Union Of India (Uoi) And Anr. vs State Of Rajasthan And Ors. on 17 October, 2002

Rajasthan High Court
Union Of India (Uoi) And Anr. vs State Of Rajasthan And Ors. on 17 October, 2002
Equivalent citations: 2003 129 STC 484 Raj
Author: N Mathur
Bench: N Mathur, H Panwar


N.N. Mathur, J.

1. The instant writ petition under Article 226 has been filed by the Union of India through General Manager, Northern Railway, New Delhi and the Divisional Railway Manager, Northern Railway, Jodhpur seeking following directions :

“(i) by an appropriate writ, order or direction it may be declared that the provisions of Section 78 of the Rajasthan Sales Tax Act, 1994 are not applicable to the railways and its servants and the respondents and their officers may be restrained from interfering with the working of the railways.

(ii) by an appropriate writ, order or direction or in alternative the Section 78 as a whole may be declared illegal and be struck down and it may be declared that the respondents and their officers are not empowered to interfere in the working of the railways.

(iii) any other appropriate writ, order or direction which this honourable Court may deem just and proper in the facts and circumstances of the case may kindly be passed in favour of the petitioners.”

2. The case of the petitioner is that the employees of the Northern Railway book the goods for transportation to various stations and also deliver the goods, which are received from other stations to the concerned parties. As per the provisions of the Indian Railways Act, 1989, the railway administration is under obligation to make arrangements for receiving and forwarding traffic/goods without any unreasonable delay. The railway administration is also under obligation to deliver the goods to the consignee or his authorised agent on production of the railway receipt.

3. The grievance of the petitioner is that in view of the provisions of Section 78 of the Rajasthan Sales Tax Act, the authorities of State of Rajasthan are harassing their officers and interfering in their functioning. It is averred that the petitioners are not under any obligation to ensure that the claimant has paid the sales tax on the goods carried by the railways. As far as, the payment of tax is concerned, the railway administration has already issued directions to its employees to provide facilities to the sales tax authorities for detection of evasion of sales tax. In spite of that, the State authorities have issued notices to its officers for imposition of penalty for not withholding the bilty (R.R.) to the various employees of the petitioners.

4. Reply to the writ petition has been filed supported by the affidavit of Shri Karan Singh Shekhawat, Assistant Commissioner, Anti-Evasion, Commercial Taxes Department, Government of Rajasthan, Jodhpur. It is averred that even under the provisions of Indian Railways Act, it is the responsibility of the carrier to ensure that the tax of State is duly paid by the consignee. The allegation of unnecessary interference in the functioning of the railway administration is denied. It is relevant to extract the averments made in para 12 of the reply to writ petition :

“12. That the averments made in para No. 13 of the writ petition are not admitted in the manner, the same are stated. It is denied that the respondents started interfering in any manner with the functioning of the petitioners and other employees at a railway station since October, 1988 or before or thereafter. The respondents are only making efforts to discharge their duties to check and prevent the evasion and avoidance of tax. It is also denied that the petitioners have made any efforts to co-operate with the respondents in the manner of tracing the tax evaders. It is also denied that the petitioners are abiding by the instructions under Section 22A of the Act of 1954 and Section 78 of the Act of 1994. It will not be out of place to mention here that since the regular checking of the goods carried through road transport made it difficult for the dealers to evade tax in respect of the goods transported through road transport, they started adopting the transport through railways hoping that the railways being the Government agency, no checking would be done and the method through which the tax was being evaded by transporting goods through fictitious names will go undetected. Realizing this trend, the respondents who are under an obligation to implement the sales tax laws in the State of Rajasthan and collect the legitimate dues levied under the Sales Tax Act, intensified checking the goods which were being transported through the railways through the territory of State of Rajasthan by invoking the provisions of Section 22A of the Act of 1954 and Section 78 of the Act of 1994 in the same manner as it was done in the case of road transport, and it was revealed that by adopting the same modus operandi as the dealers were operating while transporting the goods through the road transport, a large number of evasion of tax, was going on inasmuch as in respect of a large number of consignors and the consignees were not at all traceable. It is only to illustrate, the respondents are stating that while the entire automobile market, particularly of tyres, is concentrated at Chopasni Road which is nearer to the Jodhpur Railway Station, the tyres were being consigned to Mandore Railway Station which is about 10 kilometres from the market. Being suspicious about the destination of tyres at Mandore, the provisions of Section 22A of the Act of 1954 were invoked to know the identity of the consignees who were lifting the tyres from Mandore Station. A list of such consignees has already been annexed with the reply to the original writ petition showing the names of consignees and addresses furnished by the railway authorities and in all cases, the consignees were not traceable at the addresses given by them. Even the proper addresses of the consignees were not there. Moreover, when there was continuous checking at Mandore railway station, the venue of destination of tyres has been shifted to Tinwari since November, 1988. This is not even the tip of the iceberg. The cases have been noticed where in spite of the directions being issued by the railway officers at the station, the goods have been delivered after the office hours in the night and fictitious time has been recorded as to delivery. It has also been noticed on many occasions that to avoid checking outside the parcel office, the goods have been rebooked from the station of destination to some nearby suburb station.”

5. It is further averred in the same para as follows :

“As a matter of fact, as will appear from the reports received from various corners of the State of Rajasthan that the railway administration is not at all alive to the problem of tax evasion being carried out through transport of goods through them and they are putting all sort of hurdles in discharging the duties by the respondents and other officers of the State in the Sales Tax Department, Despite repeated requests, the goods are being delivered, in spite of detention order, to persons, who are not thereafter traceable, goods are being delivered after office hours, in spite of written instructions from higher authorities as will appear from annexure 8 filed by the petitioners themselves. In many cases, goods are also rebooked and transported to some other destination where intensity of checking is not there.”

6. Mr. Sagarmal Mehta, Advocate-General for the State of Rajasthan made a statement that if there are any suggestion from the railway administration for giving effect to Section 78 of the Act of 1994, the same shall be considered in the right perspective by the State. It is further submitted that the provisions of Section 78 shall be invoked only in a case where it is utmost necessary.

7. On careful consideration of the entire matter, we are of the view that the writ petition is misconceived. The allegation made are vague. However, in view of the statement made by the Advocate-General, if the railway administration has any difficulty they can approach to the State authorities and find out the workable method. It is expected of the railway authorities to co-operate with the State Government in the matter of detection of evasion of sales tax.

8. As far as question of validity of Section 78 is concerned, it is no more res integra. The apex Court has upheld the validity of such provisions in State of Rajasthan v. D.P. Metals reported in [2001] 124 STC 611. Thereafter, the sub-clauses of Section 78 have also been upheld by the division Bench of this Court in the case of Lalji Mulji Transport Company v. State of Rajasthan reported in [2002] 127 STC 365. Even otherwise, we fail to understand how the Union of India can challenge the validity of a State’s Act.

9. In view of the aforesaid, we find no merit in this writ petition and the same is dismissed. The interim order of this Court dated May 3, 1989 is made absolute. Petitioners shall comply with the said directions.

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