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J&K High Court · body

2000 DIGILAW 16 (JK)

Upkar Goods Transport Co. v. State Of J. &K.

2000-02-11

O.P.SHARMA

body2000
1. The petitioner is a Company registered under the Companies Act, 1956. It carries on the business as goods-carrier. The case of the petitioner is that on 20-11-1995 vehicle No. JKR-3481 with the consignment of goods booked from Delhi to Srinagar was stopped at Lakhanpur Check Post for verification of the documents of the goods loaded in it. Since the assessing authority found that part of the consignment was being carried without proper documents, the goods were impounded alongwith the vehicle. This action of the respondent-assessing authority according to the petitioner is illegal because every part of the consignment was supported by documents produced by the driver but these were not accepted. 2. The grievance of the petitioner is that although all the documents were produced by the driver on demand but the respondent refused to accept their genuineness and illegally seized the vehicle along with the goods under section 15-A(3) of General Sales Tax Act, 1962 (for short Sales Tax Act) on the plea that documents were not genuine. After the seizure of the vehicle, the respondents it is admitted case of the parties, initiated action under Section 15-A of the Sales Tax Act in an attempt to impose penalty. 3. The show-cause notices issued under different provisions have been challenged on the ground that no offence was made out against the petitioner as the document furnished by the driver were genuine and the objections about its genuineness without any basis. Another ground of challenge is that on the admitted facts of the case, no offence under section 15-A(2) was made out and therefore the seizure of the goods was without jurisdiction. 4. By an interim order dated 15-12-1995, this Court directed the release of vehicle and also directed the respondents to pass a reasoned order after hearing the petitioner so far as the proposed penalty was concerned. 5. 4. By an interim order dated 15-12-1995, this Court directed the release of vehicle and also directed the respondents to pass a reasoned order after hearing the petitioner so far as the proposed penalty was concerned. 5. Pursuant to this direction, respondent 3 passed a speaking order on 26-12-1995 rejecting the stand of the petitioner about the genuineness of documents and imposed the penalty under sub-sections (4), (8) & (9) of Sections 15-A amounting to Rs.1,15,236,00/- under sub-sections (8) and (9) of Section 15-A of the Sales Tax Act, This order of assessment dated 26-12-1995 has been challenged on the grounds:- i) That failure to produce documents before the vehicle had entered the State does not constitute breach of sub-section (2) of Section 15-A of the Act; ii) That the establishment of Check-Post under Section 15-A offends Article 301 & 304 of the Constitution of India; iii) That pursuant to the order of this Court dated 15-12-1995 the petitioner produced relevant documents in support of the claim that goods were genuinely purchased yet the assessing authority did not take notice of those documents and instead passed the order in an arbitrary manner. iv) That although the petitioner was entitled to right of hearing both under law as also in terms of the direction of this court yet respondent passed order without giving reasonable opportunity to the petitioner to satisfy him thereby principles of natural justice stand violated; and v) That it is not necessary that only such goods can be imported into the State which are accompanied by documents. These can be produced afterwards also. 6. The stand of the respondents is that goods can be transported within the State only when these are accompanied by a Bill of Sale or Delivery Note or Declaration as provided under Sub-section (2) of Section 15-A. Failure to produce documents, it is further stated, empowers the officers to impound the vehicle under Sub-section (3} of Section 15-A. 7. What is the ambit and scope of Section 15-A vis-a-vis the goods imported in the State and how the power of seizure is to be exercised if goods are not accompanied by Bill of Sales or Delivery Note or Declaration or Certificate of ownership is the only question involved in this petition. 8. The main thrust of the argument of Mr. 8. The main thrust of the argument of Mr. Hali is that under sub-section (1) of Section 15-A, the Government has to establish check-post and erect barriers where-ever necessary for the purpose of regulating passage of goods across such notified area. The breach of sub-section (2) of this section according to learned counsel takes place only when the goods are transported within the State or beyond the notified area. Not otherwise. Since the goods in this case had neither been transported within the State nor beyond the notified area, therefore, the order of seizure of the goods was according to him without jurisdiction. His next contention is that it is not obligatory that the goods should be accompanied by Bill or Sale or Delivery Note or Certificate of Ownership. These documents according to Mr. Hali can be furnished subsequently. Since the petitioner had produced documents though subsequently, the respondents-assessing authority according to the learned counsel acted in an arbitrary manner while rejecting them on the ground that the documents were fake. The third contention of Mr. Hali is that the right of hearing given to the petitioner was not effective because if the assessing authority was not satisfied about the genuineness of the documents he should have been asked to produce evidence in support of their genuineness. 9. Mr. S.K. Shukla on the other hand argued that the question whether the goods were being transported within the State or beyond the notified area is a- question of fact. The petitioner has never disputed that goods had been transported within the State before these were checked at the Lakhanpur. He argued that petitioner cannot raise the question of jurisdiction after having submitted to the jurisdiction of the Assessing Authority. The genuineness of documents according to Mr. Shukla has to be decided by the Assessing Authority and who is the officer on spot. The case the petitioner was not satisfied it could challenge the order of the assessing authority as provided in the Act. This course has not been followed by the petitioner. He produced the documents on 18-12-1995 but these were not found genuine and even if the documents were genuine, it would be a disputed question of fact which this court, he argued could not investigate. So far as the denial of effective hearing is concerned the order impugned according to Mr. This course has not been followed by the petitioner. He produced the documents on 18-12-1995 but these were not found genuine and even if the documents were genuine, it would be a disputed question of fact which this court, he argued could not investigate. So far as the denial of effective hearing is concerned the order impugned according to Mr. Shukla is self speaking and the contention is without any basis because the petitioner was not only heard but documents produced in support of the claim were also considered. 10. Mr. Hali placed reliance on the decision of Calcutta High Court reported in 1991 Sales Tax Cases 179 in which it was held that unless the consignment had crossed the check-post no offence was committed under section 6 & 7 of the West Bengal Sales Tax (4 of 1954). This judgment is, however, not helpful to the petitioner because of the specific stand taken by it even in the objections filed before the Assessing Authority, a copy of which is enclosed with the writ petition. In para 1 of these objections it has been specifically stated that goods were imported into the State of J&K with valid documents. Moreover, no such objection was taken before the assessing authority who has passed a very detailed order dealing with the objections. This apart, the petitioner had to specifically plead that the place of checking at Lakhanpur Check Post is not within the notified area in terms of Section 15-A. There is not even a whisper in the petition about the limits of notified area for which Lakhanpur Check Post has been established. This question, therefore, cannot be adjudicated in the absence of specific averment. On the contrary it is admitted in para 10-J that the goods have been validly imported within the State under valid documents. If that be so as it really is the argument that goods had not been transported within the State is self-defeating and contrary to the admission. 11. Another feeble argument was raised that establishment of a check-post under section 15-A offends Article 301 and 304 of the Constitution of India which ensures free trade between the States. However, section 15-A is regulatory in nature in the sense that it regulates the import of goods to the State under the General Sales Tax Act. 11. Another feeble argument was raised that establishment of a check-post under section 15-A offends Article 301 and 304 of the Constitution of India which ensures free trade between the States. However, section 15-A is regulatory in nature in the sense that it regulates the import of goods to the State under the General Sales Tax Act. The restriction is only with regard to the goods which are liable to Sales Tax. If the goods are liable to Sales Tax no fault can be found with the provisions. Moreover, free trade and commerce guaranteed Under Article 301 and 304 does not mean that Sale Tax should not be charged. As long as Sale Tax is valid the establishment of check-post is necessary. Such an argument is not tenable in view of the mandate of Section 15-A. 12. This takes us to the argument that goods were being imported under valid documents but the assessing authority refused to accept them. This statement is also against the facts which have not been disputed. It is admitted that the petitioner™s vehicle was impounded on 20-11-1995 when the driver failed to produce the documents such as Bill of Sale or Certificate of Ownership. It is also not disputed that driver left the vehicle unattended and did not return untill 18-12-1995, However, one Manoj Kumar who was also travelling in the vehicle stayed with the truck at the time of his physical verification. The finding of fact recorded by the assessing authority in the order dated 26-12-1995 is that twenty-one bundles carried in the vehicle were without documents of ownership of goods. It is also stated that on 22-12-1995 Sh. Ram Dass Saroop, Managing Director of the petitioner appeared before the assessing authority and sought time to produce Bill of Sale to establish the ownership of goods. 13. However, he did not appear thereafter until 18-12-1995 when he produced the order of this court dated 15-12-1995- The operative portion of which reads as under:- In view of the above submissions, I direct the Assessing Authority to hear the petitioner and afford him all the opportunities of showing cause against the show cause notice. He shall be permitted to produce the documents if he wants to produce any, and the Assessing Authority shall pass a reasoned order in writing within two weeks. He shall be permitted to produce the documents if he wants to produce any, and the Assessing Authority shall pass a reasoned order in writing within two weeks. In the meantime, prima facie it appears, that the Assessing Authority was not right in confiscating the truck which carried the goods in the question. Therefore, I direct that the truck shall be released in favour of the petitioner, and the respondents shall be at liberty to retain the disputed goods with them. Let this petition come up after two weeks. In any case, if either of the party has any grievance after the order is passed by the Assessing Authority, he shall have the liberty to make mention of the case before the vacation Judge.� 14. On the same day Sh. Virender Gupta, an employee of the petitioner filed an application along with two G.R. No. 464760 & 464761. It is also stated by the Assessing Authority that Managing Director of the petitioner had appeared before it on 22-11-1995 and sought time to produce documents to prove the ownership of goods carried in the vehicle. How the petitioner had tried to hood-wink the Sale Tax Department is vividly described in the impugned order by observing as under:- On 18th of December, 1995 the driver of the vehicle Shri Rama also appeared in this office in presence of Shri Ram Dass, Managing Director of the Transport and Shri Varinder Gupta, his regular employee who confessed that he did not possess any documents at that time and did not produce any documents regarding the Copper Sheets/Circle before the Assessing Authority, and when the attention of Shri Ram Dass was brought to the reply tendered by him in response to the show cause notices wherein he has stated that he has produced the documents and same were not accepted and was asked to justify and prove his contention. He admitted his fault and stated that none of them had produced any documents regarding Copper Sheets/Circles before the Assessing Authority. The bare perusal of the goods despatch challans bearing No: 91013 & 91014 which were produced by the Driver at the time clearance of his vehicle reveal that these do not contain any copper sheet/circle and while comparing the weight mentioned in the Challan with GRs (viz 622921. The bare perusal of the goods despatch challans bearing No: 91013 & 91014 which were produced by the Driver at the time clearance of his vehicle reveal that these do not contain any copper sheet/circle and while comparing the weight mentioned in the Challan with GRs (viz 622921. 622922 & 622945) it is observed that the-Transport Company has shown weight of 24 Nags of copies under GR No: 622921 at 16.60 kgs in the challan whereas the weight of 24 Nags of copies under GRs No : 622922 has been shown at 900 Kgs. In the challan whereas the weight as per GR is 600 Kgs. The weight of 15 Nags of copy under GR No: 622945 has been shown at 900 Kgs in the challan whereas the actual weight as per GR is 600 Kgs. Photo copies of GRs and challans has been marked at Annexure G-l, G-2, G-3 & C-l & C-2. respectively. The transporter has shown the weight in respect of goods covered under above mentioned GRs on the higher side in the goods despatch challan to cover the goods which were being carried in the vehicle without any documents. This clearly shows the malafide intention of the transporter and clears all shadow of doubts. Further the documents which have been produced subsequent to the order of the Hon™ble High Court are all after thought to get out of the penal and other relevant provisions of J&K GST Act, 1962. The S. No. of the goods despatch challans which has been produced after the Hon™ble High Court order bears No. 037431 whereas the goods despatch challans produced at the time of clearance the vehicle bears No. 91013 and 91014 which clearly indicate the documents has been fabricated lateron.� The fact that weight of the goods being transported under valid documents had been increased to cover the weight of goods not covered by the Bill of Sale, speaks of the attempt made by the petitioner to defraud the Sales Tax Department. The averment made in the petition that goods were being accompanied by documents is also boiled by the admission made by him before the Assessing Authority. The discrepancy discovered in the documents produced on 18-12-1995 to prove that goods were being validly imported speaks volume against their genuineness. The averment made in the petition that goods were being accompanied by documents is also boiled by the admission made by him before the Assessing Authority. The discrepancy discovered in the documents produced on 18-12-1995 to prove that goods were being validly imported speaks volume against their genuineness. The Assessing Authority while imposing penalty under section 15-A (9) of the Act has specifically referred to the attempt, the petitioner made to support its false claim that goods were validly imported. This portion reads as under:- Since the perusal of the said documents revealed that the consignor is M/S Allied Meta Delhi and M/S Khosla & Sons Delhi and the goods have been booked in the Transport Company in the name of Self Srinagar vide GR No: 464760 and 464761 respectively which means that only M/S Allied Metal Delhi and M/S Khosla & Sons Delhi are legally entitled to get the goods released from the Transport Company and there is no mention of M/S Allied Metal Industry Nohatta Srinagar in the GR which means that goods have been imported in the name of dealer who appears quite ignorant of this deal M/S Khosla & Sons Delhi & M/S Allied Metal Delhi are also not registered with the Sales Tax Department of the J&K State. (Photocopies of GR has been marked as Annexure G-4 & G-5). Therefore documents produced subsequent to the direction of the Hon™ble High Court are fake and false in respect of the real owner of the goods. In view of the above the transport company who has carried the goods in the State is liable to pay security under section 15-A (9) of the J&K GST Act, 1962 which is calculated at Rs. 52608-00 and same stands recoverable from him before the goods are released in his favour.� These facts did not justify any other conclusion than the one reached by the Assessing Authority. So the argument that documents produced by the petitioner are genuine is without any substance and the assessing authority was right in rejecting them. 15. The next question is whether right of hearing has been denied to the petitioner. The petitioner has produced the documents and had been heard by the Assessing Authority. Every argument advanced by him has been noticed before being rejected. It is, therefore, wrong to suggest that right of hearing was denied to the petitioner. 15. The next question is whether right of hearing has been denied to the petitioner. The petitioner has produced the documents and had been heard by the Assessing Authority. Every argument advanced by him has been noticed before being rejected. It is, therefore, wrong to suggest that right of hearing was denied to the petitioner. However, refusal to accept the documents furnished by the petitioner (Sic) were genuine is not denial of right of hearing and this is exactly what the petitioner wanted. This argument has, therefore, no merit and is rejected accordingly. 16. Lastly, it was argued that the documents can be produced in terms of Subsection (2) of section 15 subsequent to the date of import also. The finding of the assessing authority that goods being imported must be accompanied by the documents in terms of Explanation to Sub-section (2) of section 15-A according to Mr. Hali is erroneous. Section 15-A of the Sales Tax Act is quite exhaustive as it lays down the complete procedure. Sub-section (2) of this section reads as under:- (2) No person shall transport within the State across or beyond the notified area any consignment of goods exceeding such quantity or value as may be prescribed, by any vehicle or any other mode of conveyance, unless he is in possession of:- Explanation:- The term ˜goods™ referred to in this sub-section shall not include luggage of persons who cross the notified area. (a) either a bill of sale, or delivery note, ˜or declaration or certificate of ownership containing such particulars as may be prescribed; and (b) a way bill in such form and containing such particulars as may be prescribed.� So goods can be allowed to be transported only if the person importing them is in possession of a bill of sale, or delivery note, or declaration or certificate of ownership and a way bill in the prescribed form. The provision is mandatory and not directory. The provision is mandatory and not directory. The mandatory nature of the provision is evident from the language of sub-section 2-A which reads as follows:- 2-A Notwithstanding the provisions of sub-section (2), the Government may, in addition to the requirements under sub-section (2), by notification require a person importing such goods, as may be notified from time to time, to furnish such declaration and in such manner as may be prescribed.� So the government has the power to supplement the requirements of sub-section (2) but no power to relax it. And there is a reason for this. In case a consignment is allowed to be transported in violation of subsection (2) of section 15-A, it will provide an opening to the unscrupulous elements to manufacture evidence as has been found in this case. This will frustrate the very purpose of section 15-A. So it is wrong to suggest that sub-section (2) of section 15-A is not mandatory but directory. In this view expressed heretofore, there is no merit in the petition, which is dismissed with costs.