JANSO SOFT DRINKS PRIVATE LTD. v. STATE OF KERALA — 1986 DIGILAW 301 (KER)

JUDGMENT V. SIVARAMAN NAIR, J. Petition in O.P. No. 4278 of 1986 is the appellant. It is a company engaged in he business of bottling soft drinks, in its factory at Aroor in Alleppey District. It is a dealer registered under the Kerala General Sales Tax Act and the Central Sales Tax Act. It had obtained the release of 12 lorry loads of empty bottles, which were intercepted and detained at the Sales Tax Check Post, Chovva, for the period from 17th August, 1984 to 21st August, 1984. Bank guarantee for an amount of Rs. 1,54,469 was furnished for such release of the goods. For the period from 9th September, 1984 to 2nd November, 1984, 41 more lorry loads of empty bottles were intercepted at that check post allegedly for the reason that the consignments were not accompanied by prescribed documents. By order dated 19th August, 1985, under section 29 of the Kerala General Sales Tax Act, the adjudicating authority imposed a penalty of Rs. 1,54,469 in respect of the 12 lorry loads intercepted upto 21st August, 1984. An appeal was filed before the Appellate Assistant Commissioner, Cannanore, against that adjudication order. 2. O.P. No. 7542 of 1984 was filed by the petitioner thereafter, stating that it apprehended that further consignments of empty bottles were likely to be intercepted and detained in the check post. In C.M.P. No. 23494 of 1984, it was ordered on 31st August, 1984, that such consignments should be released on furnishing security bonds to the extent of the security deposits demanded. The 41 lorry loads were released on execution of bonds by the petitioner. Notices were issued under section 29A of the Act to the owner of the goods through the drivers of the lorries and also to the petitioner since their names were entered in the chalan-cum-gate passes. The petitioner-appellant furnished security bonds to the tune of Rs. 5,83,910 as per the observations contained in the order in C.M.P. No. 23494 of 1984 dated 31st August, 1984. Exhibit P1 adjudication order was passed subsequently, after considering the explanations filed by the appellant and hearing it through a chartered accountant and its counsel. The adjudicating officer found that there was an attempt to avoid sales tax allegedly due to the Government. He, therefore, imposed a penalty of Rs. Exhibit P1 adjudication order was passed subsequently, after considering the explanations filed by the appellant and hearing it through a chartered accountant and its counsel. The adjudicating officer found that there was an attempt to avoid sales tax allegedly due to the Government. He, therefore, imposed a penalty of Rs. 5,83,910 on the owner of the goods in exercise of the power under section 29A of the Act. Copy of that order was communicated to the appellant as also to M/s. Indian Reprographic Systems, New Delhi. According to the appellant, the latter is a company which had leased out empty bottles to M/s. McDowell & Company Ltd. M/s. Indian Reprographic Systems, New Delhi, which is alleged to have entered into lease arrangement with M/s. McDowell & Company, had placed a number of orders for the bottles from the manufacturers, M/s. Glass and Ceramics Decorators, Bombay, for supply of bottles. According to the leasing arrangements, the bottles were to be despatched to M/s. Janso Soft Drinks (P.) Ltd., Alleppey, which, apparently, is a sister concern of M/s. Janso Foods (P.) Ltd., Bombay, who was given the franchise of bottling and selling certain soft drinks. 3. The complaint of the appellant was that in spite of the finding contained in exhibit P1, that only the owner of the bottles was liable to pay the sales tax, exhibit P2, notice dated 9th April, 1986, was issued to it requiring payment of the penalty within period of 7 days. The appellant submitted exhibit P3, representation stating that it should not be made liable to pay the amount since it had undertaken to pay the penalty only if it was found liable to pay tax on the goods, the release of which was sought. Exhibits P4 and P5 were issued under sections 7 and 34 of the Kerala Revenue Recovery Act, seeking enforcement of the payment of penalty due under exhibit P1 order. The appellant had sought the issue of a writ of certiorari to quash exhibits P2, P4 and P5, and a further direction to the respondents not to proceed against the appellant for realisation of the penalty imposed by exhibit P1 order on M/s. Indian Reprographic Systems, New Delhi. 4. The appellant had sought the issue of a writ of certiorari to quash exhibits P2, P4 and P5, and a further direction to the respondents not to proceed against the appellant for realisation of the penalty imposed by exhibit P1 order on M/s. Indian Reprographic Systems, New Delhi. 4. The learned single Judge dismissed the original petition stating that the only effect of exhibits P2, P4 and P5 as far as the appellant was concerned, was of enforcing the terms of the bond executed by it for the release of the goods, which, in exhibit P1 order, were found to be taxable. It was also found that if the appellant was not the owner of the goods, it was liable to give back the goods which were released to it from detention pursuant to orders of court, and the appellant can avoid coercive proceedings under exhibits P2, P4 and P5 if the goods were so returned to the department. The appellant submits, that it not being the owner of the goods and not having committed any default, the imposition of penalty was unjustified and the demands contained in exhibits P2, P4 and P5 are unsustainable. It was also submitted that the learned single Judge erred in holding that the appellant was liable to return the goods which were released to it on the basis of bonded obligations, because such obligation was confined only to payment of tax or penalty if the appellant was found to be liable to be attached under the Kerala General Sales Tax Act. 5. The facts are not in controversy. 41 lorry loads of empty bottles consigned to the appellant were detained at the check post during the period 9th September, 1984, to 2nd November, 1984, and they were released to the appellant pursuant to orders of this Court in C.M.P. No. 23494 of 1984. Had the goods been available in detention, the respondents could easily have proceeded against those offending goods to realise the penalty. The appellant obtained release of those goods on executing bonds in that regard as provided in section 29 of the Kerala General Sales Tax Act. May be, that the terms of the bond do not require the appellant to produce the goods unless there is a finding that it is found liable to pay tax in respect of them. The appellant obtained release of those goods on executing bonds in that regard as provided in section 29 of the Kerala General Sales Tax Act. May be, that the terms of the bond do not require the appellant to produce the goods unless there is a finding that it is found liable to pay tax in respect of them. But the fact remains that the department could have proceeded against the goods which were detained and which allegedly belonged to M/s. Indian Reprographic Systems, New Delhi. If the goods were liable to be proceeded against and the liability is on the alleged owner, the person who got release of such goods has the liability to make them available for further proceedings to the department. If it was otherwise, the owner of the goods can always escape liability by setting up another person to claim and obtain release of the goods, and refuse to appear in proceedings for assessment, imposition of penalty, etc. The order of this Court in C.M.P. No. 23494 of 1984 was not meant to assist the owner of the goods to avoid or evade payment of tax. Nor can this Court exercise its jurisdiction in favour of a person who obtained an interim order of this Court to release of goods which are now found to be liable to be proceeded against for the only reason that the terms of the bond which it executed did not require the production of the same for realisation of penalty. 6. Another aspect of the matter is that exhibit P1 order, which is sought to be enforced by issue of exhibits P2, P4 and P5 is appealable at the instance of the owner, M/s. Indian Reprographic Systems, New Delhi, or even at the instance of the present appellant. An equally efficacious alternative remedy being available, there is no reason why this Court shall exercise its extraordinary jurisdiction under article 226 of the Constitution of India in this matter. An equally efficacious alternative remedy being available, there is no reason why this Court shall exercise its extraordinary jurisdiction under article 226 of the Constitution of India in this matter. We do not think that the petition under article 226 of the Constitution is an appropriate forum to decide the questions relating to the grant of franchise for production and bottling of soft drinks to one company; lease of bottles to another company - the appellant - for bottling on behalf of yet another company and supply of bottles by the manufacturer to a leasing firm through another principal and thereafter to a bottling contractor. Such details which involve investigation into facts and interpretation of the terms of leasing and works contract are better decided in departmental proceedings under the Kerala General Sales Tax Act. 7. We should also take note of the fact that when the offending goods are detained, any person appears to be interested at the goods, and seeks release of the same, the adjudicating authority is entitled to proceed further in the matter with the junction of the person who sought to represent the owner and who claimed to be interested in the goods. The counter-affidavit filed on behalf of the respondents makes it abundantly clear that the notice to the owner of the goods was issued through the driver of the lorry. The appellant who claimed to be interested in the goods was heard through counsel and a chartered accountant before exhibit P1 order was passed. There was no defect of jurisdiction or violation of principles of natural justice involved in passing that order : nor are we satisfied that the authorities went wrong in trying to realise the penalty realisable in respect of the offending goods from the person who obtained release of the same. In these circumstances, we do not find any justification to interfere with the judgment of the learned single Judge. 8. We should also add that Sri T. Karunakaran Nambiar, Special Government Pleader (Taxes), appearing for the respondents, stated that the moment either the goods are made available by the owner thereof, or the owner discharges the liability to pay the penalty, all proceedings against the petitioner and evidenced by exhibits P2, P4 and P5 will stand withdrawn. In the result, the appeal is dismissed. Appeal dismissed.