Eastern Freight Carriers Pvt. Vs. Cto/Durgapur Range and ors. - Court Judgment

Excerpt:
1. this is an application under section 8 of the west bengal taxation tribunal act, 1987 challenging the order dated march 11, 2001 of detention of 29 bales of scoured mohair and the order dated march 13, 2001 imposing penalty passed by the commercial tax officer, durgapur range, respondent no. 1, with a prayer for setting the same aside as both the orders have been passed illegally.this case no. rn-141 of 2001 and the other case no. rn-142 of 2001 are heard analogously since the points of law and facts involved are same and identical with the only difference that rn-141 of 2001 relates to 29 bales of scoured mohair being carried in truck no. wb-19-4048 whereas rn-142 of 2001 relates to 29 bales of the self same commodity being carried in truck no. wb-11-8947. the case of the petitioner is that the petitioner is a company and carries on business as a transporter and the petitioner is not a dealer. one m/s. nagpal traders of ludhiana, purchased 73 bales of scoured mohair on high-sea sale-basis from m/s. arindam export and the sale was effected by transferring document of title in favour of the purchaser as per the central sales tax act, 1956. that sale took place before the ship came within the territory of india. the purchaser imported the goods therefrom in west bengal by ship and the goods were released on payment of customs duty at calcutta port and m/s. barua and choudhury acted as clearing agent of the purchaser. as per declaration, goods were to be loaded in two trucks--36 bales in one and 37 bales in another truck.for shortage of space ultimately those were loaded in three trucks--29 bales in each of the two trucks and 15 in another truck. but fresh consignment notes were not obtained. the two consignment notes mentioning 36 and 37 bales were handed-over to the driver along with declaration and bill of entry. when the two trucks wb-19-4048 and wb-11-8947 reached near durgapur range office, the commercial tax officer, durgapur range (respondent no. 1) intercepted those two trucks even after two consignment notes, bill of entry and declaration were shown by the driver of the trucks. as per direction of the officer the trucks were taken to the range office. detention order was issued regarding both on march 11, 2001. instead of 36 in one and 37 bales in another, finding short-fall of 7 bales in truck wb-11-8947 and short-fall of 8 bales in truck wb-19-4048 respondent no. 1 without adhering to the explanation given and without giving any importance to the duly endorsed documents produced, held, by order dated march 13, 2001, that provision of central sales tax act, 1956 has been violated and imposed penalty of an amount of rs. 95,201 under section 72(5) of the act of 1994 after issuing notice therefor. the petitioner contends that it is the case of finding less quantity of goods than actually transported and as such there could be no intention of avoiding payment of tax. the order reflecting non-application of mind without proper and judicious scanning should be set aside.2. the contention of the respondent in the affidavit-in-opposi- tion is that the petitioner being a transporter should have clear understanding as to the capacity which would be needed to transport the said quantity of the goods. he must have submitted declaration accordingly. as a registered transporter, the petitioner should also know that fresh consignment notes were required to be taken in the changed situation of requisitioning three trucks. the explanation for shortage of the 8 bales in one and 7 in another was not satisfactory. the documents submitted failed to confirm the actual goods carried. the story by way of explanation as made is nothing but a story to bridge the difference and cannot be accepted under law. therefore, the application should be dismissed.3. the petitioner used affidavit-in-reply in this case. it is submitted that provision of section 72(5) of the act of 1994 is not applicable as it is a case of importation and loading in calcutta port for transportation in a vehicle to ludhiana. the proper rule applicable in such a case is rule 211a and declaration as per that rule has been duly given by the petitioner. the imposition of penalty is illegal as no seizure has been made before imposition of penalty. the action taken is not also as per the provision as given in section 72 of the act of 1994--on which respondent no. 1 relied under misconception of law.5. the detention order of the vehicle wb-19-4048 is annexure "b" to the application. it shows that after interception on march 10, 2001 at 11.00 p.m., the vehicle has been detained to verify correctness of the way-bill and to verify the genuineness of the papers produced by the driver at the time of interception. the impugned order dated a march 13, 2001 imposing penalty for alleged violation of section 72 of the west bengal sales tax act, 1994 is annexure "c" to the application. it appears that the respondent no. 1 perused lorry challan, consignment note as well as transit declaration. the order thereafter is as follows: as the consignment is supported by a transit declaration which supports the transit of 73 bales of scoured mohair from germany to ludhiana (india) via west bengal, these 29 bales could have been taken as part of the said consignment consisting of 73 bales of the said item, but as there was no satisfactory explanation about the c absence of 8 bales of scoured mohair, there is grave doubt about any probable relationship between the transit declaration covering 73 bales of scoured mohair and the 29 bales of the said item found in the vehicle. however, it appears that section 72 of the west bengal sales tax act, 1994 has been straightaway violated. also this implies that those 8 bales of the said item have been unloaded and sold in west bengal. this act definitely attracts penal provisions under section 72(5) of the west bengal sales tax act, 1994.6. sumit chakraborty, learned advocate for the petitioner, contends that under the admitted facts of this case, it appears clearly that the goods consigned are the goods imported from germany and have reached at sea-port in kolkata (west bengal) and are required to be transported to a place in ludhiana (outside the west bengal) through west bengal without necessity of unloading on the way. in the context of the above, he submits that regulatory measures as prescribed under rule 211a of the west bengal sales tax rules, 1995 are required to be followed by the transporter. as per the said rule, the driver presented admittedly lorry challan, consignment note along with the transit declaration. it was incumbent for the respondent no. 1 thereafter to follow the procedure as per provisions of rule 212 of the rules, 1995 for the purpose of detention, seizure, etc. recording of reason for seizure is a must. no seizure in this case has been made admittedly but following a wrong provision, that is provision of section 72 of the act of 1994, penalty has been imposed prior to the seizure, but in the meantime as per order dated march 23, 2001 of this tribunal, on furnishing cash security of rs. 70,000 the vehicle along with the goods have been released. as per annexure "x" to the affidavit-in-reply, all the three trucks loaded with the said scoured mohair already reached the destination at ludhiana. sub-section (10) of section 72 provides that seizure will be made only when penalty is not paid by the specified date in the notice. in this case it has been already mentioned by the learned advocate for the petitioner that the goods have already reached destination on furnishing cash security as ordered by the court. against this submission, sri b.n. basu, learned state representative, submits that section 72 may not be the proper section in this case admittedly. but he submits that though formal order for seizure has not been passed, seizure may be deemed to have been made in the facts and circumstances of this case. moreover, he submits, wrong quoting of section cannot exonerate a person or a transporter who failed to comply with the restrictions and conditions made regarding movement of goods to ensure non-evasion of tax.7. having so heard both the sides, as we peruse the fact-situation of this case along with different provisions of the act of 1994 and the rules, 1995 concerning restrictions and conditions on the movement of goods, it appears clearly that the regulatory measures as prescribed under rule 211a of the west bengal sales tax rules, 1995 are to be followed by the petitioner-transporter in this case. admittedly driver of the petitioner-transporter produced before respondent no. 1 both lorry challan as well as consignment note and the essential transit declaration. the power of the respondent no. 1 to intercept and detain on the way such a truck is undisputed. the officer concerned can do it for the purpose of verification. but the officer cannot, as per rule 212 detain vehicle for more than 48 hours without making out ground of seizure on being satisfied. unfortunately in this case that procedure of seizure was not at all followed but penalty before seizure was imposed under a different section which was not warranted under the facts of this case. the ground of further detention and ground for imposing penalty made under a completely different section of the act which section is also not applicable in this case, are not only unsatisfactory but also unsustainable--both under fact and law.annexure "a" is a declaration wherefrom we find the number of vehicle mentioned as hr-18/ 8341. it appears as per that declaration that the place of transshipment is mentioned as nimak mahal road and that the sales tax authorities at the calcutta port allowed the transshipment at that place. from the said annexure "a" it appears that from the port area, the truck in question mentioned here brought the goods imported to" the said nimak mahal road where transshipment was allowed, as prayed, in two trucks admittedly. paragraph 5 of the application refers to that. the transit declaration containing mention of the two trucks wb-19-4048 with 36 bales and wb-11-8947 with 37 bales is not here before us. but if we peruse annexure "a" as filed here and take note of the declaration containing two truck numbers with noting of 36 bales in one and 37 bales in another, there remains no a manner of any doubt that the 29 bales that were found physically instead of 36 bales had been part of the consignment as per declaration annexure "a". there could be no occasion for any doubt and that too a grave doubt for the respondent no. 1 concerning probable relationship between the transit declaration of 37 bales and the 29 bales found actually in the said vehicle. the short-fall of 8 bales in the truck should not have, in the context of the documents as above led respondent no. 1 to assume that the goods found short have been sold. there is no evidence that goods found short had been sold in west bengal. on the contrary it appears from annexure "x" (declaration that is affixed with the affidavit-in-reply) that all the three trucks containing 29 bales in each of the two trucks and 15 in truck no. 13e-3967 have reached the destination at ludhiana with all the goods. thus we find that the respondent no. 1 proceeded under a wrong section which is section 72 of the act. the regulatory measures mentioned therein to be followed by the transporter and the procedural matters for interception, detention, imposing penalty and seizure, mentioned therein are not at all applicable to the fact of the instant case wherein goods were loaded in the vehicle at the calcutta port after import from germany for its onwards destination to ludhiana. in this case detention as per sub-rule (3) of rule 212 5 can be made for a period not exceeding 48 hours only to enable the driver to present the documents. if within this time the driver fails to produce endorsed way-bill or other necessary document, the officer concerned after recording reasons can seize the consignment of goods. but in this case, there has been no seizure at all. seizure is an act which must be supported by reasons. thus the seizure under any circumstances cannot be held to be implied as learned state representative wanted us to hold. in this case, the initial detention of the vehicle with the goods may be lawful but its prolonged detention even after expiry of 48 hours has become unlawful. the imposition of penalty not having been made as per procedure warranted, also suffers from legal infirmity. the goods cannot be detained and penalty cannot be imposed merely on the basis of assumption of the officer concerned to the effect that the goods found short had been sold. we have already stated that the assumption had no basis. that such an assumption is unwarranted has been proved from the fact of entire consign- ment of 73 bales having duly reached the destination at ludhiana which fact is proved by document--annexure "x" to the affidavit-in-reply. thus we find the initial order of detention though was lawful, the same had become illegal subsequent to the expiry of 48 hours and the order imposing penalty is also not sustainable in law.8. sri b.n. basu, learned state representative, submits that the goods have been released on furnishing cash security by order of this tribunal on an application made for that by the applicant before the tribunal. the goods having been released on furnishing such security and the same accordingly been not made available for seizure under sub-section (1) of section 70 of the act of 1994, the respondent has power under section 7 1b of the act of 1994 to impose penalty of a sum not exceeding 25 per cent of the value of such goods following procedure as per section 71a of the act. but unfortunately the said section 71b was incorporated only with effect from august 1, 2001 and the detention is of a period of march, 2001. so the submission has no force.9. regard being had to the facts as well as points of law we hold that the order of detention dated march 11, 2001 and the order dated march 13, 2001 of respondent no. 1 imposing penalty under section 72 of the west bengal sales tax act, 1994 are not sustainable in law and as such require to be set aside.10. the application therefore succeeds. the order of detention dated march 11, 2001 and the order dated march 13, 2001 by the respondent no.1 imposing penalty are set aside. the cash security furnished in this case and case no. rn-142 of 2001 be returned or refunded to the applicant.28.6.2002: judgment is ready and delivered in open court and kept in a separate sheet along with the record of this case. the application succeeds.after the above order is passed, the learned state representative mr.j.k. goswami prays for stay of the order to which other side has objection. we find no reason for which the operation of the order should be stayed. with due consideration the prayer stands rejected.

Judgment:
1. This is an application Under Section 8 of the West Bengal Taxation Tribunal Act, 1987 challenging the order dated March 11, 2001 of detention of 29 bales of scoured mohair and the order dated March 13, 2001 imposing penalty passed by the Commercial Tax Officer, Durgapur Range, respondent No. 1, with a prayer for setting the same aside as both the orders have been passed illegally.

This case No. RN-141 of 2001 and the other case No. RN-142 of 2001 are heard analogously since the points of law and facts involved are same and identical with the only difference that RN-141 of 2001 relates to 29 bales of scoured mohair being carried in truck No. WB-19-4048 whereas RN-142 of 2001 relates to 29 bales of the self same commodity being carried in truck No. WB-11-8947. The case of the petitioner is that the petitioner is a company and carries on business as a transporter and the petitioner is not a dealer. One M/s. Nagpal Traders of Ludhiana, purchased 73 bales of scoured mohair on high-sea sale-basis from M/s. Arindam Export and the sale was effected by transferring document of title in favour of the purchaser as per the Central Sales Tax Act, 1956. That sale took place before the ship came within the territory of India. The purchaser imported the goods therefrom in West Bengal by ship and the goods were released on payment of customs duty at Calcutta port and M/s. Barua and Choudhury acted as clearing agent of the purchaser. As per declaration, goods were to be loaded in two trucks--36 bales in one and 37 bales in another truck.

For shortage of space ultimately those were loaded in three trucks--29 bales in each of the two trucks and 15 in another truck. But fresh consignment notes were not obtained. The two consignment notes mentioning 36 and 37 bales were handed-over to the driver along with declaration and bill of entry. When the two trucks WB-19-4048 and WB-11-8947 reached near Durgapur Range Office, the Commercial Tax Officer, Durgapur Range (respondent No. 1) intercepted those two trucks even after two consignment notes, bill of entry and declaration were shown by the driver of the trucks. As per direction of the officer the trucks were taken to the range office. Detention order was issued regarding both on March 11, 2001. Instead of 36 in one and 37 bales in another, finding short-fall of 7 bales in truck WB-11-8947 and short-fall of 8 bales in truck WB-19-4048 respondent No. 1 without adhering to the explanation given and without giving any importance to the duly endorsed documents produced, held, by order dated March 13, 2001, that provision of Central Sales Tax Act, 1956 has been violated and imposed penalty of an amount of Rs. 95,201 Under Section 72(5) of the Act of 1994 after issuing notice therefor. The petitioner contends that it is the case of finding less quantity of goods than actually transported and as such there could be no intention of avoiding payment of tax. The order reflecting non-application of mind without proper and judicious scanning should be set aside.

2. The contention of the respondent in the affidavit-in-opposi- tion is that the petitioner being a transporter should have clear understanding as to the capacity which would be needed to transport the said quantity of the goods. He must have submitted declaration accordingly. As a registered transporter, the petitioner should also know that fresh consignment notes were required to be taken in the changed situation of requisitioning three trucks. The explanation for shortage of the 8 bales in one and 7 in another was not satisfactory. The documents submitted failed to confirm the actual goods carried. The story by way of explanation as made is nothing but a story to bridge the difference and cannot be accepted under law. Therefore, the application should be dismissed.

3. The petitioner used affidavit-in-reply in this case. It is submitted that provision of Section 72(5) of the Act of 1994 is not applicable as it is a case of importation and loading in Calcutta Port for transportation in a vehicle to Ludhiana. The proper rule applicable in such a case is Rule 211A and declaration as per that rule has been duly given by the petitioner. The imposition of penalty is illegal as no seizure has been made before imposition of penalty. The action taken is not also as per the provision as given in Section 72 of the Act of 1994--on which respondent No. 1 relied under misconception of law.

5. The detention order of the vehicle WB-19-4048 is annexure "B" to the application. It shows that after interception on March 10, 2001 at 11.00 p.m., the vehicle has been detained to verify correctness of the way-bill and to verify the genuineness of the papers produced by the driver at the time of interception. The impugned order dated A March 13, 2001 imposing penalty for alleged violation of Section 72 of the West Bengal Sales Tax Act, 1994 is annexure "C" to the application. It appears that the respondent No. 1 perused lorry challan, consignment note as well as transit declaration. The order thereafter is as follows: As the consignment is supported by a transit declaration which supports the transit of 73 bales of scoured mohair from Germany to Ludhiana (India) via West Bengal, these 29 bales could have been taken as part of the said consignment consisting of 73 bales of the said item, but as there was no satisfactory explanation about the c absence of 8 bales of scoured mohair, there is grave doubt about any probable relationship between the transit declaration covering 73 bales of scoured mohair and the 29 bales of the said item found in the vehicle. However, it appears that Section 72 of the West Bengal Sales Tax Act, 1994 has been straightaway violated. Also this implies that those 8 bales of the said item have been unloaded and sold in West Bengal. This act definitely attracts penal provisions Under Section 72(5) of the West Bengal Sales Tax Act, 1994.

6. Sumit Chakraborty, learned Advocate for the petitioner, contends that under the admitted facts of this case, it appears clearly that the goods consigned are the goods imported from Germany and have reached at sea-port in Kolkata (West Bengal) and are required to be transported to a place in Ludhiana (outside the West Bengal) through West Bengal without necessity of unloading on the way. In the context of the above, he submits that regulatory measures as prescribed Under Rule 211A of the West Bengal Sales Tax Rules, 1995 are required to be followed by the transporter. As per the said rule, the driver presented admittedly lorry challan, consignment note along with the transit declaration. It was incumbent for the respondent No. 1 thereafter to follow the procedure as per provisions of Rule 212 of the Rules, 1995 for the purpose of detention, seizure, etc. Recording of reason for seizure is a must. No seizure in this case has been made admittedly but following a wrong provision, that is provision of Section 72 of the Act of 1994, penalty has been imposed prior to the seizure, but in the meantime as per order dated March 23, 2001 of this Tribunal, on furnishing cash security of Rs. 70,000 the vehicle along with the goods have been released. As per annexure "X" to the affidavit-in-reply, all the three trucks loaded with the said scoured mohair already reached the destination at Ludhiana. Sub-section (10) of Section 72 provides that seizure will be made only when penalty is not paid by the specified date in the notice. In this case it has been already mentioned by the learned Advocate for the petitioner that the goods have already reached destination on furnishing cash security as ordered by the court. Against this submission, Sri B.N. Basu, learned State Representative, submits that Section 72 may not be the proper section in this case admittedly. But he submits that though formal order for seizure has not been passed, seizure may be deemed to have been made in the facts and circumstances of this case. Moreover, he submits, wrong quoting of section cannot exonerate a person or a transporter who failed to comply with the restrictions and conditions made regarding movement of goods to ensure non-evasion of tax.

7. Having so heard both the sides, as we peruse the fact-situation of this case along with different provisions of the Act of 1994 and the Rules, 1995 concerning restrictions and conditions on the movement of goods, it appears clearly that the regulatory measures as prescribed Under Rule 211A of the West Bengal Sales Tax Rules, 1995 are to be followed by the petitioner-transporter in this case. Admittedly driver of the petitioner-transporter produced before respondent No. 1 both lorry challan as well as consignment note and the essential transit declaration. The power of the respondent No. 1 to intercept and detain on the way such a truck is undisputed. The officer concerned can do it for the purpose of verification. But the officer cannot, as per Rule 212 detain vehicle for more than 48 hours without making out ground of seizure on being satisfied. Unfortunately in this case that procedure of seizure was not at all followed but penalty before seizure was imposed under a different section which was not warranted under the facts of this case. The ground of further detention and ground for imposing penalty made under a completely different section of the Act which section is also not applicable in this case, are not only unsatisfactory but also unsustainable--both under fact and law.

Annexure "A" is a declaration wherefrom we find the number of vehicle mentioned as HR-18/ 8341. It appears as per that declaration that the place of transshipment is mentioned as Nimak Mahal Road and that the sales tax authorities at the Calcutta Port allowed the transshipment at that place. From the said annexure "A" it appears that from the port area, the truck in question mentioned here brought the goods imported to" the said Nimak Mahal Road where transshipment was allowed, as prayed, in two trucks admittedly. Paragraph 5 of the application refers to that. The transit declaration containing mention of the two trucks WB-19-4048 with 36 bales and WB-11-8947 with 37 bales is not here before us. But if we peruse annexure "A" as filed here and take note of the declaration containing two truck numbers with noting of 36 bales in one and 37 bales in another, there remains no A manner of any doubt that the 29 bales that were found physically instead of 36 bales had been part of the consignment as per declaration annexure "A". There could be no occasion for any doubt and that too a grave doubt for the respondent No. 1 concerning probable relationship between the transit declaration of 37 bales and the 29 bales found actually in the said vehicle. The short-fall of 8 bales in the truck should not have, in the context of the documents as above led respondent No. 1 to assume that the goods found short have been sold. There is no evidence that goods found short had been sold in West Bengal. On the contrary it appears from annexure "X" (declaration that is affixed with the affidavit-in-reply) that all the three trucks containing 29 bales in each of the two trucks and 15 in truck No. 13E-3967 have reached the destination at Ludhiana with all the goods. Thus we find that the respondent No. 1 proceeded under a wrong section which is Section 72 of the Act. The regulatory measures mentioned therein to be followed by the transporter and the procedural matters for interception, detention, imposing penalty and seizure, mentioned therein are not at all applicable to the fact of the instant case wherein goods were loaded in the vehicle at the Calcutta Port after import from Germany for its onwards destination to Ludhiana. In this case detention as per Sub-rule (3) of Rule 212 5 can be made for a period not exceeding 48 hours only to enable the driver to present the documents. If within this time the driver fails to produce endorsed way-bill or other necessary document, the officer concerned after recording reasons can seize the consignment of goods. But in this case, there has been no seizure at all. Seizure is an act which must be supported by reasons. Thus the seizure under any circumstances cannot be held to be implied as learned State Representative wanted us to hold. In this case, the initial detention of the vehicle with the goods may be lawful but its prolonged detention even after expiry of 48 hours has become unlawful. The imposition of penalty not having been made as per procedure warranted, also suffers from legal infirmity. The goods cannot be detained and penalty cannot be imposed merely on the basis of assumption of the officer concerned to the effect that the goods found short had been sold. We have already stated that the assumption had no basis. That such an assumption is unwarranted has been proved from the fact of entire consign- ment of 73 bales having duly reached the destination at Ludhiana which fact is proved by document--annexure "X" to the affidavit-in-reply. Thus we find the initial order of detention though was lawful, the same had become illegal subsequent to the expiry of 48 hours and the order imposing penalty is also not sustainable in law.

8. Sri B.N. Basu, learned State Representative, submits that the goods have been released on furnishing cash security by order of this Tribunal on an application made for that by the applicant before the Tribunal. The goods having been released on furnishing such security and the same accordingly been not made available for seizure Under Sub-section (1) of Section 70 of the Act of 1994, the respondent has power Under Section 7 1B of the Act of 1994 to impose penalty of a sum not exceeding 25 per cent of the value of such goods following procedure as per Section 71A of the Act. But unfortunately the said Section 71B was incorporated only with effect from August 1, 2001 and the detention is of a period of March, 2001. So the submission has no force.

9. Regard being had to the facts as well as points of law we hold that the order of detention dated March 11, 2001 and the order dated March 13, 2001 of respondent No. 1 imposing penalty Under Section 72 of the West Bengal Sales Tax Act, 1994 are not sustainable in law and as such require to be set aside.

10. The application therefore succeeds. The order of detention dated March 11, 2001 and the order dated March 13, 2001 by the respondent No.1 imposing penalty are set aside. The cash security furnished in this case and case No. RN-142 of 2001 be returned or refunded to the applicant.

28.6.2002: Judgment is ready and delivered in open court and kept in a separate sheet along with the record of this case. The application succeeds.

After the above order is passed, the learned State Representative Mr.

J.K. Goswami prays for stay of the order to which other side has objection. We find no reason for which the operation of the order should be stayed. With due consideration the prayer stands rejected.