Allahabad High Court
M/S Dabur India Ltd vs The Commissioner Of Trade Tax, U.P., ... on 10 April, 2018
Author: Surya Prakash Kesarwani
Bench: Surya Prakash Kesarwani
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Court No. - 7 Case :- SALES/TRADE TAX REVISION No. - 1584 of 2005 Applicant :- M/S Dabur India Ltd Opposite Party :- The Commissioner Of Trade Tax, U.P., Lucknow Counsel for Applicant :- Piyush Agrawal,Bharatji Agrawal,Suyash Agarwal Counsel for Opposite Party :- C.S.C. Hon'ble Surya Prakash Kesarwani,J.
1. Heard Sri Atul Gupta along with Sri Suyash Agarwal, learned counsel for the revisionist and Sri B.K. Pandey, learned Standing Counsel for the respondent.
2. This revision has been filed under Section 11 of U.P. Trade Tax Act 1948 (hereinafter referred to as "the Act") challenging the order dated 16.8.2005 in Second Appeal No.132 of 2005 (A.Y. 2000-2001) passed by the Member Trade Tax Tribunal, Ghaziabad -1st, Ghaziabad.
3. The revision was admitted on 22.9.2005.
4. With the consent of learned counsels for the parties the following question of law is formulated:
(a) Whether under the facts and circumstances of the case, the Tribunal has committed a manifest error of law and facts to uphold the evaded sales of 1524 grams 'Paclitaxel' @ Rs.29,000/- per gram amounting to Rs. 4,41,96,000/- + excise duty Rs.58,12,374/- = 5,00,08,374/- and to leavy tax thereon @ 8% amounting to Rs.40,00,699.92?
Facts:
5. Briefly stated facts of the present case are that assessment of the revisionist assessee for the A.Y. 2000-01 (U.P.) originally was completed by Assessment Order dated 30.12.2002. Subsequently, the department received certain information from the Central Excise Department regarding manufacture and certain transaction of the goods 'Paclitaxel' which is a raw material being used in manufacture of medicine for treatment of Cancer. On the basis of this information, proceedings under Section 21 of the Act were initiated. An ex-parte Assessment Order under Section 21 of the Act was passed on 27.9.2003. The assessee moved an application for recall of the ex-parte order under Section 30 of the Act. The ex-parte Assessment Order was recalled and the case was fixed for hearing. The assess again did not appear. Consequently, again an ex-parte order dated 8.4.2004 was passed. The assessee again moved an application under Section 30 of the Act and thereupon the ex-parte Assessment Order dated 8.4.2004 was recalled by order dated 20.5.2004.
6. Before the Assessing Authority, in proceedings under Section 21 of the Act, the Assessee admitted total quantity of 'Paclitaxel' manufactured during the Assessment Year 2000-01 in its Sahibabad (U.P.) Unit to be 1524 grams. The assessee took the stand that out of this quantity they have transferred 1040 grams to their unit at Baddi, District - Solan (Himanchal Pradesh) and 25 grams was given for research work to Dabur research foundation Ghaziabad. No information was disclosed with respect to the rest of the quantity of 'Paclitaxel' i.e. 459 grams. Considering the evidences on record the Assessing Authority reached to the conclusion that the entire quantity of 1524 grams 'Paclitaxel' was sold within the State and there was no stock transfer as alleged. On the basis of own bill of the assessee dated 6.12.1997 showing sale of 'Paclitaxel' @ Rs.28,000/- per gram and the report of the excise department for its value @ Rs. 29,000/- per gram, the sale value of the aforesaid quantity was determined @ Rs. 29,000/- per gram. Accordingly the evaded sales of 'Paclitaxel' was determined at Rs.5,00,08,374/- and tax was levied @ 8% amounting to Rs.40,00,669.92. Certain other evaded sales of other items were also found on which the tax was levied amounting to Rs.2,68,551/- which was admitted by the assessee and the tax was also deposited by treasury challan dated 24.11.2003. Aggrieved with the aforesaid Assessment Order dated 26.10.2004 under Section 21 of the Act passed by the Dy. Commissioner, (Assessment) -1st, Trade Tax, Ghaziabad, the assessee preferred First Appeal No.763 of 2004, which was dismissed by the Joint Commissioner (Appeal) 1st Trade Tax, Ghaziabad by Order dated 31.3.2005. Aggrieved with this order the assessee preferred second appeal No.132 of 2005 which has been dismissed by the Tribunal by the impugned order dated 16.8.2005. Aggrieved with order of Tribunal the revisionist-assessee has filed the present revision.
Submissions:
7. Sri Atul Gupta, learned counsel for the revisionist-assessee has made his submission on 09.04.2018 as under:
(i) 1050 gram. 'Paclitaxel' manufactured at Sahibabad Unit of the revisionist were stock transferred to its unit at Baddi, Industrial Area, Solan (Himachal Pradesh), which was supported by invoices and G.R. and as such there was no sale.
(ii) For sale there must be valuation on which the tax is to be charged and the sale consideration should also be there for charging sales tax.
(iii) The value declared in the invoices, were not adopted by the Sales Tax Authorities in proceedings under Section 21 of the U.P. Trade Tax Act, rather they adopted the figures as determined by Central Excise Authorities. The quantity on which the enhanced valuation was rejected by the Settlement Commission, could not have been modified by the Sales Tax Authorities.
(iv) The valuation done by the Central Excise Authorities applying deeming provision for transfer of goods for captive consumption, cannot be adopted by the Sales Tax Authorities.
(v) Once the Central Excise Duty has been paid on stock transfer quantity, then it cannot be said to be sale.
(vi) No enquiry was done by the Sales Tax Department to disprove the fact of stock transfer as established in Central Excise proceedings.
(vii) During the assessment year in question to prove stock transfer, submission of Form-F was not mandatory.
(viii) All the transactions of the goods in question could not have been clubbed together to hold it to be deemed sale under Section 6-A of the Central Sales Tax Act, 1956. Each transaction should have been examined separately for 1050 Gms. 'Paclitaxel'.
(ix) The assessing authority has travelled beyond the show cause notice, inasmuch as, the show cause notice was issued on the basis of information collected from the Central Excise Department with respect to the transfer of the goods in question and, therefore, it was not open for the assessing authority to hold the transaction in question to be a deemed sale.
8. Sri Atul Gupta has relied upon the following judgments in support of his afore-noted submissions:
Moriroku UT India (P) Ltd. v. State of U.P., 2008 (224) E.L.T. 365 (S.C.) (Paragraph Nos.15,16,19 and 21), Ashok Leyland Ltd. v. State of T.N. and another, (2004) 3 SCC-1 (Paragraph Nos. 47 and 48), Commissioner of C. Ex., Nagpur v. Ballarpur Industries Ltd., 2007(215) E.L.T. 489 (S.C.), Commissioner of C. Ex. & Cus., Surat v. Sun Pharmaceuticals Inds. Ltd., 2015 (326) E.L.T. 3(S.C.), Hindustan Polymers Co. Ltd. v. Collector of C. Ex., Guntur,1999 (106) E.L.T. 12(S.C.) and Caprihans India Ltd. v. Commissioner of Central Excise, 2015 (325) E.L.T.632 (S.C.).
9. Sri B.K. Pandey, learned Standing Counsel, submits that concurrent finding of fact has been recorded by the fact finding authorities that the sale turn over of the entire 1524 grams 'Paclitaxel' was suppressed by the revisionist-assessee which is evaded sale. Hence it was liable to tax under the Act and accordingly the tax was lawfully levied. He submits that during the course of original assessment proceedings the assessee had not disclosed the manufacture and sale of 'Paclitaxel'. When proceedings under Section 21 of the Act was initiated on the basis of information received then also he avoided the proceedings with the result that twice ex-parte Assessment Order under Section 21 of the Act were passed. When the assessee appeared, he took the stand that 1040 grams 'Paclitaxel' stock was transferred to Baddi Unit. Subsequently, during argument before the Tribunal he stated this quantity to be 1050 grams. He shown the dispatch of few hundred grams of the aforesaid costly drug through truck thrice and once by courier. The assessee could not establish that the aforesaid quantity of 'Paclitaxel' was dispatched or it was transferred otherwise than by way of sale to Baddi Unit. Likewise he could not establish the alleged donation of 25 grams 'Paclitaxel' to Dabur Research Foundation which he subsequently stated before the Tribunal to be 31 grams. Nothing was disclosed by the assessee with respect to the remaining quantity. Therefore, the Assessing Authority has not committed any error of law to hold the entire quantity to have been sold within the State of U.P. which was undoubtedly the evaded sale. He submits that the findings recorded in the impugned order are findings of fact based on consideration of relevant evidences on record. Therefore, the revision deserves to be dismissed.
Discussion and Findings
10. I have carefully considered the submission of learned counsel for the parties and perused the record. Original assessment records have also been produced before me pursuant to the order dated 15.2.2018 which has also been perused.
11. The revisionist-assessee is a big company. It is engaged in manufacture and sale of various commodities. At the time of original assessment proceedings, the assessee disclosed stock transfer of Rs. 178,56,45,444/- and also filed 254 Form 'F' to establish stock transfer. He had not disclosed the manufacture and sale or alleged stock transfer of 'Paclitaxel' during the course of original assessment proceedings. This Court specifically asked the learned counsel for the revisionist-assessee, yesterday and today also to point out from any evidence that the assessee has disclosed the manufacture and sale or the alleged stock transfer of 'Paclitaxel' during the course of original assessment proceedings. He admits that it was not disclosed. Thus, it is a clear case of suppression of manufacture and disposal of the goods in question i.e. 'Paclitaxel'.
12. Based on information received, the assessing authority initiated proceedings under Section 21 of the Act with respect to evaded sale turn over. In proceedings under Section 21 of the Act the assessee initially not appeared and allowed twice the ex-party Assessment Order to be passed. After about a year of initiation of the proceedings under Section 21 of the Act, the assessee took the stand before the Assessing Authority that 1040 grams 'Paclitaxel' stock was transferred to Baddi Unit as under:
Sl.
Invoice/Challan no. and date Quantity Name of transporter/G.R. No./Truck No. Date 1 440048, 4.4.2000 320 gms 016643 Truck No. HR 12/2272, s/s Haryana Bombay goods Carriers, Faridabad 2.4.2000 2 440726, -
320 gms 016845 Truck No. HR 38/K-4541 Haryana Bombay goods Carrier, Faridabad 3.7.2000 3 440850, - 150 gms 016888 Truck No.HR 51 e/k 4545 s/s Haryana Bombay goods Carrier, Faridabad 17.7.2000 4 440930, - 250 gms By Courier 28.7.2000 Total ________ 1040 gms
13. The Assessing authority found that GRs show transportation of the aforesaid goods by Trucks while in the aforenoted first invoice/challan the transportation has been shown as "By hand". The invoice at serial no.4 above records the manner of transport to be "By Courier". He found that to cover up the evaded sales, the assessee is showing it as stock transfer. Thus, these Grs can not be said to be reliable to prove the despatch of such small quantity of 'Paclitaxel' through Trucks. No information was disclosed by the assessee with respect to the disposal of balance quantity i.e 459 grams of 'Paclitaxel'. Thus, the assessing authority came to the conclusion that the entire 1524 grams 'Paclitaxel' has been sold which is the evaded taxable sales of the assessee. The Appellate Authority also considered the entire details and evidences on record and reached to the same conclusion.
14. Even before the Tribunal the assessee has not disputed the evaded sales of the balance quantity of 459 grams of 'Paclitaxel'. In the grounds of appeal before the Tribunal, the dispute was raised only with respect to alleged stock transfer of 1040 grams and alleged donated quantity of 25 grams 'Paclitaxel'. It appears that during the course of arguments before the Tribunal the assessee took the stand that the stock transferred quantity is 1050 grams instead of 1040 grams and the donated quantity is 31 grams instead of 25 grams. The Tribunal considered the entire facts and evidences on record and recorded a finding of fact that there was no stock transfer and Farm F procured by the revisionist-assessee from its unit situate at Baddi, District - Solan on 24.11.2003 is merely to cover up the evasion. The Tribunal has given sufficient reasons to disbelieve the contention of the revisionist and to uphold the findings of the Assessing Authority and the 1st Appellate Authority. The Tribunal also found that the alleged dispatch could not be proved by the assessee in terms of Section 6-A of the Central Sales Tax Act. For sufficient reasons recorded in the impugned order, the Tribunal disbelieved the story set up by the assessee for donating 25 grams or 31 grams 'Paclitaxel' to Dabur Research Foundation. The assessee took a vague stand before the Tribunal merely in written argument that balance quantity of 443 grams 'Paclitaxel' has either been used in production or it is available in stock. The assessee could not substantiate his claim from the books of accounts.
15. Thus, the Tribunal has not committed any error of law to uphold the determination of evaded sales turnover of the entire quantity of 1,524 grams 'Paclitaxel' by recording the findings of facts as under:
(i) It is undisputed that the assessee has not disclosed stock transfer of 1050 grams 'Paclitaxel' at the time of original assessment proceedings.
(ii) The explanation that the assessee was in impression that the stock which has been transferred for self use is not necessary to be disclosed, does not appear to be correct.
Note : In the original Assessment Order it is mentioned that the assessee disclosed branch transfer of goods of Rs.178,56,45,444/- and submitted original 254 Farm 'F' in support of stock transfer. Thus, assessee is well conversant with the transaction of stock transfer and the relevant provisions to prove the stock transfer. Therefore, the explanation of the assessee was totally false.
(iii) On the basis of alleged four invoices, the assessee has alleged stock transfer of 1040 grams but before the Tribunal stated the stock transfer quantity to be 1050 gram.
(iv) The stand taken by the assessee regarding mode of transportation mentioned in the invoices and the GRs are self contradictory, there appears to be no justification to send such a costly medicine ('Paclitaxel') at transporter's risk without any insurance.
(v) Dispatch of 250 gram 'Paclitaxel' under the alleged invoice No.440930, through DDCT courier is not proved on facts. No evidence was filed by the assessee for delivery of the goods allegedly sent by courier.
(vi) There is no mention of freight in GRs but merely S.T. Charges of Rs.5/- only have been mentioned.
(vii) To establish stock transfer, two things are to be proved; firstly, evidence of dispatch of the goods and secondly, submission of declaration under Section 6A. The dispatch could not be proved by the assessee. The stock transfer could not be established.
(viii) Nothing was disclosed by the assessee regarding allegedly donation of 25 grams 'Paclitaxel' to Dabur research foundation amounting to Rs.1,16,000/- through invoices No.440407 dated 23.5.2000, 440386, dated 19.5.2000 and 440133 dated 18.5.2000. Subsequently, the alleged certificate of Dabur Research foundation dated 8.12.2003 for 25 gram 'Paclitaxel' of value Rs.1,16,000/- was submitted in reassessment proceedings but before the Tribunal the assessee took the stand that 31 gram 'Paclitaxel' valuing Rs.1,85,210/- was transferred to Dabur Research foundation. On being asked the assessee stated that invoice No.440039 dated 6.4.2000, Rs.69,210/- was inadvertently not mentioned. The explanation submitted is afterthought. The alleged donation of 31 grams 'Paclitaxel' is not proved.
(ix) Balance quantity of 443 gram 'Paclitaxel' was stated before the Tribunal by the assessee to have been used either in manufacture or is available in stock at Sahibabad. No such explanation or disclosure was made by the assessee either before the assessing authority in proceedings under Section 21 or before the First Appellate Authority.
(x) By invoice No.2680 dated 6.12.1997 the assessee had sold 'Paclitaxel' to Biological India Ltd. Hyderabad @ Rs.28,000/- per gram. As per report of the Excise Department the value of 'Paclitaxel' is Rs.29000/- per gram. Therefore, the determination of sale value of 1524 gram 'Paclitaxel' @ Rs.29000/- per gram for the Assessment Year 2000-01 is based on facts and evidences which does not require interference.
16. In the case of Ashok Leland Ltd. (supra) Hon'ble Supreme Court considered the provisions of Section 6A of the Central Sales Tax Act, 1956 and held as under:
"43. Having regard to the Statement of Objects and Reasons of the Central Sales Tax Act vis-a-vis the recommendations made by the Law Commission, as referred to hereinbefore, it would appear that Parliament with a view to bring in expediency in such a matter so that the dispute can be determined as expeditiously as possible, amended Section 6A. Section 6 of the Act provides for liability to tax on inter-State sales in terms whereof every dealer is liable to pay tax thereunder on sales effected by him in the course of inter-State trade or commerce subject to the exception contained in the proviso appended thereto. Such tax would be leviable notwithstanding the fact that no tax is leviable either on the seller or the purchaser under the State tax laws of the appropriate State if that sale had taken place inside the State.
44. The liability to tax on inter-State sale as contained in Section 6 is expressly made subject to the other provisions contained in the Act. Sub- Section (2) of Section 9, on the other hand, which is a procedural provision starts with the words "subject to the other provisions of this Act and the rules made thereunder". Section 6-A provides for exception as regards the burden of proof in the event a claim is made that transfer of goods had taken place otherwise than by way of sale. Indisputably, the burden would be on the dealer to show that the movement of goods had occasioned not by reason of any transaction involving sale of goods but by reason of transfer of such goods to any other place of his business or to his agent or principal, as the case may be. For the purpose of discharge of such burden of proof, the dealer is required to furnish to the assessing authority within the prescribed time a declaration duly filled and signed by the principal officer of the other place of business or his agent or principal. Such declaration would contain the prescribed particulars in the prescribed form obtained from the prescribed authority. Along with such declaration, the dealer is required to furnish the evidence of such dispatch of goods by reason of Act 20 of 2002. In the event, if it fails to furnish such declaration, by reason of legal fiction, such movement of goods would be deemed for all purposes of the said Act to have occasioned as a result of sale. Such declaration indisputably is to be filed in Form F. The said form is to be filled in triplicate. The prescribed authority of the transferee State supplies the said form. The original of the said form is to be filed with the transferor State and the duplicate thereof is to be filed before the authorities of the transferee State whereas the counterfoil is to be preserved by the person where the agent or principal of the place of business of the company is situated.
45. When the dealer furnishes the original of Form F to its assessing authority, an enquiry is required to be held. Such enquiry is held by the assessing authority himself. He may pass an order on such declaration before the assessment or along with the assessment. Once an order in terms of Sub-Section (2) of Section 6-A of Central Act is passed, the transactions involved therein would go out of the purview of the Central Act. In other words, in relation to such transactions, a finding is arrived at that they are not subjected to the provisions of the Central Sales Tax. It is not in dispute that thereunder no appeal is provided thereagainst.
47. By reason of Sub-Section (2) of Section 6-A, a legal fiction has been created for the purpose of the said Act to the effect that transaction has occasioned otherwise than as a result of sale.
48. On an analysis of the aforementioned provisions, therefore, the following propositions of law emerge:
(i) The initial burden of proof is on the dealer to show that the movement has occasioned by reason of transfer of such goods which is otherwise than by reason of sale. The assessee may file a declaration. On a declaration so filed an inquiry is to be made by the assessing authority for the purpose of passing an order on arriving at a satisfaction that movement of goods has occasioned otherwise than as a result of sale.
(ii) Whenever such an order is passed, a legal fiction is created.
49. Legal fiction, as is well-known, must be given its full effect.
50. In the rules of evidence, there exist several presumptions. These presumptions may be rebuttable or irrebuttable. Irrebuttable presumptions are referred to as conclusive presumptions as they stand as conclusive proof of certain facts and are open to challenge only on very meagre grounds. Under the Indian Evidence Act, Sections 41, 112 and 133 deal with conclusive presumptions. Even in other enactments, like the Indian Companies Act, 1956, such provisions exist.
51. In the case at hand it is necessary to determine whether Section 6-A of the Central Sales Tax Act sets up a conclusive presumption:
"Presumptions may be looked upon as the bats of law, flitting in the twilight, but disappearing in the sunshine of facts."
64. Thus from the above, we can conclude that the order of an authority under Section 6-A is conclusive for all practical purposes.
71. These decisions, therefore, show that whenever a legal fiction is created by a statute, the same shall be given full effect.
INTERPRETATION OF SECTION 6-A OF THE CENTRAL ACT
72. A statute, as is well-known, must be interpreted having regard to the text and context thereof. Mischief rule may also be applied in a given case.
73. While construing a statute, the object of the Act must be taken into consideration. (See Killick Nixon Ltd. v. CIT (2003) 1 SCC 145).
74. Section 6-A of the Act although provides for a burden of proof, the same has to be read in the context of Section 6 of the said Act. Section 6 provides for liability to pay tax on inter-State sales. Any transaction which does not fall within the definition of 'sale' would not be exigible to tax, the burden whereof would evidently be on the assessee. We have noticed hereinbefore that whereas prior to the amendment in Sub-section (1) of Section 6-A the dealer had an option of filing a declaration in Form-F; after such amendment, he does not have such option, insofar as in terms of the amended provision, if the dealer fails and/or neglects to file such a declaration, the transaction would be deemed to be an inter-State sale. It is to be noticed that for the aforementioned purpose also, Parliament advisedly used the expression 'deemed'. If the expression 'deemed' is interpreted differently, an incongruity would ensue.
75. In absence of any indication that Parliament while enacting Sub- section (2) of Section 6-A did not intend to make the deeming provisions to be a conclusive fact as regards occasion of the transaction having taken place otherwise than as a result of sale, it would have dealt with the matter differently.
76. Section 6-A(2) of the Act uses the following expressions which are important : (1) 'thereupon'; (2) 'for the purposes of this Act'; (3) 'the movement of goods to which the declaration relates shall be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale'."
17. An analysis of the relevant provisions of the Section 6A of Central Sales Tax Act and the Rules framed thereunder shows that the initial burden of proof is on the dealer to show that the movement has occasioned by reason of transfer of such goods which is otherwise than by reason of sale. The assessee may file a declaration. On a declaration so filed an inquiry is to be made by the Assessing Authority for the purpose of passing an order to arrive at a satisfaction that movement of goods has occasioned otherwise than as a result of sale and whenever such an order is passed, a legal fiction is created.
18. The concurrent findings of fact recorded by the statutory authorities including the last fact finding authority i.e. the Tribunal as aforenoted, are based on appreciation of relevant material and evidences on record. The suppression of fact and withholding of information/documents by the assessee regarding the alleged stock transfer and the vague suggestion regarding 459 gram or 443 grams 'Paclitaxel' to be either in stock or to have been used in manufacture, itself amounts to a fraud on the authorities. In Gowrishankar and Anr. v. Joshi Amba Shankar Family Trust and Ors. 1996 3 SCC 31 and S.P. Chengalvaraya Naidu Vs. Jagannath 1994 (1) SC1 Hon'ble Supreme Court held that suppression of material document would amount to fraud on the Court.
19. The drug 'Paclitaxel' manufactured by the assessee is a raw material being used in manufacture of anti cancer medicine. The explanation of the assessee with regard to non disclosure of the alleged stock transfer of 1040 grams or 1050 grams 'Paclitaxel' during the assessment proceedings that he was under impression that the goods which are being stock transferred are not necessary to be disclosed, was found to be groundless inasmuch as perusal of the assessment order shows that during the course of the assessment proceedings the assessee disclosed stock transfer of certain other goods amounting to Rs.178.56 crores and also filed 254 Form - 'F' in original to claim stock transfer. The mode of transportation of the goods in question mentioned in the invoices and the G.Rs. were found to be contradictory as per facts noted by the Tribunal in the impugned order. No evidence of delivery of goods allegedly sent through courier 'DDCT' could be submitted by the assessee. He shown transportation of this costly goods of value of about Rs. 29,000/- per gram covered by three invoices as mentioned in para 12 above for quantity of 320 grams, 320 grams and 150 grams respectively, through different trucks without showing any freight and insurance, which were correctly found to be unproved for detail concurrent findings of fact recorded by the fact finding authorities including the Tribunal. No legally acceptable ground has been made out by the assessee to require this Court to interfere with the findings of fact for not accepting the alleged stock transfer of the goods in question. Therefore, the impugned order of the Tribunal requires no interference by this Court in revisional jurisdiction under Section 11 of the U.P. Trade Tax Act 1948.
20. The judgments relied by the learned counsel for the revisionist assessee are of no help to him on the facts of the present case and the concurrent findings of fact recorded by the statutory authorities as aforenoted.
21. In view of the above discussion, I do not find any error of law in the impugned order. The controversy is concluded by concurrent findings of fact recorded by the fact finding statutory authorities. The question of law framed above is answered in negative i.e. against the assessee and in favour of the opposite party.
22. In result the revision fails and is hereby dismissed.
Order Date :- 10.4.2018/vkg