Allahabad High Court
Godawari Steels vs Commissioner Of Trade Tax on 24 August, 1999
JUDGMENT M.C. Agarwal, J.
1. These six revision petitions under Section 11 of the U.P. Trade Tax Act, 1948 are directed against a common order dated July 28, 1999 passed by the Trade Tax Tribunal, Ghaziabad whereby it dismissed the dealer's appeal Nos. 273, 274, 275, 276, 277 and 278 of 1999 and upheld the seizure of goods and the demand of security under Section 13-A(6) of the Act.
2. I have heard Sri Bharat Ji Agrawal, learned Senior Advocate for the revisionist and Sri Surya Prakash, learned Standing Counsel for the respondent.
3. The facts are that on June 20, 1999, six trucks loaded with C.R. coils were parked near Mahavir Dharam Kanta and Pooja Cane Crusher Service on the U.P. border. The Trade Tax Officer, Mobile Squad, Unit-A, Ghaziabad arrived there and on enquiry found that the driver/person-in-charge of the vehicles had no papers whatsoever in respect of the goods. The goods were detained and show cause notices were issued to the respective drivers to show cause by June 25, 1999 why the goods be not seized. Thereafter on June 25, 1999 Gajendra Pal Sharma claiming to be the proprietor of Godawari Steels (the revisionist) filed objection. His contention was that it was on the 5th June, 1999 that he placed orders for these goods on three parties of Delhi, namely, Aggarwal Tubes Syndicate, M.C. Steels and Lakshmi Steels all of Loha Mandi, Naraina. The orders were oral and were communicated on telephone. On June 7, 1999 his father died and he became busy in performing his last rites. The teharvin was held on June 18, 1999 and he returned to Ghaziabad on June 19, 1999. It was in these circumstances that he could not send form XXXI to the selling dealers. However, since the orders had been placed long back the aforesaid dealers despatched the goods on June 19, 1999 and the six trucks containing the goods arrived at the U.P. border. The representative of the sellers along with the bills, challans, etc., issued by the aforesaid parties came to contact Gajendra Pal Sharma. He told him of the aforesaid circumstances and that he had not been able to obtain form XXXI from the trade tax office and that the parties to whom he had supplied these goods were also not willing to accept the goods. It was also stated in the reply that under a prevailing procedure the goods can be released on the red channel of the check-post on deposit of 1.5 times of the tax. He stated in his objection that there was no intention to evade tax and the goods have been consigned by a bona fide dealer to a bonafide dealer.
4. This explanation was not accepted and the officer concerned passed seizure orders in respect of "each of the trucks. The total value of the goods as estimated by him was about 24 lacs and security was demanded in the sums equal to 40 per cent of the value of the goods. The revisionist made a representation to the Assistant Commissioner (Enforcement) who upheld the seizure and the demand of a security. According to him during the departmental investigations it was revealed that the goods in question had been purchased by one K.K. Industrial Corporation, Faridabad from Steel Authority of India, Bhokaro from where the goods were transported by rail up to Ballabhgarh railway station and it was from there that the goods were loaded in the aforesaid trucks and, therefore, according to department the bills of the Delhi party that were produced with the objection on June 25, 1999 were fictitious. Departmental enquiries also revealed that the Delhi parties were non-existent. The Deputy Commissioner also took note of the fact that the revisionist took long time to file the objection and also that its registration certificate has been cancelled. The revisionist then preferred an appeal to the Tribunal that has been dismissed.
5. Sri Agrawal laid stress on the fact that the father of the revisionist's proprietor had died due to which this lapse has happened and the papers, i.e., bills, challans, etc., were accompanying the consignment but could not be produced before the officer concerned at the time of checking because the representative of the seller was away for contacting the petitioner. He also contended that the Delhi parties are genuine and are registered with the Sales Tax department of the said Delhi and that the trucks were parked on the Delhi-U.P. border before the check-post only for ensuring the completion of the papers by taking form XXXI from the revisionist and then proceeding further and reporting at the check-post. I have given my careful consideration to the aforesaid arguments but at present every thing does not seem to be well and a detailed investigation may be necessary during the proceedings for the levy of penalty. It is somewhat strange that consignments of a substantial value, as stated above, were ordered when the revisionist did not even have form XXXI with him. The explanation that the objections were filed on June 25, 1999 because that was the time allowed in the notices is not acceptable on its face value. The goods worth about Rs. 25 lacs and six trucks with their drivers were detained and if as contended by the revisionist that the seller's representative was there having ail the papers the objections could have been filed on June 20, 1999 itself so that the goods could be released without delay. Therefore, so far as the seizure is concerned I do not find any cause for interference in revisional jurisdiction. The final findings of fact that will conclude the matter have to be arrived at in the penalty proceedings.
6. Learned counsel for the revisionist also contended that the demand of security at the rate of 40 per cent of the value of the goods is excessive. He placed reliance on a circular dated 4th July, 1999 issued by the Commissioner. This circular applies when the importer of the goods or the driver of the vehicle reports at the check-post along with the trip sheet in form XXXV and would apply to a case where only the declaration of import in form XXXI is lacking. In the present case there were no documents whatsoever available with the drivers of the trucks and hence the circular cannot be invoked. However, the demand of security equal to 40 per cent of the value of the goods seems to be arbitrary. The goods in question being iron and steel are taxable at the rate of 4 per cent. Therefore, if the revisionist intended to avoid tax the avoidance could be only of 4 per cent of the of the value of the goods, the levy of penalty at the maximum rate of 40 per cent would, therefore, be unjustified. It may be mentioned that rates of trade tax varied to 1 per cent to 26 per cent and the security demanded in all cases can be a maximum of 40 per cent. The security demanded should vary with the rate of tax ; when the rate of tax was only 4 per cent, the demand of security at the rate of 40 per cent is unjustified. In my view, therefore, security by way of a cash deposit to the extent of 15 per cent of the value of the goods would be sufficient and to this extent the Tribunal's order requires interference.
7. In the result, the revision petitions are partly allowed and the Tribunal's order is modified to the effect that the dealer's aforesaid appeals will stand partly allowed. The seizure of the goods stands affirmed but the amount of security demanded is reduced to 15 per cent of the value of the goods.