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2004 DIGILAW 37 (KAR)

M/S. SHANTI ENTERPRISES v. STATE OF KARN

2004-01-16

AJIT J.GUNJAL, P.VISHWANATHA SHETTY

body2004
AJIT J. GUNJAL, J. ( 1 ) IN this appeal under Section 24 (1) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act the appellant calls in question the order dated 31st March 1997 passed by the Addl. Commissioner of Commercial Taxes, Bangalore, in No. BCD I/smr/kst/cr 71/96-97, wherein he has restored the order passed by the Commercial Tax Officer levying the penalty. ( 2 ) FEW facts which are necessary for the disposal of this appeal can be stated briefly: the appellant is a registered dealer under the Karnataka Sales Tax Act and the Central Sales Tax who deals in electrical items. The appellant is also engaged in the execution of works contract in electrification, erection and maintenance of electrical machinery equipments, lights etc. The appellants case is that he purchases goods in the State as well as outside the State for the purpose of selling the electrical goods and for execution of the contract work. The appellant received an order from M/s. Rajkumar Cultural Cottages Pvt. Ltd; to execute electrification work of M/s. Rajkumar Resorts situated at Hosahoddya village, Doddaballapur Taluk, Doddaballapur, Bangalore. The said resort placed an order with MI s Oriental Electricals at Madras who in turn placed an order with M/s Boltan Cable Industries, Jaipur with instructions to supply the goods to the appellant. The goods in question were accompanied with an invoice No. 334 dated 19. 10. 1995. The goods reached Nelamangala on 23. 10. 1995. The driver of the vehicle in question was able to contact the appellant only on 25. 10. 1995 in view of the intervening Deepawali holidays. The appellant, it appears, informed the driver of the lorry to go towards Doddaballapur to unload the goods at the work spot situated at Rajkumar Resorts at Doddaballapur and to wait at the land mark at M/s. Venkateshwara Distilleries situated at Dodclaballapur Road. The driver was also informed that Form 39 would be sent to him showing the destination delivery. When the driver along with the goods was waiting at the spot as informed for Form 39, the Commercial Tax Officer Control Room Bangalore was on his rounds came to the driver and asked him to produce the relevant documents for movement of the goods. The driver produced the invoice No. 334 dated 19. 10. When the driver along with the goods was waiting at the spot as informed for Form 39, the Commercial Tax Officer Control Room Bangalore was on his rounds came to the driver and asked him to produce the relevant documents for movement of the goods. The driver produced the invoice No. 334 dated 19. 10. 1995 along with L. R. No. 8502888 and informed the officer that he was waiting for Form 39 which is to be sent by the appellant as according to him the goods were to be delivered to MI s Rajkumar Resorts. The Commercial Tax Officer found that the vehicle in question was carrying goods without proper documentation wherein the invoice which was issued by M/s Bolten Cable Industries was addressed to Oriental Electricals Madras showing the delivery point at Shanthi Enterprises Electricals Pvt. Ltd. , (which is the appellant in this proceedings ). On verification the Commercial Tax Officer found that. there is a difference in the weight of goods. In the circumstances, he initiated proceedings under section 28a (4} of the Act. He also further stated that a per the weighment slip the weight of the goods found to be 8765 kgs but as per L. R. No. 850288 it is 9185 kgs. The Commercial Tax Officer recorded the statement of the driver and a show cause notice was issued as to why a penalty as proposed should not be imposed. In response to the said notice one K. Dhanbalan appeared and filed his written reply. After due verification of all the relevant documents which were available with the driver, the Commercial Tax Officer recorded a finding that there is no proof as to why there is a difference between the weight mentioned in the invoice and that of L. R. receipt. He further found that the driver had failed to produce the required form Le. , Form 39. He further recorded a finding that the purchase order did not tally with the invoice No. 334 dated 19. 10. 1995 and that item No. 5 of the invoice was not found. He further recorded a finding that the, Accounts Manager i. e. , Dhanbalan agreed to pay penalty as proposed. Consequently he passed an order imposing penalty and until the said penalty is paid the goods should be held as security as provided under Section 28a (6) of the Act. He further recorded a finding that the, Accounts Manager i. e. , Dhanbalan agreed to pay penalty as proposed. Consequently he passed an order imposing penalty and until the said penalty is paid the goods should be held as security as provided under Section 28a (6) of the Act. The appellant aggrieved by the said order passed by the era preferred an appeal under section 20 (5) of the Act before the Deputy Commissioner of Commercial Taxes (Appeals ). He reiterated his stand that in view of the fact that the shop was closed for a period of three days for Deepawali holidays and the watchman at the shop had instructed the driver of the truck to take the vehicle directly to Rajkumar Resorts and wait near the deviation road to Doddaballapur. He accepted the explanation offered by the appellant and allowed the appeal setting aside the levy of penalty and directed refund of the said penalty which is already collected. ( 3 ) ONE of the reasons which weighed with the Appellate authority to upset the order passed by the Commercial fax Officer was that at a latter point of time Form 39 was produced and the same was not accepted by the Commercial Tax Officer. The Addl. Commissioner for Commercial Tax initiated suo motu revisional proceedings under section 22a ( 1) of the Act and he found that the explanation offered by the appellant did not stand to reason as he found that the vehicle in question with the goods was moving towards Doddaballapur cross via Gangamma Circle and it was checked at Yelahanka near Venkateshwar Distilleries; As per the version of the driver the goods were to be delivered at Rajkumar Resorts for which there was no prescribed document such as Form 39 or a bill or any other documentary evidence; the invoice produced by the driver of M/s Boltan Cable Industries in favour of Oriental Electricals Madras with a specific instruction to delivery the goods at dealers premises at Aga Abbas All Road, Bangalore and the goods were found elsewhere and as per the weightment slip, weight of goods was found to be 8765 kgs; whereas as per the weight mentioned in the L. R. receipt it was 9185 kgs. Thus, there was a difference of 420 kgs. Thus, there was a difference of 420 kgs. He further recorded a finding that the appellant was blowing hot and cold and had given different versions at different times. He also found that the Accounts Manager of the appellant company had also agreed to pay the penalty. In view of this the revisional Authority disbelieved the version of appellant and has reversed the findings of the appellate authority and restored that of the Commercial Tax Officer. Aggrieved by the said order, the appellants have preferred this appeal. ( 4 ) MR. Shashtry, learned counsel appearing for the appellant, submitted that there is no contravention of section 28a (2) of the Act. According to him, the vehicle carried the bill, lorry receipt and other documents. He submits that the appellant was required to produce Form 39 only at Doddaballapur when he was supposed to unload the goods for execution of the works contract. He also pointed out that Form 39 was submitted before the Check Post authority ( Commercial Tax Officer) who declined to receive the same. He submits that there was no justification for the Commercial Tax Officer not to receive the said documents. He also submits that Form 39 was produced before the impugned order was passed and before issuance of notice. The second limb of his argument is that a deviation of road is not a ground to proceed under section 28a (4) of the Act. In support of his contention that such a deviation would not attract the penal clause, he relied upon a judgment of the Madhya Pradesh High Court reported in 95 STC p. 141 (Indore Kolhapur Roadlines VA. Assistant Commissioner of Sales Tax and another) and submits that the appeal is to be accepted and the order of the appellate authority is to be restored. ( 5 ) HOWEVER, Mr. Anand, learned Government Advocate, sought to support the order passed by the revisional authority. He submits that it is unthinkable and does not stand to reason as to why the driver should wait for a period of three days to get necessary instruction. He pointed out that the goods were directed to be unloaded only at the appellant premises. None was examined to show that any direction was given to the driver to take the goods to Rajkumar Resorts. He pointed out that the goods were directed to be unloaded only at the appellant premises. None was examined to show that any direction was given to the driver to take the goods to Rajkumar Resorts. In the absence of any compelling reasons, he submits that the order under appeal will have to be sustained and the appeal is liable to be dismissed. ( 6 ) WE have given our anxious consideration to the rival contentions of both the counsel. Firstly, it is to be noted that the proceedings were initiated by the Commercial Tax Officer when he found that the lorry in question was carrying certain goods without proper documentation in a place where it was not supposed to be found and on the face of the material on record found that the appellant had violated the provisions of Section 28a (2 ). Section 28a (2) (b) and 0 of the Act reads thus: 28a (2) (b) carry with him a bill of sale or a delivery note obtained from the prescribed authority or such other documents, containing such particulars as may be prescribed, in respect of the goods other than those mentioned in sub clause (c) carried in the goods vehicle or boat; and carry with him in addition to a bill of sale, a delivery note obtained from such authority containing such particulars as may be prescribed, if the goods carried in the goods vehicle or boat are arecanut, cardamom, cashew, coconut, coffee, copra, cotton, edible oil including vanaspathi, iron and steel, liquor, oil seeds, pepper, rectified spirit, rubber, timber or such other goods as may be notified by the Commissioner. ( 7 ) IT is very clear from a reading of the said provisions that the vehicle carrying goods should carry all the necessary documents. In the absence of relevant documents, it is but natural the proceedings will have to be initiated under Section 28a for imposing penalty. Section 28a (4) also empowers the concerned officer not below the rank of a Commercial Tax Inspector and not higher in rank than a Deputy Commissioner of Commercial Taxes to levy penalty if sufficient cause is not furnished. Section 28a (4) also empowers the concerned officer not below the rank of a Commercial Tax Inspector and not higher in rank than a Deputy Commissioner of Commercial Taxes to levy penalty if sufficient cause is not furnished. The revisional authority has found the following irregularities in carrying of goods: i) The goods vehicle was moving towards D cross via Gangamma Circle and were checked at Yelahanka near M/s Venkateshwara Distilleries (P) Ltd. , which is a deviation route to avoid Sales Tax Checkpost, Bellary Road, Bangalore for movement: tram Bangalore towards Doddaballapur. ii) As per the driver of the vehicle, the goods were to be delivered at Rajkumar Resorts, Doddaballapur Road approximately 25 kms from Bangalore, for which there was no prescribed document such as Form 39 or a bill of sale or any other documentary evidence, which indicates violation of the provisions of Section 28a (2) of KST Act, 1957; iii) The invoice produced by the driver No. 334/19. 10. 1995 of Mis Boltan Cable Industries, Jaipur in favour of Oriental Electrical, Madras, and with instructions to deliver at the dealers premises at No. 69, Aga Abbas All Road, Bangalore, whereas the goods vehicle with the goods was moving towards different destination i. e. , Rajkumar Resorts on Doddaballapur Road without prescribed documents as per Rules; iv) As per weighment slip~ weight of goods was found at 8765 kgs; whereas as per weight mentioned in the L. R. No. 8502888 is at 9185 kgs; with a considerable difference of 420 kgs. ( 8 ) IT is seen that the conduct of the business transaction of goods, destination without any records or documents is irregular or illegal. It would be a pointer to the fact that the concerned person is making a definite attempt to evade the tax payable. It does not stand to reason as to why the transporter should wait for a period of three days to unload the goods. For a businessman losing a days earning is very important. No prudent businessman will close his establishment for a continuous period of three days without making any alternate arrangement for receipt of a consignment which runs into lakhs of rupees. For a businessman losing a days earning is very important. No prudent businessman will close his establishment for a continuous period of three days without making any alternate arrangement for receipt of a consignment which runs into lakhs of rupees. The version given by the appellant is not easily acceptable that the watchman of the appellant company had directed the driver of the vehicle to proceed towards Doddaballapur and asked him to keep waiting at Yelahanka (deviation road) for Form 39 to arrive. In fact the watchman of the establishment has also not made any statement that he had indeed directed the driver of the vehicle to wait on the deviated road. Another compelling reason which weighed with the revisional authority to reverse the finding was that two diametrically different stands were taken by the appellant one is that in reply to the notice the dealer was ready and willing to pay the penalty and get the goods released and the another version is that they came to know of the goods reached Bangalore through their watchman which is altogether different from the letter dated 25. 10. 1995 addressed to the CTO which would mention that the vehicle was stranded at Nelamangala near Bangalore. In view of the inconsistent stand taken by the appellant, it is very difficult for us to accede to the request of Mr. Shastry that Form 39 was indeed available and was presented to the Commercial Tax Officer when the vehicle was apprehended. The events leading up to the transportation of goods to a different destination than what is indicated as per the lorry receipt is also against the normal transportation rules and ordinary business practices. If the entire narration of the events and the explanation offered by the dealer is taken note of it has got to be held that the dealer had violated the provisions of section 28a (2) of the Act in not carrying the prescribed document with him which is a definite intention to evade the tax payable. ( 9 ) IN so far as the decision relied upon by Mr. Shashtry is concerned, that was a case where the truck was accompanied by necessary documents as are required under law. The only difference was that the truck had taken a different route and that was not a sufficient ground to initiate proceedings under the said Act. ( 9 ) IN so far as the decision relied upon by Mr. Shashtry is concerned, that was a case where the truck was accompanied by necessary documents as are required under law. The only difference was that the truck had taken a different route and that was not a sufficient ground to initiate proceedings under the said Act. But, however, the decision has no application to the facts of this case. In the case on hand, in the first place, the necessary document i. e. , Form 39 was not accompanying the goods; (2) two diametrically different versions were given by the appellant and that there was a difference of 420 kgs; compared to the invoice and the L. R. receipt. It is not a simple case where by chance the vehicle had taken a different route. The chronological events would clearly indicate that the only reason why such a deviation was taken was to evade payment of tax. ( 10 ) THE substantial question of law raised by Mr. Shashtry in this appeal does not arise at all as we have proceeded to dismiss the appeal as it is a pure question of fact as both the revisional authority as well as the first authority have prima facie found that the vehicle in question was not accompanied by relevant necessary documents. ( 11 ) IN view of what is stated above, we do not find any merit in this appeal and it is liable to be dismissed and accordingly it is dismissed. No costs. --- *** --- .