Allahabad High Court
The Commissioner, Commercial Tax, U.P. ... vs S/S Jai Mata Di Cargo Services Pvt. Ltd. on 9 January, 2017
Author: Surya Prakash Kesarwani
Bench: Surya Prakash Kesarwani
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR (Judgment reserved on 09.12.2016) (Judgment delivered on 09.01.2017) Court No. - 28 Case :- SALES/TRADE TAX REVISION No. - 460 of 2016 Applicant :- The Commissioner, Commercial Tax, U.P. Lucknow Opposite Party :- S/S Jai Mata Di Cargo Services Pvt. Ltd. Counsel for Applicant :- Bipin Kumar Pandey Hon'ble Surya Prakash Kesarwani,J.
1. Heard Sri B.K. Pandey, learned standing counsel for the applicants and Sri Suyash Agarwal, learned counsel for the respondent. This revision was initially heard on 29.11.2016 and it was admitted.
Facts of the Case:-
2. Briefly stated the facts of the present case are that a truck bearing Registration No.UP22T4924 was intercepted by Assistant Mobile Squad, Commercial Tax, Pilibhit on 27.09.2016. A show cause notice under Section 48 of the U.P. V.A.T. Act, 2008 (hereinafter referred to as "the Act") was issued by the aforesaid authority on 09.10.2016 on allegations that the goods have been loaded from Ghaziabad and the invoices accompanying it, are fictitious and the consignors are non-existent. The respondent neither appeared nor submitted reply within the time allowed. After considering the facts and circumstances and the evidences on record, the Mobile Squad Authority came to the conclusion that the goods have been loaded from Ghaziabad and accordingly passed the seizure order dated 20.10.2016 demanding cash security of Rs.10,90,250/- for release of the seized goods, which were valued at Rs.27,25,624/-. Against the aforesaid order, the respondent preferred an application under proviso to Section 48(7) of the Act before the Joint Commissioner (SIB), Commercial Tax, Range Barellie in which he took the stand that the goods were being transported from transshipment area at Delhi-U.P. Border. The same were accompanied with TDF-1, bills, bilties and weighment slip. The respondent also took the stand that transporter has no right to collect information about the consignor and whosoever books the goods, the same is transported by him for the given destination where the goods are delivered to the person who produces the bilty. The Joint Commissioner (SIB) found that the applicant is not registered under the Act. He considered the facts and evidences on record, and rejected the application of the respondent by order dated 02.11.2016. Aggrieved with the aforesaid order, the respondent filed Appeal No.254 of 2016 under Section 57 of the Act before the Member of Commercial Tax Tribunal, Ghaziabad (Division Bench)- II, Ghaziabad, which has been partly allowed by the impugned order dated 11.11.2016 directing for release of the entire goods without security except twenty articles valued at Rs.81,000/- which was directed to be released on security of Rs.32,400/-. Aggrieved with the aforesaid order of the tribunal, the applicant has filed the present revision.
Submissions:-
3. Learned standing counsel submits that the goods were loaded within the State of U.P. Out of total 78 invoices accompanying the goods, seventy six invoices were found totally fake and bogus in enquiry and the alleged sellers were found non-existent. Only two invoices which were with respect to exempted goods were found to be genuine. TIN numbers of the alleged sellers printed in the aforesaid 74 invoices were also found to be forged and fake. Entire action of the respondent was fraudulent. As per transit declaration form, the purchasers are unregistered as TIN No. of none of the purchasers have been disclosed either in the transit declaration form or in the fake invoices accompanying the goods. Invoices do not contain even addresses of alleged purchasers. He submits that in fact the goods have been sold by the respondent assessee to some undisclosed persons under the cover of fake invoices, fraudulently showing it as being transported from outside the State of U.P. to out-side the State of U.P. so as to evade payment of tax. He submits that there was clear breach of provisions of Section 48 of the U.P. VAT Act, and, therefore, the mobile squad authorities have not committed any error in seizing the goods and demanding cash security of 40% on the estimated value of such goods. However, the Tribunal has committed a manifest error of law and facts to direct for release of goods (except few) without considering or giving due importance to concrete evidences of fraud on record. He submits that the impugned order of the Tribunal deserves to be set aside.
4. Sri Suyash Agarwal, learned counsel for the respondent submits that the respondent is a transporter and is engaged merely in transportation of goods. He used to collect goods of dealers and brings it at its branch at Chikambarpur, Ghaziabad at the Ghaziabad-Delhi Border which is known as transshipment area. From there goods are loaded in trucks for transportation to its destination after weighment. He submits that in the present case, the respondent has booked the goods of various dealers for transportation from Delhi to Siliguri (West Bengal). He submits that as per circular of the Commissioner dated 07.10.2013, copy of which has been filed as Annexure-20 to the revision, search and seizure may be made in the transshipment area with regard to the goods being loaded and transported from the transshipment area (Delhi Ghaziabad Border) but it cannot be treated to have been loaded for transportation from Ghaziabad within the State of U.P. He submits that transshipment area is a no-man's land and, therefore, transportation of goods from this area cannot be treated to be a transportation originating from the State of U.P. He relied upon a decision of Single Bench of this court in the case of Commissioner, Commercial Tax, U.P. Lucknow Vs. Panch Kanya Road Carriers, Ghaziabad, 2012 NTN (Vol.49)-22 (at 25). He submits that the respondent has not committed breach of any of the provisions of the Act. No action can be initiated against him for the reason that the goods were being transported from outside the State of U.P. to outside the State of U.P. Consequently, the mobile squad authority committed a manifest error in seizing the goods and demanding security which has been lawfully set aside by the Tribunal. Section 52 of the VAT Act is not relevant in view of the judgment of this court in the case of Madhya Bharat Transport Carrier, Gwalior Vs. Commissioner of Trade Tax, 2003 U.P.T.C.-1218, New Indore Delhi Road Lines Vs. Commissioner of Commercial Tax, U.P. Lucknow, 2012 NTN (Vol.49)-19, Saiya Transport Pvt. Ltd. Vs. State of U.P. and others, 2006 U.P.T.C.-967, Commissioner, Trade Tax U.P., Lucknow Vs. Vikram Tewari, Karol Bagh, Delhi, 2007 NTN (Vol.33)-376 and Dev Nandi Trading Co. Vs. Commissioner, Commercial Tax, 2013 NTN (Vol.53)-232. He supports the impugned order of the Tribunal.
5. Considering the submissions of learned counsels for the parties and the questions, following questions of law are formulated under Section 58(2) of the Act for answer in this revision:-
(i) Whether under the facts and circumstances of the case, seizure of goods and demand of cash security for its release under Section 48 of the U.P. VAT Act, 2008 is valid?
(ii) Whether Delhi - U.P. Border area of District Ghaziabad is "no-man's land"?
(iii) Whether transporters are strangers to the transaction of sale and purchase and totally ignorant about the consignors and consignees?
(iv) Whether fraudulent transportation of goods and colourable devices used to give impression of transportation of goods from outside the State of U.P. to outside the State of U.P. shall fall under Section 52 or would be a case falling under Section 48 of the U.P. VAT Act, 2008?
Relevant Provisions:
U.P. VAT Act, 2008:
Section 46. Power of search, inspection and seizure in case of a person other than dealer:-
Where a person carries on any activity ancillary or incidental to or in connection with business of a dealer, any officer authorized under sub-section (1) of section 45, for the purpose of investigation into tax liability of a dealer, subject to provision of sub-section (11) of section 45, may exercise powers under subsection (1) to sub-section (10) of the said section.
EXPLANATION- For the purposes of this section, following persons shall be deemed to carry on activities ancillary or incidental to or in connection with the business of a dealer:
(i) broker or canvassing agent who acts as mediator between purchaser and seller of goods; or
(ii) transporter or any other carrier or a forwarding agent of goods; or
(iii) person who fabricates or manufactures any goods for a dealer; or
(iv) person who takes delivery of goods or who dispatches goods on behalf of a dealer; or
(v) person who holds in custody any goods belonging to a dealer; or
(vi) person who handles goods of a dealer in any other capacity.
Section 48. Power to seize goods.-
(1) An officer authorised under sub-section (1) of section 45 shall have the powers to seize any goods -
(i) which are found in a dealer's place of business, vehicle, vessel or any other building or place; or
(ii) which, such officer has reason to believe to belong to the dealer and which are found in any place of business, vehicle, vessel or any other building or place, but are not account for by the dealer in his accounts, registers or other documents maintained in the ordinary course of his business.
(iii) which are found in any place of business, vehicle, vessel or any other building or place, and such goods are accompanied by any tax invoice or sale invoice or any other document pertaining to value of goods, as the case may be, containing value of goods undervalued to the extent more than fifty percent of the value of goods prevalent at the relevant time in the local market area where the said transaction had taken place, with intention to evade payment of tax:
PROVIDED that a list of all the goods seized under this sub-section shall be prepared by such officer and be signed by the officer and not less than two witnesses.
(2) Where any officer referred to in sub-section (1) has reason to believe that the goods found in any vehicle, vessel, building or place are not traced to any bonafide dealer or documents issued by a bonafide dealer with respect to accompanying goods contains wrong particulars or that it is doubtful if such goods are properly accounted for by any dealer in his accounts, registers or other documents, maintained in the ordinary course of his business, he shall have power to seize such goods, and the remaining provisions of this section shall mutatis mutandis apply in relation to such seizure.
(3) An officer seizing the goods under sub-section (1) shall take all the measures necessary for their safe custody and forward the list, referred to in the proviso to sub-section (1), along with other documents relating to the seizure to the assessing authority concerned.
(4) The said assessing authority shall serve on the dealer or, as the case may be, the person in charge of the goods at the time of seizure (hereinafter in this section referred to as the person in charge) a notice in writing requiring him to show cause, why a penalty should not be imposed.
(5) If such authority, after taking into consideration the explanation, if any, of the dealer or, as the case may be, the person in charge and after giving him an opportunity of being heard, is satisfied that the said goods were omitted from being shown in the accounts, registers and other documents referred to in sub-section (1) or not traced to any bonafide dealer or not properly accounted for by any dealer or the documents issued by a bonafide dealer with respect to the accompanying goods contained wrong particulars or the goods are undervalued to the extent of more than fifty percent of the value of goods prevalent at the relevant time in the local market area where the said transaction had taken place, with intention to evade payment of tax, it shall pass an order imposing a penalty not exceeding forty per cent of the value of such goods, as he deems fit.
(6) A copy of the order imposing penalty under sub-section (5) shall be served on the dealer or, as the case may be, the person in charge.
(7) The officer seizing the goods shall serve on the dealer or, as the case may be, the person in charge an order in writing mentioning the fact of such seizure and indicating the amount, not exceeding such amount as would be sufficient to cover the penalty likely to be imposed, on deposit whereof in cash, the goods so seized may be released in favour of the dealer or, as the case may be, the person in charge:
PROVIDED that the Commissioner or such other officer, not below the rank of a Deputy Commissioner, as may be authorised in this behalf by the Commissioner, may, for sufficient reasons to be recorded in writing, direct that the goods be released without any deposit or on depositing such lesser amount, or furnishing security in such form other than cash or indemnity bond, as he may deem fit:
PROVIDED FURTHER that in case of a person, who is not a registered dealer and against whom penalty order referred to in sub-section (7) has been passed, filing of return by such person and assessment of tax on him may not be necessary.
(8) The penalty or such part thereof as remains after adjustment of any amount deposited under sub-section (7) shall be deposited in the prescribed manner within thirty days of the date of service of the copy of the order imposing the penalty. In default, the assessing authority shall cause the goods to be sold in such manner as may be prescribed and apply the sale proceeds thereof towards the penalty imposed, and subject to the provisions of section 40, refund the balance, if any, to the dealer or, as the case may be, to the person-incharge.
(9) Where the officer seizing the goods, before forwarding the list and other documents referred to in sub-section (3), or the assessing authority at any time thereafter, is of the opinion that the goods are subject to speedy and natural decay or where the tax assessed or penalty imposed, as the case may be, is not deposited in accordance with the provisions of this Act, the officer seizing the goods or the assessing authority, as the case may be, may, without prejudice to any other action that may be taken in accordance with other provisions of this Act, cause the goods to be sold by public auction in the prescribed manner. The sale proceeds of such goods shall be adjusted towards the expenses of tax assessed or penalty imposed. The balance, if any, shall be refunded to the dealer or, as the case may be, the person in-charge in accordance with the provisions of sub-section (8).
(10) If the amount deposited under sub-section (7) is more than the amount of penalty imposed under sub-section (5), the excess amount so deposited shall be refunded to the dealer or, as the case may be, the person in-charge by the authority with whom it was so deposited, in accordance with the provisions of section 40."
(Emphasis supplied by me) Section 52. Provision for goods passing through the state.-
When a vehicle coming from any place outside the State and bound for any other place outside the State carrying goods referred to in sub-section (1) of section 50, passes through the State, the driver or other person in charge of such vehicle shall carry such documents as may be prescribed failing which it shall be presumed that the goods carried thereby are meant for sale within the State by the owner or person in charge of the vehicle.
U.P. VAT RULES, 2008:
"Rule 58. The transit of goods by road through the State.--
The driver or person-in-charge of a vehicle carrying goods referred to in sub-section (1) of section 50, coming from a place outside the State and destined for a place outside the State, passes through the State, the driver or person-incharge of a vehicle shall carry such documents and follow such procedures as may be determined by general or special order issued by the Commissioner from time to time, failing which it shall be presumed that the goods carried thereby are meant for sale within the State by the owner or person-in-charge of the vehicle.
Rule 59. Import or receipt of goods by rail, river or air and matters incidental thereto. (1) A registered dealer or a person other than a registered dealer desirous of importing or receiving into the State (from any place outside the State) by post, rail, river or air, any goods, notified under sub-section (1) of section 50, in excess of quantity, measure or value specified thereunder, shall submit for endorsement the original and duplicate portions of the declaration or certificate as the case may be duly filled in and signed by him to the assessing authority within whose territorial jurisdiction he carries on business or, if he does not carry on business, ordinarily resides.
(2) The assessing authority to whom a declaration or certificate is submitted for endorsement shall, after satisfying himself about their correctness and completeness, sign and stamp with his official seal, retain the original portion of the declaration or the certificate and return to the registered dealer or the person other than the registered dealer, as the case may be, the duplicate portion thereof after endorsing thereon a receipt for the retained original portion. The assessing authority may, in his discretion, direct the dealer or the person concerned to furnish copies of bill or cash memorandum or challan or invoice received by him from the selling dealer or the consignor of the other State for verification of the contents of the declaration or the certificate.
(3) The concerned authority of rail, air, or post shall not deliver the consignment to the dealer or person concerned unless the declaration or certificate dully endorsed as aforesaid, is furnished before him.
(4) The provisions in rule 54,and rule 56, except sub-rules (1), (6), (8) and (11) thereof and of rule 57 except subrule (1) and (6) thereof shall mutatis mutandis, apply in regard to the declaration or certificate, as the case maybe, referred to in sub-rule (1).
(5) The commissioner may from time to time issue instructions with regard to the procedure to be followed regarding taking of delivery of goods and submission of declaration or certificate."
Section 165 of Indian Evidence Act "165. The Judge may, in order to discover or to obtain proper proof of relevant facts, ask any question he pleases, in any form, at any time, of any witness, or of the parties, about any fact relevant or irrelevant; and may order the production of any document or thing: and neither the parties nor their agents shall be entitled to make any objection to any such question or order, nor, without the leave of the Court, to cross-examine any witness upon any answer given in reply to any such question:
Provided that the Judgment must be based upon facts declared by this Act to be relevant, and duly proved:
Provided also that this section shall not authorize any Judge to compel any witness to answer any question, or to produce any document which such witness would be entitled to refuse to answer or produce under sections 121 to 131, both inclusive, if the questions were asked or the documents were called for by the adverse party; nor shall the Judge ask any question which it would be improper for any other person to ask under section 148 or 149; nor shall he dispense with primary evidence of any document, except in the cases herein- before excepted."
Discussion and Findings:-
Question No. (i) Whether under the facts and circumstances of the case, seizure of goods and demand of cash security for its release under Section 48 of the U.P. VAT Act, 2008 is valid?
6. Perusal of the record shows that on 27.09.2016, a truck bearing Registration No.UP22T/4924 was intercepted by the Assistant Commissioner, Commercial Tax, Mobile Squad Pilibhit. The driver of the truck was required to produce the documents. The authorities also intended to make physical verification of the goods and for that, time was fixed at 10.30 A.M. on the next day i.e. 28.09.2016. On 28.09.2016, the driver of the truck Sri Saddam Hussain moved an application that the respondents have instructed on telephone that the goods be verified physically in their presence. For this reason, he did not allow the officers to check the goods. On 29.09.2016, one Kayyum, representing himself as helper moved an application that owner of the goods has not come and the driver has gone to his village and, therefore, physical verification be done only when the owner of the goods/ transporter comes. The authorities granted time as requested but none turned up even on 29th or 30th September, 2016 and instead, the aforesaid Kayyum again moved an application and stated that he shall not allow physical verification of the goods until owner of the goods or transporter comes. Again on 01.10.2016, the aforesaid person 'Kayyum' moved a similar application denying physical verification of the goods. On 02.10.2016 and 03.10.2016, he moved applications submitting that he has no information as to when the owner of the goods or respondent-transporter shall come and the driver has gone leaving him and therefore, the goods cannot be checked. Ultimately on 05.10.2016, when neither respondents nor the owner of the goods turned up then the authorities recorded statement of one Sri Tahir, who was Khalasi of the truck. He stated that the driver of the truck and the helper, both have gone and he shall open the truck only when they come. On 06.10.2016, he took Mobile No.9412191336 of the authorities and stated that he shall inform the driver to talk on the said mobile number. Thereafter, the driver of the truck talked to the authorities through his Mobile No.7466031686 at the aforesaid mobile number of the authority at about 12.55 P.M. He stated that he is not in Pilibhit and shall return after 2-3 days since the vehicle owner 'Imran' has told him to go after 2-3 days and to get the goods verified in the presence of the goods' owner. On 07.10.2016, none turned up and instead the Khalasi of the truck (Tahir) again informed by a written application that he does not know when the driver and the helper shall come back and he shall not allow the goods to be physically verified in their absence. On 08.10.2016, the helper "Kayyum" came and moved an application intimating that on 09.10.2016, the driver shall come for physical verification of the goods. However, later on, on the same day, the authorisation of the respondents was produced by the aforesaid helper "Sri Kayyum" whereby the respondents authorized him as their representative for checking of the goods. Thus, the respondents and actual owner of goods did not deliberately turn up for 12 days for physical verification of the goods loaded in the truck in question. On 09.10.2016, the driver as well as the helper, namely Sri Saddam Hussain and Sri Kayyum appeared for physical verification of the goods. They produced weighment slip bearing Serial No.1950 dated 25.09.2016 of M/s Mahabir Dharm Kanta G.T. Road, Delhi-U.P. Border, Ghaziabad, a transit declaration form No.D20160900424805 and certain other documents. On checking, the following discrepancies were found:
(i) On physical verification, goods of G.R. Nos.18982, 61162, 18973, 61618, 61613, 15930 and 15886 were found different than the goods declared.
(ii) Kachcha parchas of goods of estimated value covered by G.R. Nos.61694 and 61613 were found.
(iii) On physical verification, 19 bags iron pended rack and 11 bags artificial jewellery gilt (payal) and one bag leather washer were found undisclosed.
(iv) On examination of bills/ invoices and as per TIN numbers, the consignors were not found in existence and TIN numbers were fictitious.
(v) On inquiry, the consignors were also not found in existence.
(vi) Forged bills/ invoices of non-bona fide dealers have been used for the goods loaded within the State of U.P. and to evade payment of tax, the transportation has been shown from outside the State of U.P. to outside the State of U.P.
7. By notice dated 09.10.2016, No.134 under Section 48 of the U.P. VAT Act, 2008 (hereinafter referred to as 'the Act'), the Assistant Commissioner (Office In-charge), Commercial Tax, Mobile Squad Authority, Pilibhit required the respondents/ person in-charge of the vehicle to submit reply and to appear with evidences and show cause why goods be not seized under Section 48 of the Act. The date was fixed for 14.10.2016. The aforesaid notice was duly received by the driver as well as the helper of the truck, namely, Sri Saddam and Sri Kayyum. However no one appeared on the date fixed. Consequently, Mobile Squad Authority passed an ex parte order under Section 48 of the Act for seizure of the goods giving an option for release thereof on deposit of cash security of Rs.10,90,250/- being 40% of the estimated value of goods amounting to Rs.27,25,624/-.
8. It is undisputed that the goods in question were loaded from Ghaziabad (U.P.) and 76 invoices out of total 78 invoices accompanying the goods, were found to be fake. The Mobile Squad Authority checked TIN number of each of the aforesaid invoices with the help of "Tax Information Exchange System". None of the alleged firms were found with respect to the entered TIN number. The authority downloaded the information so received and placed a copy thereof on record which has also been perused by the court. Thus, the invoices accompanying the goods were found to be fake and fraudulent and TIN numbers printed thereon were found to be fictitious.
9. The invoices accompanying the goods loaded in the truck in question as found with the truck are available in the records of the Mobile Squad Authority which has been produced before the court. The court perused the invoices and found that in none of the invoices, addresses of the consignees have been given. Merely "Siliguri" has been mentioned in the invoices. All the aforesaid fake invoices bear name of firms showing some addresses of Delhi which all were found to be untraceable/ non-existent on the basis of checking of the TIN numbers as aforesaid.
10. It appears that after the seizure order dated 20.10.2016 was passed, a reply was presented on 22.10.2016 before the Mobile Squad Authority by one Sri Rana Pratap Singh, authorised representative along with an authorisation of the respondents showing him to be resident of District Chapra while as per Voter ID Card, the aforesaid person is resident of District Saran. Even in this reply, the respondents have not mentioned even a word about the queries made in the show cause notice for seizure of goods but instead simply stated that the goods are covered by invoices and bilties and they have no right to collect information about the consignors and whosoever books the goods, they deliver it at the destination on presentation of bilti. It was also stated that the goods do not relate to the Uttar Pradesh.
11. After the seizure order, the respondents moved an application under proviso to Section 48(7) of the Act before the Joint Commissioner (SIB), Commercial Tax, Bareilly, Zone-B, Bareilly, who passed a detailed order dated 02.11.2016. He examined each and every paper, the inquiry report etc. and noted details of 62 alleged consignors who were not found in existence and their TIN numbers as mentioned in the invoices were found to be forged. The goods mentioned in the bilties were different. He mentioned details of invoices with respect to two alleged consignors and TIN numbers which were also found forged and non-existent and details Kachcha Parcha indicated that the the actual price of goods was several times higher than those mentioned in the invoices. He also noted details of four invoices, the numbers of which were overlapping. After detailed discussion and noticing judgments of this court, he concluded as under:
"mDr foospuk ls Li"V fu"d"kZ fudyrk gS fd iz'uxr izdj.k esa fodzsrk QeZ vfLrRoghu@cksxl gSA LEO;ogkj ds lkFk miyC/k izi= tsuqbu ugh gS rFkk cksxl@QthZ izi=ksa ds vk/kkj ij Vh0Mh0,Q0&1 tujsV djds mRrj izns'k ds vUnj ls eky dk ifjogu fd;k tk jgk gS rFkk dj&Hkkj ls cpus ds fy;s eky dk ifjogu mRrj izns'k ds ckgj fnYyh ls flyhxqM+h] nkftZfyax] if'pe caxky ds fy, ifjogu fd;k tkuk iznf'kZr fd;k tk jgk gS] ftlds fy;s fnYyh dh QeksZ ds QthZ fcyksa dk iz;ksx fd;k x;k gSA Li"V :i ls lEO;gkj mRrj izns'k ds vUnj ds cksukQkbZM Mhyj ds fu;fer ys[kksa dk va'k ugh gS rFkk Vh0Mh0,Q0&1 dk vkJ; mRrj izns'k okf.kT; dj ds vioapu ds mn~ns'; ls fd;k tk jgk gSA ;g Hkh mYys[kuh; gS fd Vh0Mh0,Q0&1 esa ?kksf"kr lHkh dzsrk QeksZ ds fVu&09000000000 vafdr gS vFkkZr lHkh dzsrk QesZ lEcfU/kr izns'k ds okf.kT; dj foHkkx esa viathd`r gS rFkk fcyksa ij muds vafdr irs Hkh v/kwjs gSA vr% izLrqr ekeys esa dh x;h vfHkxzg.k dh dk;Zokgh mfpr (Emphasis supplied by me)
12. However, in Appeal No.254 of 2016 filed by the respondents, the Member Commercial Tax Tribunal, Ghaziabad (DB)-II, Ghaziabad partly allowed the appeal by the impugned order dated 11.11.2016 on the ground that the goods were brought from Delhi to U.P. Border where they were loaded in the truck in question and thereafter TDF was downloaded for carrying the goods from outside the State of U.P. to outside the State of U.P. The Tribunal took the view that Chikambarpur Ghaziabad is a transshipment area where the respondents have transshipment branch and the goods have been loaded from that place, which is a free zone area and consequently, the seizure of the goods is invalid. The aforesaid findings of the Tribunal are not only baseless and perverse but also in conflict with the evidences on record. It is undisputed that the goods were loaded from Ghaziabad and, thereafter, TDF was downloaded whereas TDF is required to be downloaded before entry of goods within State of U.P. That apart, the invoices accompanying the goods were found to be forged and TIN numbers mentioned therein were fictitious. The name of dealers mentioned therein were found to be non-existent. Documentary evidence in this regard were well on record. The Tribunal has not set aside the findings of fact recorded in this regard by the Mobile Squad Authority as well as by the Joint Commissioner (SIB). Thus, the impugned order of the Tribunal is wholly arbitrary and illegal.
13. Before I proceed to test the arguments of the respondents on the touchstone of the afore-noted provisions of the Act and the Rules, it would be relevant to note at the cost of repetition that the invoices accompanying the goods were found to be forged, the TIN numbers were found to be fictitious and the consignors mentioned in the forged invoices were found to be non-existent. The goods were loaded at Ghaziabad within State of U.P. These facts are supported by documentary evidences on record which could neither be disputed or denied by the respondents nor the Tribunal has set aside the findings recorded in this regard by the Mobile Squad Authority and the Joint Commissioner (SIB). Three questions were put by the court to the respondents as recorded in the order of this court dated 09.12.2016 which were answered as under:
"(a) Question (i): Whether there is any branch or office or contact address of the respondent at Ghaziabad (U.P.) and Siliguri (West Bengal)?
Answer (i):- It is not relevant for transportation and delivery of the goods.
(b) Question (ii):- When goods of 76 invoices relating to different alleged purchasers showing their address merely as 'Siliguri' are being transported by the respondent then how the goods shall be delivered to alleged purchasers whose address are not known?
Answer (ii):- In view of the provisions of Section 52 read with provisions of Rule 58 of the Rules, the jurisdiction of the authorities under the Act is confined only within the State of U.P.
(c) Question (iii):- Since the entire case of the department is that the consignors are bogus and invoices are fake and the goods have been loaded within State of U.P. for transportation to another place with intent to evade payment of tax, is it not necessary to disclose to the court on a query in view of the provisions of Section 165 of the Indian Evidence Act that who are actual consignors and consignees and how respondent transporter shall know or trace the alleged purchasers and where the alleged purchasers shall approach the respondent when he neither has any branch or office or a contact address at Siliguri?
Answer (iii):- The transporter has no address of the purchasers as per record."
14. From the facts as afore-noted, it is evident that from own applications of persons In-charge of the vehicles moved on 29.09.2016, 30.09.2016, 01.10.2016, 02.10.2016, 03.10.2016, 07.10.2016, 08.10.2016 and the statement of the driver of the truck, Sri Kayyum dated 06.10.2016 before the Mobile Squad Authority that the goods shall be allowed to be checked in the presence of the owners of the goods who are coming. However, owners of the goods had not turned up rather respondents persuaded the matter on their behalf. Thus, it is evident that the respondents are well aware of the real owners of the goods but they have suppressed the information and did not allow the real owners/ consignors to come forward and instead preferred to pursue the case through authorised representative of a very distant place, i.e. Chhapra (Bihar). Specific queries were made by the Mobile Squad Authority based on documentary evidences regarding the invoices accompanying the goods to be fake, TIN numbers mentioned therein to be fictitious and the alleged dealers to be non-existent, yet none of the alleged consignors/ owners of goods came forward nor respondents disclosed identity of real consignors/ owners and consignees of the goods nor replied the queries made by the Mobile Squad Authority. In fact, the respondents have not only consciously suppressed material facts but also fraudulently acted to get the goods released merely on their baseless stand that the goods were being transported from outside the State of U.P. to outside the State of U.P.
15. In view of the above discussion, prima facie I have no difficulty to hold that the goods in question originated for transportation from Ghaziabad were being carried by the respondent in a fraudulent manner under the cover of bogus invoices with fictitious TIN numbers printed thereon. Respondents downloaded TDF-1 by submitting false information, suppressing material information, identity and particulars of real owners of the goods, so as to give it colour of transportation of the goods from outside the State of Uttar Pradesh to outside the State of Uttar Pradesh under Section 52 of the Act, with intent to evade tax under the Act. Under the circumstances, seizure of the goods under Section 48 of the Act and demand of cash security by the Mobil Squad Authority as modified by the Joint Commissioner (SIB) for release of the goods, does not suffer from any illegality.
Question No.(ii) Whether Delhi - U.P. Border area of District Ghaziabad is "no-man's land"?
16. The stand taken by the respondents that certain border area of District Ghaziabad is a "no man's land", has no substance. Article 1(2) of the Constitution of India, provides that the States and the territories thereof shall be specified in the First Schedule. It is undisputed that District Ghaziabad is within the territory of State of U.P. Neither the Constitution of India nor any Statute provides for Delhi-U.P. Border area of District Ghaziabad to be "no man's land". The circular of the Commissioner Sales Tax dated 31.01.1987 was issued in view of Establishment of Check Posts under the U.P. Sales Tax Act, 1948. Section 49 of the U.P. VAT Act provides for establishment of check-posts and barriers but this provision has been omitted w.e.f. 27.08.2009 by the U.P. VAT (III Amendment) Act, 2009, (U.P. Act No.23 of 2009) published in the notification dated 27.08.2009. In the case of Om Logistic Ltd. Vs. Commissioner of Commercial Tax, 2016 NTN (V.61) 250 (All.), this court held that the power to apprehend, inspect and seize goods is exercisable throughout the length and breadth of the State. If that power exists and exercisable statutorily throughout the State, surely a circular of the Commissioner cannot eclipse the same. That apart, in exercise of powers conferred under Section 52 of the Act read with Rule 58 of the Rules, the Commissioner of Commercial Tax has issued a circular dated 03.09.2013 providing for the procedure for vehicles passing through the State which person incharge of the vehicle is bound to follow. Paragraph-6 of the aforesaid circular dated 03.09.2013 provides as under:
"ikjxeu ?kks"k.kki= TDF-1 dks iz'uxr okgu ds eky lfgr izns'k dh lhek esa izos'k ds iwoZ gh Hkjuk vfuok;Z gksxk rFkk izns'k ds ckgj ls izns'k eas gksrs gq, izns'k ds ckgj tkus okys eky ds lkFk eky ls lEcfU/kr izi=ksa rFkk fcy@fcYVh vkfn ds vfrfjDr bl ikjxeu ?kks"k.ki= TDF-1 dks Hkh j[kuk vfuok;Z gksxkA"
17. The circular dated 31.01.1987 has been heavily relied by the respondents on the basis of certain judgments of this court contending that the area of Chikambarpur, Ghaziabad is a "no man's land" as per the circular. It is relevant to note that even the aforesaid circular has been cancelled by the Commissioner of Commercial Tax by circular dated 29.08.2016, which is reproduced below:
"dEI;wVj ifji= la0 1617028 fnukad 29-08-2016 la[;k&fof/k&4¼1½@lkekU; funsZ'k@16&17@[email protected]; dj dk;kZy; dfe'uj okf.kT; dj] mRrj izns'k ¼fof/k vuqHkkx½ y[kuÅ % fnukad % 26 vxLr] 2016 leLr tksuy ,Mh'kuy dfe'uj@,Mh'kuy dfe'uj xszV&2 ¼fo0vuq0'kk0½ leLr TokbUV dfe'uj ¼dk;Zikyd½@¼fo0vuq0'kk0½ okf.kT; dj] mRrj izns'kA fo"k; %&loZ Jh vkse ykSftfLVd fy0 cuke fde'uj okf.kT; dj ¼Vh0Vh0vkj0 la0 % 326@2011½ 2016 NTN (Vol. 61) 250 (All.) esa ekuuh; mPp U;k;ky; }kjk fn;s x;s fu.kZ; ds lanHkZ esaA loZ Jh vkse ykSftfLVd fy0 cuke dfe'uj okf.kT; dj ¼Vh0Vh0vkj0 la0 % 326@2001½ ds okn esa ;kph }kjk vfHkxzg.k dh dk;Zokgh dks fuEu nks fcUnqvksa ij pqukSrh nh x;h Fkh %& ¼1½ dfe'uj] O;kikj dj }kjk ifji= fnukad 31-01-1987 ds lanHkZ esa ;kph dk dFku Fkk fd eky xksnke esa igqapus ls iwoZ "no mans land" esa gksus ds dkj.k eky dk vfHkxzg.k ugha fd;k tk ldrkA ¼2½ **dkj.k crkvks uksfVl** ds mRrj esa QkeZ 38 nkf[ky dj fn;s tkus ds vk/kkj ij vfHkxzg.k dh dk;Zokgh visf{kr ugha FkhA izFke fcUnq ds laca/k esa ekuuh; mPp U;k;ky; }kjk iz'uxr fu.kZ; esa foLrkj ls fopkj fd;k x;k rFkk ;g vfHker O;Dr fd;k x;k fd dfe'uj] okf.kT; dj }kjk tkjh iz'uxr ifji= fnukad 31-01-1987 fdlh Hkh izdkj ls okf.kT; dj foHkkx ds vf/kdkfj;ksa dks mRrj izns'k jkT; dh lhek ds vUnj eky ds vfHkxzg.k ls ugha jksdrk gSA ekuuh; U;k;ky; }kjk ;g Hkh vfHker O;Dr fd;k x;k gS fd mRrj izns'k ewY; laof/kZr dj vf/kfu;e 2008 esa ,slk dksbZ izkfo/kku ugha gS ftlds vk/kkj ij dfe'uj] okf.kT; dj dks ;g vf/kdkj izkIr gks fd os vius v/khuLFk vf/kdkfj;ksa dks mRrj izns'k jkT; ds leLr Hkw&Hkkx ds vUrxZr eky dks jksdus] tkap djus vkSj mudk vfHkxzg.k djus dk vf/kdkj gS rFkk ;g 'kfDr;kWa vf/kfu;e }kjk iznRr gksus ij dfe'uj okf.kT; dj ds ifji= }kjk mUgsa ckf/kr ugha fd;k tk ldrkA ekuuh; mPp U;k;ky; ds mDr fu.kZ; ls ;g Lor% Li"V gS fd dfe'uj okf.kT; dj ds mDr ifji= la[;k fof/k&1&¼2½&¼lh&7½&86&87&3332@eq[;ky; fnukad 31-01-1987 }kjk fdlh izdkj ls mRrj izns'k ds Hkw&Hkkx ds vUnj fdlh Hkh LFkku ij [email protected] dh dk;Zokgh ls jksdk ugha x;k gSA rFkk izns'k ds Hkw&Hkkx ds vUrxZr fdlh Hkh {ks= esa /kkjk&45 ,oa 45 ds vUrxZr iznRr vf/kdkjksa }kjk eky dh [email protected] dh dk;Zokgh dh tk ldrh gSA oSls Hkh iz'uxr ifji= rRle; dk;Zjr tkWp pkSfd;ksa dh HkkSxksfyd fLFkfr ds dkj.k gks jgs djkioapu dh izHkkoh tkap gsrq tkjh fd;k x;k rFkk orZeku esa tkWp pkSfd;kWa lekIr gks tkus ds dkj.k iz'uxr ifji= Lor% fu"iz;ksT; gks tkrk gSa ,oa rn~uqlkj fujLr fd;k tkrk gSA ekuuh; mPp U;k;ky; ds iz'uxr fu.kZ; dh izfr bl i= ds lkFk bl funsZ'k ds lkFk layXu dj izsf"kr dh tk jgh gSa fd ekuuh; U;k;ky; ds mDr fu.kZ; ls v/khuLFk vf/kdkfj;ksa dks voxr djkrs gq, mijksDrkuqlkj dk;Zokgh djuk lqfuf'pr djsaA mDr funsZ'kksa dk dM+kbZ ls vuqikyu fd;k tkuk lqfuf'pr fd;k tk;sA layXud % See 2016 NTN (Vol.61) 250 (All.) ¼eqds'k dqekj esJke½ dfe'uj okf.kT; dj] mRrj izns'kA"
18. Thus, the circular dated 31.01.1987 is non-existent. That apart, it has no relevance in view of the facts found and the constitutional provisions mentioned above. Delhi - U.P. Border area of District Ghaziabad is not "no man's land" rather it is part of District Ghaziabad (U.P.).
Question No.(iii) Whether transporters are strangers to the transaction of sale and purchase and totally ignorant about the consignors and consignees?
19. Before the authorities and the Tribunal, the respondents took the stand that they being transporter have no right to obtain information of any kind about any businessman rather the business of transportation is based on practical formula that whosoever books the goods for a place of destination, he takes bilti and on the place of destination the goods are delivered to the person who produces bilti. Before the Tribunal the respondents pleaded that they do not enquire whether the consignors and consignees are in existence or not. The stand so taken has no substance in view of the observations of Hon'ble Supreme Court in the case of A.B.C. (India) Ltd. Vs. State of Assam and another (2005) 6 SCC 424 (para-22) as under:
"22. In our view, transporters are not strangers to the sale or purchase of goods, to the contrary are part and parcel and are directly involved in storing the goods purchased or sold by dealers, and in many cases such transactions are fictitiously carried on in false names and addresses besides false classifications vis-a-vis transportation of such goods in and outside the State making themselves party to the episode of such fictitious transactions for the sole purpose of evasion of tax by the dealers purchasing and selling such goods."
20. The activity of transporter or any other carrier, forwarding agent, person who holds any goods belonging to a dealer and person who handles goods of a dealer in any other capacity; have also been statutorily recognised under section 46 of the Act to be an activity ancillary or incidental to or in connection with business of a dealer.
21. In the case of Gill Sandhu Haryana Transport Co. Vs. State of Rajsthan, (1991) 10 RT JS 335 (paras 6, 7), a Division Bench of Rajsthan High Court observed that where a transporter is stopped and it is found that consignee is fictitious and the goods are seized, it is not likely to effect the right of the transporter. In that eventuality, the consignor or the consignee should come forward and assign reasons for their concealing the real identity. The law does not help those who are torch bearers of dishonest persons.
22. In view of the above, it cannot be said that transporters are strangers to the transaction of purchases and sales and totally ignorant about the consignors and consignees. In cases like the present case where transactions have been fictitiously carried on in false names and addresses, bogus invoices with fictitious TIN numbers printed therein and TDF-1 is downloaded on the basis of false particulars and forged papers by a transporter then he makes himself party to the episode of fictitious transaction with sole purpose of evasion of tax by undisclosed non-bonafide dealers. By seizure of goods in such cases transporter is not affected if he is really a transporter. Therefore, instead of being torch bearer of dishonest persons, he should allow the real consignors or consignees to come forward and assign reasons for concealing their real identity. The action of the departmental authorities in such cases to unearth evasion of tax is one of their fundamental duties under the Act.Question No.(iv) Whether fraudulent transportation of goods and colourable devices used to give impression of transportation of goods from outside the State of U.P. to outside the State of U.P. shall fall under Section 52 or would be a case falling under Section 48 of the U.P. VAT Act, 2008?
23. In the case of Vodafone International Holdings BV Vs. Union of India and another, (2012) 6 SCC 613 (paras 323, 331) Hon'ble Supreme Court considered the effect of adoption of colourable devices and held as under:
"323. McDowell has emphatically spoken on the principle of Tax Planning. Ranganath Mishra, J. on his and on behalf of three other Judges, after referring to the observations of S.C. Shah, J. in CIT v. A. Raman and Co. AIR 1968 SC 49, CIT v. B. M. Kharwar (1969) 1 SCR 651, the judgments in Bank of Chettinad Ltd. v. CIT, (1940) 8 ITR 522, Jiyajeerao Cotton Mills Ltd. v. CIT, Bombay AIR 1959 SC 270; CIT v. Vadilal Lallubhai (1973) 3 SCC 17 and the views expressed by Viscount Simon in Latilla v. IRC, (1943) AC 377 : 25 TC 107 (HL) stated as follows:
(McDowell and Co. Ltd. V. CTO, (1985) 3 SCC 230, SCC pp.254-55, para 45) "45. Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges."
331. Reddy, J., we have already indicated, himself has stated that he is entirely agreeing with Mishra, J. and has only supplemented what Mishra, J. has stated on tax avoidance, therefore, we have to go by what Mishra, J. has spoken on tax avoidance. Reddy, J. has depreciated (sic deprecated) the practice of setting up of tax avoidance projects, in our view, rightly because the same is/was the situation in England and Ramsay (W.T.) Ltd. v. IRC, 1982 AC 300 and other judgments had depreciated the tax avoidance schemes. In our view, the ratio of the judgment is what is spoken by Mishra, J. for himself and on behalf of three other judges, on which Reddy, J. has agreed. Reddy, J. has clearly stated that he is only supplementing what Mishra, J. has said on Tax avoidance."
(Emphasis supplied by me)
24. In the case of United India Insurance Company Ltd. V. B.Rajendra Singh and others, JT 2000(3)SC.151, considering the consequences of fraud, Hon'ble Supreme Court held in paragraph 3 as under :
"Fraud and justice never dwell together". (Frans et jus nunquam cohabitant) is a pristine maxim which has never lost its temper overall these centuries. Lord Denning observed in a language without equivocation that "no judegment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud, for fraud unravels everything"(Lazarus Estate Ltd. V. Beasley 1956(1)QB 702).
(Emphasis supplied by me)
25. In the case of Ram Chandra Singh Vs. Savitri Devi and others, 2003(8) SCC 319, Hon'ble Supreme Court defined fraud and considered the effect of fraud and misrepresentation and held in paragraphs 15, 16, 17, 18, 25 and 37 as under :
"15. Commission of fraud on court and suppression of material facts are the core issues involved in these matters. Fraud as is well-known vitiates every solemn act. Fraud and justice never dwells together.
16. Fraud is a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter.
17. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud.
18.A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad.
25. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res-judicata.
37. It will bear repetition to state that any order obtained by practising fraud on court is also non-est in the eyes of law."
(Emphasis supplied by me)
26. In the case of S.P. ChengalVaraya Naidu (dead) by L.Rs Vs. Jagannath (dead) by L.Rs and others, AIR 1994 SC 853, the Hon'ble Supreme Court held in para 7 as under :
"7. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation."
(Emphasis supplied by me)
27. In the case of Jainendra Singh Vs. State of U.P., 2012 (8) SCC 748, Hon'ble Supreme Court considered the fact of appointment obtained by fraud and held in para 29.1 to 29.10 as under :
"29.1 Fraudulently obtained orders of appointment could be legitimately treated as voidable at the option of the employer or could be recalled by the employer and in such cases merely because the respondent employee has continued in service for a number of years, on the basis of such fraudulently obtained employment, cannot get any equity in his favour or any estoppel against the employer.
29.2 Verification of the character and antecedents is one of the important criteria to test whether the selected candidate is suitable to the post under the State and on account of his antecedents the appointing authority if find not desirable to appoint a person to a disciplined force can it be said to be unwarranted.
29.3 When appointment was procured by a person on the basis of forged documents, it would amount to misrepresentation and fraud on the employer and, therefore, it would create no equity in his favour or any estoppel against the employer while resorting to termination without holding any inquiry.
29.4 A candidate having suppressed material information and/or giving false information cannot claim right to continue in service and the employer, having regard to the nature of employment as well as other aspects, has the discretion to terminate his services.
29.5 Purpose of calling for information regarding involvement in any criminal case or detention or conviction is for the purpose of verification of the character/antecedents at the time of recruitment and suppression of such material information will have clear bearing on the character and antecedents of the candidate in relation to his continuity in service.
29.6 The person who suppressed the material information and/or gives false information cannot claim any right for appointment or continuity in service.
29.7 The standard expected of a person intended to serve in uniformed service is quite distinct from other services and, therefore, any deliberate statement or omission regarding a vital information can be seriously viewed and the ultimate decision of the appointing authority cannot be faulted.
29.8 An employee on probation can be discharged from service or may be refused employment on the ground of suppression of material information or making false statement relating to his involvement in the criminal case, conviction or detention, even if ultimately he was acquitted of the said case, inasmuch as such a situation would make a person undesirable or unsuitable for the post.
29.9 An employee in the uniformed service pre-supposes a higher level of integrity as such a person is expected to uphold the law and on the contrary such a service born in deceit and subterfuge cannot be tolerated.
29.10The authorities entrusted with the responsibility of appointing Constables, are under duty to verify the antecedents of a candidate to find out whether he is suitable for the post of a Constable and so long as the candidate has not been acquitted in the criminal case, he cannot be held to be suitable for appointment to the post of Constable."
(Emphasis supplied by me)
28. Similar principles with regard to fraud have been laid down by Hon'ble Supreme Court in the case of JT 2005(6) SC 391, para 7 to 15, JT 2007(4) SC 186, para 19 to 39, JT 2009(9) SC 365, para 22 and 23, JT 2008 (3) SC 452, para 12.3 to 15, JT 2009(5) SC 278, para 13 to 18 and 28 and JT 2008(8) SC 57.
29. Facts of the present case as noted above, leave no manner of doubt that the alleged invoices accompanying the goods are fake, the TIN numbers printed therein are fictitious, the alleged consignors are non-existent and identity of real owners of the goods have been concealed by the respondents with only motive to evade tax under the Act or to help undisclosed persons to evade tax. It is a clear case of fraud, misrepresentation and suppression of facts by the respondents. This court cannot act to protect perpetuation of legal fraud. The courts are obliged to do justice. Fraud and justice never dwell together (Frans Et Jus Nunquam Cohabitant). This maxim has never lost its temper over all the centuries. The courts are not meant to permit dishonesty even on technical pleas. Dishonesty cannot be permitted to bear the fruit and benefit to the persons who played fraud or misrepresented or suppressed facts and in such circumstances, the court should not allow perpetuation of fraud by entertaining the technical pleas. The very foundation of the case of the respondent is based on falsehood and fraud. The respondents have suppressed material facts and did not disclose it despite being repeatedly asked by the Mobile Squad Authority. Even they abstained to answer the queries made by the court as afore-noted. They have not disclosed the real person/ owner of the goods in question. Wrong has been clearly committed and, therefore, the respondents cannot be allowed to take advantage of their own wrong on the basis of technical pleas so as to frustrate the law. Once a transportation of goods under the cover of Section 52 of the Act is shown to be fraudulent, sham, bogus, circuitous or a device designed to evade tax under the Act, the statutory authorities under the Act and the court can always examine the substance of the transaction because the legislature never intends to guard fraud. No authority or court may recognise such transportation or transaction on the basis of the provisions of Section 52 of the Act. Law is manifestation of principles of justice, equity and good conscience. Hence section 52 of the Act cannot be considered and understood in a manner so as to encourage tax evaders and to discourage those who abide by law. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. No doubt, when a person transports goods from outside the State of U.P. to outside the State of U.P. in terms of Section 52 of the Act and Rule 58 of the Rules, the authorities under the Act have no power to seize the goods and demand security for release thereof but where, as in the present case, the transaction is sham, not genuine and make-believe and originated for transportation from a place within the State of U.P. or intended to be sold within the State of U.P. with intent to evade tax then it would be a case falling under Section 48 of the Act. Provisions of Sections 48 & 52 of the Act, have to be considered in a manner so as to hold that it serves to seek a reasonable result. Protection of Section 52 of the Act cannot be extended for evasion of tax under the Act, to perpetuate fraud or to do something indirectly which cannot be done directly.
30. The judgments relied by the respondents, have no relevance on the facts of the present case and are distinguishable.
31. In view of the above discussion, the revision succeeds and is allowed. The impugned order of the Tribunal is set aside and the questions of law are answered in favour of the applicants and against the respondents. It is clarified that penalty proceeding shall be concluded by the competent authority without being influenced by any of the observations made in this judgment.
Order Date :- 09.01.2017 NLY