State Taxation Tribunal - West Bengal
Shree Dayal Enterprise vs Commercial Tax Officer, Shyambazar ... on 31 May, 1989
Equivalent citations: [1990]79STC137(TRIBUNAL)
JUDGMENT
L.N. Ray, Judicial Member.
1. The short question involved in this application made under Section 8 of the West Bengal Taxation Tribunal Act (West Bengal Act 8 of 1987), is whether detention of the impugned notified goods, namely, timber was valid. The facts of the case may be stated in some detail for proper appreciation of the dispute. The applicant is a registered partnership firm and a registered dealer within the meaning of the Bengal Finance (Sales Tax) Act (Bengal Act 6 of 1941). The applicant's case is that in due course it obtained two permits in form XXX for clearing 1425.350 cft of sawn Malayasian timber despatched by Shree Dayal Saw Mill from Vishakhapatnam by rail for delivery at Ultadanga. On January 13, 1989, the applicant produced the said two permits before the Inspector of Commercial Taxes of Ultadanga check-post. He did not clear the goods on the ground that the consignment was in excess of the quantity declared in the permits by 336 cft. He determined the excess quantity with reference to the actual weight of 587 quintals. The Inspector refused to accept the applicant's contention that sawn timber should be measured cubic feet-wise as per the trade practice and the procedure laid down by the Indian Standards Institution ("ISI", for short) and not by reference to weight. The applicant was asked by annexure "B" to obtain a permit for the excess quantity. Annexure "C" is the applicant's reply of January 18, 1989, in which he denied any excess quantity and requested that measurement should be taken cubic feet-wise instead of by way of conversion from weight. Thereafter the Inspector started taking cubic feet-wise measurement from end to end, while the applicant insisted on measurement in accordance with the alleged trade practice and procedures followed by railways and the ISI. Finally, the Assistant Commissioner of Commercial Taxes had to intervene and according to his instructions measurements were taken during the period from January 30, 1989 to February 15, 1989, both on end to end basis, as wanted by the Inspector, and upon taking into account the saps, knots, cracks and inconsistency in dimensions, etc., as wanted by the applicant. Those two sets of measurements are recorded in annexure "F", which shows that the timber was 1658.95 cft according to end to end measurement and 1423.76 cft according to the applicant's procedure. The difference still remained to the extent of 235.19 cft, as a result of which the timber was not released for non-production of permit to that extent. Hence this application.
2. Since the entire quantity of timber was being detained at Ultadanga railway yard, we, by an interim order dated March 14, 1989, directed conditional release thereof. We are informed that the goods have since been released.
3. According to the respondents, a secret information was received by respondent No. 3 (the Inspector) that the applicant was importing timber in excess of the declared quantity. He, therefore, demanded physical verification. Some pieces of timber of representative character were taken out of the consignment, weighed and measured in the presence of the applicant. The result was that 100 kgs. of sawn timber were found equivalent to 3 cft. By following that method the Inspector found that 336 cft was in excess. He asked the applicant to get the permits amended to that extent. Subsequently, as desired by the applicant, the Inspector started taking cubic feet-wise measurement. But the applicant insisted that such measurement should be taken after excluding saps, knots, cracks and inconsistencies identified by it on the plea that such was the trade practice or ISI procedure. Finally, the measurements were taken according to both the methods. The difference was 235 cft between the two types of measurements. It is alleged that the excess quantity, said to be defective, has its own sale value. Never before was any such quantity excluded from the quantity imported. The respondent No. 3 asked the railways not to release the goods until clearance was given by the Commercial Tax check-post at Ultadanga so that the excess timber not covered by the permits was not transported in violation of Section 4B of the Bengal Finance (Sales Tax) Act, 1941. Sale value at the prevailing market rate of the aforesaid excess quantity of timber would be allegedly about Rs. 50,000. The respondents maintain that there was a possibility of evasion of tax, if the excess quantity was allowed to be transported without any permit and the applicant ought not to have any objection to show the excess quantity in the permits, because unless that quantity was actually sold, there could not be any claim of sales tax.
4. There is no dispute that timber is a notified goods under Section 4A of the Bengal Finance (Sales Tax) Act, 1941. Permits are admittedly required for transportation of timber of such quantity from the notified places. Before arrival of the goods at Ultadanga railway station, which is a notified place, the applicant obtained from the concerned Commercial Tax Officer two permits in form XXX (annexure "A"). The quantities mentioned in those permits are--715.350 cft and 710 cft respectively, making a total of 1425.350 cft.
5. The detention of the goods by the Inspector of Commercial Taxes is under challenge. The learned Advocate for the applicant contended that the secret information which the Inspector allegedly received may not be liable to be disclosed to the applicant, but should be disclosed to this Tribunal in order to consider whether the detention was valid. Without laying down any general principle whether or not disclosure of such secret information may be required by us, we are of the opinion that in the present case there is no need to call upon the respondents to lay the secret information before us. It was admitted by the learned Advocate appearing for the applicant that the impugned goods had not been seized at any point of time. Those were simply detained. Mr. Ashit Chakraborty, appearing for the applicant, submitted that an intention to evade tax must be present if any goods are to be detained. He relied on [1970] 25 STC 211 (SC) (Hindustan Steel Ltd. v. State of Orissa). That was a case of levy of penalty for failure to register as a dealer. The principle stated by the Supreme Court in that case has no relevance here. Mr. D. Majumdar, appearing for the respondents, countered the argument by relying on [1977] 40 STC 497 (Joshi v. Ajit Mills Ltd.), in which case the Supreme Court held that it is not correct that a penalty or a punishment cannot be cast in the form of an absolute or no-fault liability but must be preceded by mens rea. In the instant case intention or mens rea does not, in our opinion, appear to be relevant. Having regard to Sub-section (1) of Section 14A of the Bengal Finance (Sales Tax) Act, 1941, we hold that the Inspector of Commercial Taxes was within his jurisdiction to detain the goods for the purpose of verifying whether the notified goods referred to in Section 4A are being or have been transported in contravention of the provisions of Section 4B. No illegality or invalidity was involved in such detention.
6. Then controversy arose between the Inspector and the applicant as to the mode of verification. At the intervention of the Assistant Commissioner of Commercial Taxes the method of measurement by conversion from weight was abandoned. We make it clear that we do not express any opinion on such measurement with reference to weight. But we have noted that the applicant accepted railway booking by weight and paid extra freight on the actual weight after arrival at Ultadanga. Krishna Murari Bhaniramka, who has affirmed the affidavit before us on behalf of the applicant, is admittedly a common partner of the applicant and the sender firms.
7. There was further controversy between the Inspector and the applicant over the mode of taking cubic feet-wise measurement. Therefore, we get two different sets of measurements, one on end to end basis and the other after excluding allegedly defective parts and inconsistencies. The first process undeniably has an objective standard without any scope for exercise of one's discretion. The second process obviously involves an individual's subjective exercise of discretion in the matter of identifying and measuring the saps, knots, cracks and inconsistencies. According to the applicant, the second process should be followed, as it is supported by the trade practice and also by the ISI and railway procedures. Admittedly, the 1941 Act and the Rules framed thereunder do not lay down any standard procedure for measurement of such timber. Learned Advocate for the applicant relied on the cases reported in [1967] 19 STC 469 (SC) (Commissioner of Sales Tax v. Jaswant Singh Charan Singh), [1983] 52 STC 3 (Mad.) (Malayalee Stores v. State of Tamil Nadu) and [1987] 64 STC 180 (SC) (Indian Aluminium Cables Ltd. v. Union of India). In [1967] 19 STC 469 (SC) (Commissioner of Sales Tax v. Jaswant Singh), in the course of deciding whether charcoal is included in the word "coal" under the M.P. General Sales Tax Act, 1958, the Supreme Court held that in interpreting items in statutes like Sales Tax Acts, resort should be had not to the scientific or technical meaning of such items, but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. In the case of Malayalee Stores v. State of Tamil Nadu [1983] 52 STC 3, the Madras High Court took the same view in case of "firewood" which was not defined in the concerned Act. In [1987] 64 STC 180 (Indian Aluminium Cables Ltd. v. Union of India), the Supreme Court held that the principle that in determining the meaning or connotation of words and expressions describing an article in a tariff schedule, those words and expressions should be construed in the sense in which they are understood in the trade, by the dealer and the consumer, assumes importance only when the goods in question are marketable and not when they do not have a commercial market. These principles are now well-settled. But in the instant case we are confronted with a process of measurement of timber which is not defined in the concerned law. It is not at all easy to adopt a method of measurement of timber as practised in the trade, because mainly of non-availability of a standardised formula.
8. The learned Advocate for the applicant produced before us a xerox copy of letter No. 637 dated October 18, 1987, written by Deputy Divisional Manager, Orissa Forest Corporation, Jatni, to the Commercial Tax Officer, Chichira check-post, Midnapore. This refers to so-called "Burma measurement system", which ignores up to 8 inches and adds up to 4 inches in certain cases. A xerox copy of a certificate dated March 7, 1989, issued by the President of Timber Merchants' Association, Raipur, was similarly produced before us. Regarding saps, knots, cracks, etc., the certificate states that at every sale and purchase due consideration is given to such defects to the mutual satisfaction of both the parties (obviously the dealer and the purchaser). It gives certain practices of measuring length and dimension, apart from the Burma measurement system. A xerox copy of letter No. 586/28-33(2) dated March 10, 1989, written by the Divisional Forest Officer, Utilisation Division, Directorate of Forests, Government of West Bengal, has also been produced. According to it, "deductions in measurements due to split, crack, etc., are allowed in excess of the permissible limits as per Indian Standard Specification for sawn timber". Similarly produced is a xerox copy of letter No. 44/Certi/7/ 89 dated May 9, 1989, addressed by the Bengal Timber Merchants' Association, Ultadanga Railway Goods Siding, Calcutta, to the applicant. It simply states that there is an old trade practice of granting deduction in measurement in respect of knots, cracks, etc., but it does not quantify or specify such deduction. Mr. A. Chakraborty, appearing for the applicant, further referred to the Indian Railway Standard Specification for sawn timber (Sl. No. K2-66) issued by Research, Designs and Standards Organisation, Alambagh, Lucknow-5. It appears to have been issued by the Ministry of Railways, Government of India (Railway Board) and the specifications are relevant in case of purchases by the Railways. He also produced the Indian Standard Methods of Measurement and Evaluation of Defects in Timber, Part II--converted timber (1st revision), 1st reprint, June 1982, issued by the ISI. It gives a certain method of identification measurement and quantitative evaluation of commonly occurring defects in converted timber (page 4). It is nobody's case that the applicant followed any of the above methods at the time of taking its own manner of measurement in this case.
9. We feel that it is not for us to lay down which is the standard trade practice or which is the appropriate method for identification and measurement of defects and inconsistencies in sawn timber for the purpose of verification under Section 14A of the Bengal Finance (Sales Tax) Act, 1941. No codified or standardised procedure could be shown to us to be followed by the commercial circles uniformly and universally.
10. We find that the applicant did not follow even the ISI method, though it has very much relied on it and though the ISI is a statutory body which was set up with the object of standardising such methods. After the two kinds of measurements were taken, a difference of 235.19 cft was found. According to the respondents, that was in excess of the declared quantity, whereas according to the applicant, that should not be termed as excess, if the defects, etc., are taken into account. At this stage, even though the Inspector thought that this was the excess quantity not covered by the permits, in all fairness he might continue to keep under detention the alleged excess quantity of 235.19 (rounded off to 235 cft) and should have released the rest. The applicant should have also applied to him for release of the quantity excluding the controversial 235 cft.
11. Since the goods have already been released pursuant to our order of March 14, 1989, it does not appear to be possible to get the same again measured according to the ISI method, which is now relied on by the applicant or, for that matter, by any other method. Having regard to the peculiar facts and circumstances of this case, we direct that the applicant shall produce before respondent No. 3 a permit in respect of the disputed quantity of 235 cft of timber mentioning the same as said to be defective, within 2 (two) weeks from now, failing which the appropriate authorities shall be at liberty to take steps, if any, against the applicant, in accordance with law, treating the said 235 cft of timber as in excess of the two permits already produced before respondent No. 3. The question of charging tax, if any, will arise only to the extent of the price of the disputed quantity of 235 cft in case of sale thereof. If, however, the applicant produces such a permit within two weeks from now, as directed above, the Commercial Tax authorities shall refund the sum of Rs. 10,000 which was deposited by the applicant in compliance of our order of March 14, 1989. The application is thus disposed of. We make no order for costs.
B.C. Chakrabarti, Chairman.
12. I agree.
P.C. Banerji, Technical Member.
13. I agree.