would also attract the presumption
laid down in the aforesaid provision or any penalty. At best, in the event of
above irregularities, the officer-in-charge of the check-post can only detain
the goods or refuse to issue transit form.
In the case at hand admittedly, a transit form was subsequently
issued to the assessee meaning thereby that the issuing authority was
satisfied that the goods are coming from outside U.P. for being carried
through U.P. to a destination again outside U.P. It was duly produced at
the exit check-post within time and no discrepancy in its production was
found. Therefore, the twin conditions laid down under Section 28-B of the
Act for drawing the adverse inference of sale of the goods in the State of
U.P. were duly satisfied. Thus, the penalty provision of Section 13-A(4)
does not get attracted.
In view of above discussion, I am of the opinion that whether the
consigner or transporter are fake or are not traceable is not a material
consideration for drawing any adverse inference when the person-in-
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charge of the vehicle has obtained a valid transit pass at the entry check-
post and had duly produced the same at the exist check-post within time.
Here the obtaining of transit pass and its surrender is in conformity with
the provision of Section 28-B of the Act.
In Madhya Bharat Transport Carrier, Agra Vs. Commissioner of
Trade Tax, U.P. 2003 NTN (Vol.23) 1009 it has been held that all that is
required to be seen is whether the goods have actually been brought from
outside of U.P. and taken outside of U.P. and that the goods must tally
with the accompanying documents and as such it is wholly irrelevant
whether the consignor or consignee are traceable or not.
In M/s Murliwala Agrotech Ltd. Vs. Commissioner of Trade Tax,
U.P. Lucknow 2005 NTN (28) 198 it has been held by this Court that the
goods being transported through U.P. cannot actually be seized at the
entry check-post, not even on the ground that the goods were different
from the goods declared in documents produced for obtaining transit form.
In view of the above, the validity of the seizure itself becomes
doubtful and as such the imposition of penalty on the ground of seizure
can not also be justified. It may be noted that it is not the case of the
department that the goods as per the transit pass were unloaded within
the State of U.P. or found to be different or not tallying with those
mentioned in the form or that they were not properly accounted.
Apart from the above, it is well recognised that for imposting penalty
there must be a clear intention to evade payment of tax and mere seizure
of the goods cannot be sufficient in itself for imposing of penalty.
The tribunal has not recorded any finding of intention to evade tax
on the part of the assessee in resorting to the order of penalty and has not
even taken into consideration the impact of the subsequent issuance of
the transit pass to the assessee which impliedly indicates that the officer-
in-charge was satisfied that the goods were coming from outside U.P. for
being transported through U.P. to a destination outside U.P.
In the above background of facts and circumstances, no
presumption can legitimately be drawn that the goods were not actually
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coming from outside U.P. Thus,, the penal provision of Section 13-A(4) of
the Act does not get attracted.
In view of above facts and circumstances, the impugned order of
the tribunal dated 2.8.2006 is unsustainable and is hereby set aside and
that of the Joint Commissioner (Appeal), Trade Tax, Ghaziabad dated
15.2.2006 is restored and affirmed.
The revision accordingly stands allowed with no order as to costs.
Order Date :- July 23, 2010
BK