Allahabad High Court
Parry And Company Ltd. vs Commissioner Of Sales Tax on 3 February, 2003
Equivalent citations: [2004]138STC437(ALL)
Author: Rajes Kumar
Bench: Rajes Kumar
JUDGMENT Rajes Kumar, J.
1. The present revision Under Section 11 of the U.P. Sales Tax Act, 1948 (hereinafter referred as "the Act") filed against the order of Tribunal dated September 13, 1990 relating to the assessment year 1989-90 by which Tribunal has confirmed the penalty levied Under Section 15A(1)(o).
2. The brief facts of the case for the purposes of deciding the issue are the dealer was public limited company incorporated under the Indian Companies Act and was selling agent of M/s. Citurgia Bio Chemicals Ltd., Pandesara, Surat dealing in Chemicals. Applicant did not have any establishment in the State of U.P. Applicant had received an order from M/s. Kisan Products Ltd., Bareilly, a registered dealer in the State of U.P. for supply of citric acid. For the supply of citric acid to M/s. Kishan Products Ltd., Bareilly, applicant had booked order to M/s. Citurgia Bio Chemicals Ltd., Surat, and for import of the goods M/s. Kisan Product Ltd., Bareilly, had provided one form XXXI No. FT-1988-1852068. M/s. Citurgia Bio Chemicals Ltd., Surat, prepared the bill in favour of the applicant for ten tons citric acid and in turn applicant prepared two invoice Nos. 522 and 523 dated August 8, 1989 in favour of M/s. Kisan Products Ltd., Bareilly. In the bill a seal had been fixed stating "sale by transfer of documents of title to the goods Under Section 6B(2)(b) of Central Sales Tax Act, 1956". The G.R. was also prepared in favour of the applicant. The G.R. Which was issued in favour of the applicant was sent to M/s. Kisan Product Ltd., directly after endorsement so that they may retire the goods. Applicant issued the instructions to M/s. Citurgia Bio Chemicals Ltd., to dispatch the goods directly to M/s. Kisan Product Ltd., and for this purpose form XXXI issued by M/s. Kisan Product Ltd., were also provided. The goods were sent in vehicle No. UHQ 698. At the check-post, driver of the vehicle submitted two builties relating to the goods, form XXXI, No. FT-1988-1852068 and form XXXV, challan No. 49335 dated August 4, 1989 sale challan No. 21527 dated July 31, 1989 issued by M/s. Citurgia Bio Chemicals Ltd., in favour of Parry and Company. Gate pass issued in favour of M/s. Parry and Company, Bangalore, and one bill No. 4836 dated July 31, 1989 issued in favour of M/s. Parry and Company, Bangalore, were submitted at the check-post. The check-post officer seized the goods Under Section 13A. The goods was subsequently released on furnishing of security. Thereafter, in pursuance of the seizure of the goods a penalty proceeding had been initiated Under Section 15A(1)(o) against the applicant for the alleged violation of section 28A. Applicant filed reply which was not accepted and penalty order was passed on January 5, 1990 in which a sum of Rs. 1,66,400 was levied towards penalty Under Section 15A(1)(o). Applicant filed appeal before Assistant Commissioner (Judicial) Sales Tax, which was dismissed. Dealer further filed appeal before Tribunal, Meerut which too was rejected vide order dated September 13, 1990. Feeling aggrieved by the order of Tribunal, the present revision has been filed.
3. I have heard Sri Bharat Ji Agrawal, Senior Advocate and learned Standing Counsel.
4. I have perused the order of Tribunal and the authorities below. Tribunal has confirmed the penalty by disbelieving the case of the applicant that the transaction was covered Under Section 6(2)(b) of the Central Sales Tax Act. For rejecting the plea, Tribunal has given various reasons. It is not necessary to refer to those reasons because I am of the view that those reasons are not relevant for the purposes of levy of penalty Under Section 15A(1)(o). I am not going into the question whether the reason given by the Tribunal for coming to the conclusion that the transaction was not covered Under Section 6(2)(b) of the Central Sales Tax Act is correct or not. I am of the view that it is wholly irrelevant that what was the nature of the transaction for the purposes of section 28A. In the proceeding Under Section 13A it is not open to the check-post officer to examine the nature of the transaction. The check-post officer has to see whether the goods were covered by the requisite documents or not. Admittedly at the check-post form XXXI and form XXXV were submitted along with other documents, namely, bill invoice, challan, gate pass, etc. By the documents the goods was traceable to the parties and trade tax authority can call them at any stage in any proceeding. In case of Godfrey Philips India Ltd. v. Commissioner of Sales Tax reported in 1992 UPTC 902, applicant has taken certain machinery on lease from M/s. 20th Century Finance Corporation Limited, Bombay, and had placed the order on M/s. Mandi Deep Engineering and Packaging Industries Pvt. Ltd., Bhopal for supply of the said machinery directly to the applicant. When the goods were being carried over from Bhopal to Ghaziabad, same were intercepted at the check-post. The goods were accompanied with goods receipt, invoice, form XXXI, form XXXV and challan, etc., which were all in the name of the applicant. The goods were seized and the security was demanded on the ground that form XXXI was in the name of applicant, whereas, it should have been in the name of leasing company which had placed the order for supply of machinery. This Court held that, "all the documents accompanying the goods were in the name of the applicant, form No. XXXI was also issued by it and, therefore, there is no illegality in the same because the purpose of form No. XXXI is to bring the transaction to the notice of the department so that it may not remain unaccounted. It is now for the department on the basis of form No. XXXI so issued to tax the party which is liable for it. Therefore, it becomes immaterial whether the form was issued by the applicant who as the consignee. According to the revenue, form No. XXXI should have been issued by leasing company which had placed the order. It hardly makes a difference because transaction has come to the notice of department which is fully accounted for and it is the duty of the assessing authority to tax the person liable for the same." This Court has held that the purpose of importing goods against declaration form is to bring the transaction in the notice of department, so that imported goods may not be escaped to the assessment.
5. In the case of Shaw Scott Distilleries Private Ltd. v. Sales Tax Officer, reported in [1983] 54 STC 344 ; 1983 UPTC 387, the division bench of this Court held that in the proceeding Under Section 13A it is not relevant to examine whether the transactions are inter-State sale or intra-State sale.
6. It is settled principle of law that for the purposes of levy of penalty Under Section 15A(1)(o) it is necessary to make out a case of an attempt to evade the payment of tax and while levying the penalty the assessing authority must record the finding in this regard. In the case of Sri Mewa Lal and Sons v. Commissioner of Trade Tax reported in 2002 STI 79 ; 2002 UPTC 165, this Court cancelled the penalty on the ground that in the penalty order there was no finding of any attempt to evade the tax. Similar view was taken in the case of Bharat Plywood Products Pvt. Ltd. v. Commissioner of Sales Tax reported in [1990] 79 STC 400 (All.) ; 1989 UPTC 1067. I have perused the order of penalty. The Sales Tax Officer could not make out any case of an attempt to evade the payment of tax. The levy of penalty only on the ground that from the document, the claim of the applicant Under Section 6(2)(b) was not established is not justified. Tribunal has also not made out any case of an attempt to evade the payment of tax and has upheld the order of the penalty only on the ground that the applicant could not make out a case that the transaction was Under Section 6(2)(b) of the Central Sales Tax Act. In the present case, it was found that the applicant had made declaration of goods voluntary at the check-post in form XXXV and other documents were also submitted, therefore, there was no scope not to disclose such transaction in the books of account and left no room for any attempt to evade tax.
7. In my opinion the penalty Under Section 15A(1)(o) has been levied on irrelevant consideration. Whether the transaction was the sale in transit by transfer of document and covered Under Section 6(2)(b) of the Central Sales Tax Act or not is the matter to be adjudicated in the assessment proceeding and not in the penalty proceeding. I am not expressing any view in respect of the nature of the transaction. On the facts and circumstances stated above, I am of the view, penalty Under Section 15A(1)(o) is not justified. The penalty is accordingly set aside.
8. In the result, the revision is allowed and order of Tribunal dated September 13, 1990 is set aside and the penalty Under Section 15A(1)(o) is quashed.