Stone India Limited Vs. Commercial Tax Officer, Central - Court Judgment

Excerpt:
1. the applicant, stone india ltd., is a limited company carrying on business of re-selling of bearings most of which are imported. it is a dealer registered under the west bengal sales tax act, 1994 (in short, "the 1994 act"). in course of its business it placed with s.k.f. south east asia pacific pvt. ltd. of singapore, an order for supply of 898.800 kgs. of cylindrical roller bearings. on such order the said company sent, as consignor, the invoice and other necessary documents in order to enable the applicant to apply for sales tax permit for importation of the said bearings into west bengal. since, bearing is a notified commodity, the applicant applied in form 40 with necessary documents for issue of permit. the applicant claims that a permit was issued by the respondent no. 2 (commercial tax officer, corporate division) and the bearings, contained in 14 wooden boxes, having reached the international airport at calcutta, the applicant engaged express clearing agency as the clearing agent. accordingly, the clearing agent got the goods cleared from the customs authority on february 10, 1998 and loaded the same, along with some quantity of medicine belonging to dey's chemicals, in truck no. wb 03-7505 on february 11, 1998. the applicant claims that the driver of the truck was given the necessary documents including the permit and that since there was no sales tax check-post at the international airport at calcutta the permit could not be got endorsed by any check-post authority at the time of taking delivery of the goods from the airport.when during its movement the truck reached the airport hotel it was intercepted by the commercial tax officer, central section (respondent no. 1). the applicant alleges that despite production of the permit and other documents the respondent no. 1 took the truck to the office of the sales tax directorate at 14 beleghata road, calcutta, and issued order detaining the truck and then seized the goods on february 12, 1998 on the ground that the goods were transported in contravention of the provisions of section 68 of the 1994 act. subsequently, the respondent no. 1 initiated a penalty proceeding and imposed a penalty of rs. 2,25,000 fixing the value of the goods involved at rs. 9,00,000.the applicant has moved the instant application before this tribunal on the specific pleas that the seizure in question having been effected despite production of permit as well as associated documents is illegal and that on the said ground the order imposing penalty is also bad. the applicant prays for a declaration to that effect. however, by an order dated february 26, 1998 of this tribunal the seized goods were directed to be released against security.2. the respondents' pleas, as canvassed in the affidavit-in-opposition, resisting the applicant's prayer are that the airport at calcutta has a check-post and that the applicant having transported the goods (898.800 kgs. cylindrical roller bearings) from the airport check-post area without getting the permit endorsed by the check-post authority at the airport has contravened the legal provisions of rule 212 of the west bengal sales tax rules, 1995 (in short, "the 1995 rules") and has thereby attracted the penal provisions of section 71 of the 1994 act.according to the respondents, the impugned seizure as well as the order imposing penalty are valid and do not suffer from any illegality.3. the contentious issue before us is whether the impugned seizure and the subsequent order imposing penalty have been competently made by the respondent no. 1.4. the uncontroverted position is that "bearings" are notified goods and hence their importation into west bengal is subject to the restrictions and conditions as laid down in section 68 of the 1994 act read with rules framed thereunder. in the instant case the consignment of bearings was imported from singapore by air and it reached calcutta airport. the applicant was to take delivery of the consignment from the airport. hence, rule 211 of the 1995 rules is appropriate one which applies to the case. this rule requires, inter alia, that a person or a dealer for taking delivery of a notified goods or goods specified in part a of the fourth schedule to the act from an airport shall have to produce documents like air consignment note along with a declaration in duly filled in form no. 40 before the appropriate assessing authority or the appropriate inspector for his signature and that such authority/inspector being satisfied about the correctness of the declaration shall countersign the document with official seal and shall endorse the declaration. this rule further requires that after such endorsement/signature whoever transports or carries the consignment shall carry with him a copy of the declaration and a road challan and that in case of interception of the vehicle by any competent sales tax authority, such documents shall be produced before such authority.5. the applicant before us duly performed the above formalities by getting the air consignment note and the declaration duly endorsed by the competent authority before taking delivery of the goods from the airport. it is the specific case of the applicant that the driver produced the road challan and the declaration when the respondent no. 1 intercepted the truck carrying the boxes of bearings. this assertion has not been disputed by the respondents. thus, the applicant has fully complied with the provisions of rule 211.6. mr. j.k. goswami, learned state representative, however, contends that mere compliance with the statutory formalities as provided in rule 211 is not enough and that the airport at calcutta being also a check-post the applicant shall have to act according to the provisions of rule 212 of the 1995 rules in order to avoid the penal provisions of section 71 read with section 68 of the 1994 act. but a perusal of rule 212 does not lead us to an inference that the said rule has any application to a case of taking delivery of goods from an airport even if such airport be declared as check-post under section 75 of the act.rule 212 applies when any goods specified in part a of the fourth schedule to the 1994 act or any notified goods, enters west bengal being transported by a road vehicle, river-craft or other vessels or by any other means through the notified areas of a check-post or any other place notified under section 68, other than those referred to in rule 211. the expression "other than those referred to in rule 211" as appearing in rule 212 is very significant. it indicates that the places referred to in rule 211, viz., railway station, steamer station, sea port, airport or post office, are excluded from the purview of rule 212. in other words, it means that even if such places as referred to in rule 211 are declared as check-posts, rule 212 shall have no application in dealing with entry into west bengal of such specified/notified goods and that in such situation the compliance with the provisions of rule 211 would suffice. so long the expression "other than those referred to in rule 211" remains in rule 212, there is no scope for application of rule 212 to the cases of goods imported through airport. in view of the circumstances we find that the applicant cannot be indicted on the plea of violation of the provisions of section 68 read with the rules framed thereunder, in connection with the goods (bearings) as are the subject-matter in the instant case.therefore, it is not necessary to go into the question whether the applicant's truck carrying the consignment of bearings was actually proceeding towards the airport check-post situated at the domestic terminal with an intent to get the declaration, which was previously endorsed by the competent authority, for further endorsement under sub-rule (4) of rule 212 by the check-post authorities or tried to sneak out of the area with intent to evade such endorsement. be it mentioned that even where presence of "mens rea" is relevant for constituting an offence, mere presence of "mens rea" without overt acts which constitute offence will not be punishable for commission of such an offence. in the instant case even if the applicant had intention to take away the goods without producing the duly authenticated declaration at the check-post for counter signature as well as release of the goods under rule 212, the applicant could not be said to be guilty of violation of rule 212 because this rule is not applicable to this case and because the rule 211 which applies to the instant case has been duly complied with.7. in the result, we do not find any violation of any provisions of section 68 during the course of movement of the truck carrying the impugned consignment of bearings. hence, the application is allowed.the seizure of 14 boxes of bearings on february 12, 1998 is quashed.for the said reason the subsequent order imposing penalty is also quashed. the order of this tribunal dated february 26, 1998 returning the seized bearings is made absolute and the security, if any, furnished in terms of the said order in cash be refunded within three weeks from this order. if the security has been furnished by way of bank guarantee the same shall stand terminated.9. after the judgment is delivered mr. j.k. goswami, learned state.representative, prays for staying the operation of this order for eight weeks. none appears on behalf of the applicant in this case for raising the objection to the instant prayer. since according to mr. goswami a considerable amount of revenue is involved in this instant case, the instant prayer for stay is allowed for four weeks.

Judgment:
1. The applicant, Stone India Ltd., is a limited company carrying on business of re-selling of bearings most of which are imported. It is a dealer registered under the West Bengal Sales Tax Act, 1994 (in short, "the 1994 Act"). In course of its business it placed with S.K.F. South East Asia Pacific Pvt. Ltd. of Singapore, an order for supply of 898.800 kgs. of cylindrical roller bearings. On such order the said company sent, as consignor, the invoice and other necessary documents in order to enable the applicant to apply for sales tax permit for importation of the said bearings into West Bengal. Since, bearing is a notified commodity, the applicant applied in form 40 with necessary documents for issue of permit. The applicant claims that a permit was issued by the respondent No. 2 (Commercial Tax Officer, Corporate Division) and the bearings, contained in 14 wooden boxes, having reached the International Airport at Calcutta, the applicant engaged Express Clearing Agency as the clearing agent. Accordingly, the clearing agent got the goods cleared from the customs authority on February 10, 1998 and loaded the same, along with some quantity of medicine belonging to Dey's Chemicals, in Truck No. WB 03-7505 on February 11, 1998. The applicant claims that the driver of the truck was given the necessary documents including the permit and that since there was no sales tax check-post at the International Airport at Calcutta the permit could not be got endorsed by any check-post authority at the time of taking delivery of the goods from the airport.

When during its movement the truck reached the Airport Hotel it was intercepted by the Commercial Tax Officer, Central Section (respondent No. 1). The applicant alleges that despite production of the permit and other documents the respondent No. 1 took the truck to the office of the Sales Tax Directorate at 14 Beleghata Road, Calcutta, and issued order detaining the truck and then seized the goods on February 12, 1998 on the ground that the goods were transported in contravention of the provisions of Section 68 of the 1994 Act. Subsequently, the respondent No. 1 initiated a penalty proceeding and imposed a penalty of Rs. 2,25,000 fixing the value of the goods involved at Rs. 9,00,000.

The applicant has moved the instant application before this Tribunal on the specific pleas that the seizure in question having been effected despite production of permit as well as associated documents is illegal and that on the said ground the order imposing penalty is also bad. The applicant prays for a declaration to that effect. However, by an order dated February 26, 1998 of this Tribunal the seized goods were directed to be released against security.

2. The respondents' pleas, as canvassed in the affidavit-in-opposition, resisting the applicant's prayer are that the airport at Calcutta has a check-post and that the applicant having transported the goods (898.800 kgs. Cylindrical Roller Bearings) from the airport check-post area without getting the permit endorsed by the check-post authority at the airport has contravened the legal provisions of Rule 212 of the West Bengal Sales Tax Rules, 1995 (in short, "the 1995 Rules") and has thereby attracted the penal provisions of Section 71 of the 1994 Act.

According to the respondents, the impugned seizure as well as the order imposing penalty are valid and do not suffer from any illegality.

3. The contentious issue before us is whether the impugned seizure and the subsequent order imposing penalty have been competently made by the respondent No. 1.

4. The uncontroverted position is that "bearings" are notified goods and hence their importation into West Bengal is subject to the restrictions and conditions as laid down in Section 68 of the 1994 Act read with Rules framed thereunder. In the instant case the consignment of bearings was imported from Singapore by air and it reached Calcutta airport. The applicant was to take delivery of the consignment from the airport. Hence, Rule 211 of the 1995 Rules is appropriate one which applies to the case. This Rule requires, inter alia, that a person or a dealer for taking delivery of a notified goods or goods specified in Part A of the Fourth Schedule to the Act from an airport shall have to produce documents like Air Consignment Note along with a declaration in duly filled in form No. 40 before the appropriate assessing authority or the appropriate Inspector for his signature and that such authority/Inspector being satisfied about the correctness of the declaration shall countersign the document with official seal and shall endorse the declaration. This Rule further requires that after such endorsement/signature whoever transports or carries the consignment shall carry with him a copy of the declaration and a road challan and that in case of interception of the vehicle by any competent sales tax authority, such documents shall be produced before such authority.

5. The applicant before us duly performed the above formalities by getting the Air Consignment Note and the declaration duly endorsed by the competent authority before taking delivery of the goods from the airport. It is the specific case of the applicant that the driver produced the road challan and the declaration when the respondent No. 1 intercepted the truck carrying the boxes of bearings. This assertion has not been disputed by the respondents. Thus, the applicant has fully complied with the provisions of Rule 211.

6. Mr. J.K. Goswami, learned State Representative, however, contends that mere compliance with the statutory formalities as provided in Rule 211 is not enough and that the airport at Calcutta being also a check-post the applicant shall have to act according to the provisions of Rule 212 of the 1995 Rules in order to avoid the penal provisions of Section 71 read with Section 68 of the 1994 Act. But a perusal of Rule 212 does not lead us to an inference that the said rule has any application to a case of taking delivery of goods from an airport even if such Airport be declared as check-post under Section 75 of the Act.

Rule 212 applies when any goods specified in Part A of the Fourth Schedule to the 1994 Act or any notified goods, enters West Bengal being transported by a road vehicle, river-craft or other vessels or by any other means through the notified areas of a check-post or any other place notified under Section 68, other than those referred to in Rule 211. The expression "other than those referred to in Rule 211" as appearing in Rule 212 is very significant. It indicates that the places referred to in Rule 211, viz., railway station, steamer station, sea port, airport or post office, are excluded from the purview of Rule 212. In other words, it means that even if such places as referred to in Rule 211 are declared as check-posts, Rule 212 shall have no application in dealing with entry into West Bengal of such specified/notified goods and that in such situation the compliance with the provisions of Rule 211 would suffice. So long the expression "other than those referred to in Rule 211" remains in Rule 212, there is no scope for application of Rule 212 to the cases of goods imported through airport. In view of the circumstances we find that the applicant cannot be indicted on the plea of violation of the provisions of Section 68 read with the rules framed thereunder, in connection with the goods (bearings) as are the subject-matter in the instant case.

Therefore, it is not necessary to go into the question whether the applicant's truck carrying the consignment of bearings was actually proceeding towards the airport check-post situated at the domestic terminal with an intent to get the declaration, which was previously endorsed by the competent authority, for further endorsement under sub-rule (4) of Rule 212 by the check-post authorities or tried to sneak out of the area with intent to evade such endorsement. Be it mentioned that even where presence of "mens rea" is relevant for constituting an offence, mere presence of "mens rea" without overt acts which constitute offence will not be punishable for commission of such an offence. In the instant case even if the applicant had intention to take away the goods without producing the duly authenticated declaration at the check-post for counter signature as well as release of the goods under Rule 212, the applicant could not be said to be guilty of violation of Rule 212 because this Rule is not applicable to this case and because the Rule 211 which applies to the instant case has been duly complied with.

7. In the result, we do not find any violation of any provisions of Section 68 during the course of movement of the truck carrying the impugned consignment of bearings. Hence, the application is allowed.

The seizure of 14 boxes of bearings on February 12, 1998 is quashed.

For the said reason the subsequent order imposing penalty is also quashed. The order of this Tribunal dated February 26, 1998 returning the seized bearings is made absolute and the security, if any, furnished in terms of the said order in cash be refunded within three weeks from this order. If the security has been furnished by way of bank guarantee the same shall stand terminated.

9. After the judgment is delivered Mr. J.K. Goswami, learned State.

Representative, prays for staying the operation of this order for eight weeks. None appears on behalf of the applicant in this case for raising the objection to the instant prayer. Since according to Mr. Goswami a considerable amount of revenue is involved in this instant case, the instant prayer for stay is allowed for four weeks.