Punjab-Haryana High Court
M/S Ranger Foods Pvt. Limited vs The State Of Punjab on 1 March, 2012
Author: Rajiv Narain Raina
Bench: Rajiv Narain Raina
VAT Appeal No.71 of 2011 (O&M)
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
VAT Appeal No.71 of 2011 (O&M)
Date of Decision: 01.03.2012
M/s Ranger Foods Pvt. Limited ..... Appellant
Versus
The State of Punjab ..... Respondent
CORAM:- HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE RAJIV NARAIN RAINA
Present: Mr. Avneesh Jhingan, Advocate, for the appellant.
Mr. Piyush Kant Jain, Addl. AG, Punjab for respondents.
1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
RAJIV NARAIN RAINA, J.
1. This is an appeal preferred by a dealer under Section 68 of the Punjab Value Added Tax Act, 2005 (in short "the Act") against the order dated 22.07.2011 (A-3) of the Value Added Tax Tribunal, Punjab, Chandigarh rendered in (VAT) Appeal No.113 of 2011. The order was served on the appellant on 12.08.2011. The Tribunal dismissed dealer's appeal. The order dated 28.02.2010 (A-2) passed by the Deputy Excise & Taxation Commissioner (Appeals) Ludhiana Division, Ludhiana has been upheld together with the order of the Assistant Excise & Taxation Commissioner-cum- Deputy Director (Mobile Wing), Ludhiana. The Deputy Director (Mobile Wing) had imposed a penalty of Rs.11,84,220/- and further a tax of Rs.94,737/- has been found due to the revenue under Section 51(7) (c) of the Act on the VAT Appeal No.71 of 2011 (O&M) -2- appellant company.
2. Brief facts necessary for decision on this appeal are that on 05.11.2009 a vehicle bearing registration No.HR-38-C-2186 was intercepted and checked. It was carrying Desi Ghee. The vehicle was on its way from Sirsa (Haryana). On checking, the driver of the vehicle produced the computer generated invoice No.26 dated 05.11.2009 issued by the petitioner-Company in favour of M/s Milk Foods Ltd. Hamira, District Kapurthala (Punjab). The invoice showed weight and value of goods consigned and under transportation together with the goods receipt No.2199 dated 05.11.2009. The driver did not possess at the time checking information generated at the Information Collection Centre (ICC) erected at the Punjab Border while entering the territory of Punjab. The driver could not produce Form ST-36 prescribed under Section 51 of the Act. However, an outward challan in Form VAT D3, (a statutory form to be used by the dealer registered under the Haryana Value Added Tax Act, 2003) for consigning goods in transit, was also produced on checking. A physical check of the person accompanying the driver revealed an invoice bearing No.84, Goods Receipt No.264 and 26 Empty Goods Receipts of Beopari Truck Union Kalanwali (Sirsa) Haryana. The recovery of this document was made. Scrutiny by the authorities disclosed that a single transaction was covered by double set of documents. While one set showed goods coming from Sirsa to be delivered at Hamira in Punjab, the second set showed goods coming from Samana (Punjab) to be delivered at Hamira by a vehicle of Kansal Road Lines, Ghagga Road, Samana. The AETC held proceedings and imposed penalty as aforesaid vide order dated 20.11.2009. The present appeal arises out of those proceedings. It was found that there had VAT Appeal No.71 of 2011 (O&M) -3- been contravention of the statutory provisions contained in Sections 51 (6) (b) read with explanation to Section 51 (7) (d) of the Punjab Act. The suspected evasion of tax was confirmed by the authorities below. The appellant was given opportunity in defence of the notice issued to the firm to explain why penal action under Section 51 (7) (b) of the Act should not be taken against it. On a consideration of the entire material on record, the AETC recorded a finding that the firm gave no plausible reason as to why a double set of documents were prepared for a single transaction. Invoice No.26 dated 05.11.2009 showed the appellant as seller and Milk Foods Pvt. Ltd. as buyer. The commodity was shown as loose Ghee, the weight of which was 10,750 kgs. The total value including 2% CST was shown as Rs.23,68,440/-. The fact of the matter was that goods were loaded in Haryana and was under transportation to Punjab. In such transaction, the mandatory provisions of Section 51 (6) (b) of Act had to be complied with. VAT D3 form was duly filled by the appellant which explains everything. The AETC in the original order imposing penalty found that the Goods Receipts of M/s Kansal Road Lines, Ghagga Road Samana was doubtful and on enquiry marked to the ETO to check the genuineness of GR issued by such transporter it came to light that no such transport company exists in Samana. Local transporters supported this fact. To make matters worse, the appellant did not produce regular account books either before the detaining officer or before the Deputy Director (Mobile Wing), Ludhiana. The story that the empty tanker was sent from Haryana to Punjab and that too after filling the VAT D-3 form by the appellant was not believable. Besides, a perusal of the agreement entered by the dealer nowhere showed that goods of the appellant were to be sold from Herman Milk Food Ltd. Samana. A VAT Appeal No.71 of 2011 (O&M) -4- combination of factors presented before the authorities below proved intention of evasion of tax. Even assuming that there is no mens rea non compliance of statutory provisions would itself be sufficient to impose penalty. Penalty gets attracted as soon as there is contravention of statutory provisions. Intentions of the parties committing such violation is wholly irrelevant. The modus operandi adopted by the assessee itself indicates the mens rea, as held by Hon'ble the Supreme Court in Guljang Industries v. Commercial Tax Officer, (2007) 30 PHT 300 (SC). On facts it was concluded that Pure Desi Ghee in loose form was loaded in vehicle No.HR-38-C-2186 from Sirsa, Haryana and the goods were on their way to Hamira, Kapurthala, Punjab. The goods were meant for trade. Two sets of documents were prepared by the owner, for a single transaction, deliberately in a clandestine manner in order to evade tax. One set, for account books and the other for the transit. If the truck was not checked there would have been loss of revenue. The DETC (Appeals) by a well reasoned order upheld the order passed by the lower authority and reached the conclusion that there was a definite attempt to evade tax. It was held to be a clever device to arm the persons accompanying the goods/vehicle with duly filled Form VAT D-3 prescribed under the Haryana VAT Act so that in case goods are checked within Haryana the same can be produced before the checking officer on the way. One fact which glares us in the face is that the transaction was not reported at the ICC set up on the border by the State of Punjab. A Division Bench of this Court in its oft quoted judgment in M/s Mool Chand Chunilal reported in (1977) STC 40-238 P&H has held as follows:-
"A scheme or device to evade the tax may start operating long before the actual liability to pay the tax arises. As soon as the VAT Appeal No.71 of 2011 (O&M) -5- scheme or device is set in motion there is an attempt to evade the tax due under the Act and it will not be necessary to wait till the liability to pay the tax actually arises. If an attempt to evade the tax is discovered earlier, the liability to be subjected to penalty is straightway attracted."
3. We have heard learned counsel for the parties and have perused the record and the orders passed by the authorities below.
4. In his challenge to the order under appeal passed by the learned VAT Tribunal, Mr. Avneesh Jhingan, learned counsel for the appellant submits that the learned Tribunal failed to appreciate that issuance of D-3 Form showed no mala fides. Rather, the issuance of D-3 Form assured that the transaction cannot be kept out of the books of accounts in Haryana as this Declaration Form is issued by the Department. The use of this form is monitored by the Department and the dealer has to submit one counterfoil of this Form, along with returns. Still further, the mistake of issuance of two GRs, nowhere establishes the attempt to evade tax. Besides, the statements relied upon by the Department with regard to the existence or non-existence of the transport company were recorded at the back of the appellant dealer. It was not confronted with that material. Hence, the present was a case of no evidence in the eyes of law. Mr. Jhingan would urge that taking the case of the Department at the highest, the facts of the present case indicated that this was an Inter-State sale between the appellant and Milk Foods Ltd in which case as per Section 9 of the CST Act the tax is to be collected by the State from which the movement of goods started i.e. Haryana. In that eventuality, there was no tax payable under the Punjab Act, hence, no penalty under Section 51 can be imposed. Mr. Jhingan would emphasize that issuance of Form D-3 itself ensures that VAT Appeal No.71 of 2011 (O&M) -6- transaction had to be entered in Haryana Books and since the sale of goods is to the manufacturer the latter would get input tax credit, if the job worker had deposited the tax in the State, otherwise M/s Milk Foods, Hamira would have to pay the tax on the entire value of manufactured goods.
5. We have perused the order of the learned Tribunal with care and with the able assistance of the learned counsel. We, however, see no legal infirmity or any legal or factual shortcoming in the order in appeal and would in fact appreciate the well considered judgment. The learned Tribunal has observed; "Startlingly enough that an empty vehicle was engaged from Sirsa for transporting the goods from Samana (Punjab) to Hamira (Punjab). It is not the case of the appellant that he was the owner of this vehicle. Had he been so, the driver would have been maintaining the log book. There are two goods receipts, one purportedly issued by Beopari Truck Union, Kalanwali, Sirsa (Haryana) for carrying the goods from Sirsa to Hamira and the other one purports to have been issued by Kansal Road Lines Ghagga Road, Samana and delivered at Hamira. In both these goods receipts dated 5.11.2009, same vehicle bearing registration No.HR-38-C-2186 has been mentioned. If the vehicle was sent from Sirsa for loading the goods from Samana for being delivered at Hamira, then what was the fun to get the goods receipt issued from Kansal Road Lines, Ghagga Road, Samana. This gives an inkling that of these two goods receipts, one is fake".
6. There was clear violation of the provisions of Sections 51 (2) and 51 (4) of the Act. The data required under the aforesaid provisions would not be available to the State. Those provisions are addressed to owner or person in charge of a goods vehicle entering the limits or leaving the limits of the State. VAT Appeal No.71 of 2011 (O&M) -7- Non compliance at the ICC would remain fatal to the case of the appellant. Mr. Jhingan has not been able to persuade us to take a view different from the one taken up to the appellate order passed by the VAT Tribunal. We are convinced that there was attempt to evade tax and but for the checking that ensued the matter would have gone undetected. We, consequently, would uphold the order of the Learned VATTribunal and are inclined to dismiss this appeal. Appeal to stand dismissed. No costs.
(M.M. KUMAR) JUDGE (RAJIV NARAIN RAINA) JUDGE 01.03.2012 manju