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Himachal Pradesh High Court · body

2005 DIGILAW 377 (HP)

DILLO RAM & CO. v. DY. E. T. C. (NZ) PALAMPUR

2005-10-06

A.R.BASU

body2005
ORDER This is an appeal field against the order of the Appellant (sic-Appellate Authority)-Cum Dy- Excise & Taxation Commissioner (NZ), Palampur dated 17.1.2003. Brief facts of the case are that during the course of general checking on 4.5.2002 under the supervision of the Dy. Excise & Taxation Commissioner (CZ), Mandi, the staff of the Excise & Taxation Department of the office of Dy. ETC, Mandi checked a truck No. HP-12-3391 at Kanaid (near Chowk) and found the driver Shri Garnail Singh, transporting goods on behalf of the consignees and was found not having declared goods worth Rs.2, 75,500/- and it was also ground that he had declared goods worth Rs.64,475/- only. The goods were shown to have been brought form New Delhi via Multipurpose Barrier Baddi. The driver i.e. person-in-charge of the goods was found having deliberately failed to declare goods at the barrier, which were meant for re-sale. It was found that the document i.e. bills goods received and challan concerning goods had not been declared at the barrier. The Assessing Authority imposed a penalty of Rs.20,400/-under Section 22(7) of HP. GST Act, 1968 on the appellant. Being aggrieved by the orders of the Assessing Authority dated 6.6.2002 an appeal had been filed before the 1st Appellate Authority who has supported the action of the Assessing Authority and therefore this present appeal. 2. The statement of the driver Shri Jarnail Singh was recorded to the effect that he filed certificate i.e. S.T. XXVI-A. Form at the checking barrier of few bills of goods only. The driver admitted his mistake and undertook not to repeat it in future and agree to pay the penalty, but requested some time for the payment, as at that time he was not having money. The driver was directed to inform the consignee dealers accordingly. Out of four other dealers whose goods were being transported on 4.5.2002 by Shri Gurdyal Singh, Driver, Shri Sohan Lal, Partner of M/s Diloo Ram & sons, Gutkar attended inquiry conducted by the Assessing-cum-lnspecting Authority. The statements of all the consignee dealer were recorded. The appellant expressed their ignorance about the fact of failure of the driver of declare the goods by failing to fill up ST. XXVI-A Form at the MPB, Baddi. The statements of all the consignee dealer were recorded. The appellant expressed their ignorance about the fact of failure of the driver of declare the goods by failing to fill up ST. XXVI-A Form at the MPB, Baddi. The matter pertained in between the driver of the truck, and the person who actually fills such forms at the barrier had been found to have failed to declare the goods at the barrier in connivance with the owners of the goods i.e., the dealers and in this way the appellant alongwith other consignees were found to have evaded the payment of tax with the connivance of the Inspector on duty at the barrier. The dealer was allowed to furnish bank guarantee upto 25% value of the goods transported of the appellant and thereafter the goods as well as the vehicle was released. After inquiry, the driver and the dealer was imposed a penalty of Rs.20,400/- under section 22(7) of H.P. GST Act. The first Appellate Authority upheld the order of the Assessing-cum-Inspecting Authority and further held that the act of the driver i.e., person-incharge of the goods, who was carrying goods on behalf of the consignee did not prefer the shortest routes with the sole intention to evade tax. Therefore intentionally failed to declare the goods as required. The appellant has filed this appeal on the following grounds:- 1. That the impugned orders are contrary to facts and law. 2. That the order of the first appellate authority was bad because he had not even touched and adjudicated on some of the grounds raised in the appeal and his findings were based on conjectures and surmises. 3. That the order of the assessing authority violated the principles of Natural Justice as he being a member of the checking party should not have decide the case. 4. That copies of certain documents relied upon by the respondent assessing authority was not applied to the appellant even on written application which also amounted to violation of the above principle. 5. That the order of the respondent assessing authority was not independent judgment and that the same was influenced by his superior officers. 6. That the detention of the truck was un-authorized and illegal. 7. 5. That the order of the respondent assessing authority was not independent judgment and that the same was influenced by his superior officers. 6. That the detention of the truck was un-authorized and illegal. 7. That as the truck contained goods of 5 dealers of different stations, the alleged omission could not have taken place without all of them entering into a conspiracy which sounds improbable. In all probability it was the result of human error. 8. That penalty for violation of section 22(4) of the Act is provided under section 35(l) read with Section 35-A of the Act and not under Section 22(7) unless it is proved beyond doubt that the omission was intentional with a motive to evade tax. The argument of the respondent No.1 that he followed a longer route is also false as the route followed by the driver was also a National High Way I No. 21-A and thereby he avoided lawfully payment of taxes to the State of Punjab & Chandigarh Union Territory. 9. That the appellant could not be punished for the alleged wrong conduct of the driver. 10. That non-production of Form ST-XXVI-A is a technical offence and does not necessarily lead to a presumption that it was with an intention to evade tax. 11. That the back ground, reputation and conduct of the concerned dealer has not been taken into consideration before imposing the said penalty. The sales as well as tax paid by the appellant have throughout been progressive and he enjoys positive reputation of honestly and fair dealings and has not been, therefore ever penalized in the past. In support his above contention the Ld. Counsel for the appellant relied upon the following authorities:- (2000) 20 PHT 115; (2001) 122 STC 565 and (1992) 84 STC 505 respectively). 3. The Ld. Counsel for the Appellant Shri M.L. Gupta has vehemently argued that the first Appellate Authority was required to deal with each ground of the appeal before him and adjudicate thereon. But the first Appellate Authority has not even referred to some of the grounds and as such his order is bad in the eyes of law. 4. The Ld. Counsel for the Appellant Shri M.L. Gupta has vehemently argued that the first Appellate Authority was required to deal with each ground of the appeal before him and adjudicate thereon. But the first Appellate Authority has not even referred to some of the grounds and as such his order is bad in the eyes of law. 4. The Ld. Counsel has stressed that the impugned orders have violated the principles of the natural justice recognized in all civilized countries of the world in as much as the Assessing Authority who was himself a member of the Inspecting party and interested in the result of his detection, could not have decided the case fairly and honestly. More over, the said Assessing Authority was constantly under the influence of his superior officers as is evident form the perusal of the impugned order itself and as such the impugned order cannot be said to be his independent judgment and thus the order is bad. In support his above contention the Ld. Counsel for the appellant relied upon the following authorities:- (2001) 122 STC 212 (Orissa-DB); (2000) 15 PHT 534 (STT-PB) and AIR 1969 SC 48 and AIR 1958 SC 667 quoted in (2003) 129 STC 361 (Pat.) and (1994) 95 STC 374 (Raj.). 5. The Ld. Counsel for the appellant further argued that all the papers i.e., bills, challans and GRs as required under section 22(2) of the H.P.GST Act were produced by the driver of the truck before the inspecting officers and these papers were not found to be false, forged or objectionable and no discrepancy in them relating to the description, quantity, weight and value of the goods was noticed which is generally detected in the cases of attempt to evade the tax. The Ld. Counsel for the appellant further stressed that as per legal provision under subsection (6) of Section 22 of the Act, the Sales Tax Officers is authorized only to detain the goods and not the truck itself as was done by them in this case and thus his action was totally illegal and un-authorized. The Ld. Counsel for the Appellant has relied upon the following authorities:- (1994) 92 STC 367 (Orissa- DB); (1999) 116 STC 456 (Raj at page 460); 114 STC 285 (All -para 7) and (2000) 119 STC 123 (M.P.). 6.The Id. The Ld. Counsel for the Appellant has relied upon the following authorities:- (1994) 92 STC 367 (Orissa- DB); (1999) 116 STC 456 (Raj at page 460); 114 STC 285 (All -para 7) and (2000) 119 STC 123 (M.P.). 6.The Id. Counsel for the appellant further argued that the liability for the alleged wrong conduct of the driver could not be fastened on the appellant and that the penalty proceedings, if any, could have been initiated against the Transport Company/or the truck driver. The Ld. Counsel for the appellant has supported his version on the ground of following authorities- (1996) 101 STC 226(AII); (2002) 126, STC 275 (Kar. Page 280) and (1965) 102 STC 288 (All). 7. The Ld. Counsel for the appellant conceded that Form ST-XXVI-A was not produced by the truck driver before the Inspecting Officers. But according to him this omission alone cannot be a ground for imposing the penalty under Section 22(7) as done by the respondent. According to him the provisions of section 22(7) can be resorted to only, when, after the inquiry envisaged under the provisions of Subsection (6) and (7), the officer comes to a definite finding that the said omission was actuated by an attempt to evade sales tax. Such finding is required to be based on legal and acceptable evidence and not merely on guess, assumption, presumption, suspicion or apprehension alone. According to Ld. Counsel for the appellant no such finding is recorded by the Assessing Authority. He further argued that the Honble Supreme Court of India has land down some principles for imposition of penalty according to which penalty being a quasi-judicial proceeding, therefore the presence of guilty mind is essential. According to the Apex Court the penalty shall not generally be imposed, unless the dealer concerned acted deliberately in defiance of law or was guilty of contumacious conduct or dishonesty or acted in conscious disregard of its obligations. He supported his above arguments with the following judgments.- (2002) 126 STC 275 (Ker. Para 7 and 17) (1999 114 STC 285 (All-Para 7) (1999) 116 STC 456 (Raj-Para 5) = (1996) 101 STC 203 (All) (1995) 99 STC 600 (Kar.)= (1992) 84 STC 509 (Ker.) (1996) 104 STC 65 (Raj-page 70) = (1970) 25 STC 211 (SC) 8. The Ld. Para 7 and 17) (1999 114 STC 285 (All-Para 7) (1999) 116 STC 456 (Raj-Para 5) = (1996) 101 STC 203 (All) (1995) 99 STC 600 (Kar.)= (1992) 84 STC 509 (Ker.) (1996) 104 STC 65 (Raj-page 70) = (1970) 25 STC 211 (SC) 8. The Ld. Advocate emphasized that in this case a penalty, if any, was required to be imposed under Section 35(1) (h) read with Section 35-A of the Act it should be imposed upon the driver and not on the appellant dealer siting at Mandi, away from the scene of the alleged occurrence. Lastly, Ld. Counsel for the appellant stressed that the appellant dealer is a law- abiding citizen and a honest taxpayer and enjoys a positive reputation of honesty and fair and clean dealings. His sales have throughout been progressive and the payment of sales tax is also increasing year after year. As the appellant dealer does not believe in tax evasion at all, no penalty has ever been imposed upon him. According to the Ld. Counsel, the background, reputation and conduct of the dealer is very relevant and is required to be kept in mind while deciding such cases as held in AIR 1970 SC 2531; (1996)17 STC 465 at 469 (PC); (1979) 43 STC 508 (Mad.) and (1999) 95 STC 116 (Cri). 9. The Ld. Asstt. Excise & Taxation Commissioner (legal) arguing on behalf of the residents emphasized that it is required under Section 22(4) of the act that the owner of person incharge of the goods shall file a declaration in From STXXVI-A in triplicate at the Sales Tax Barrier while entering the territory of the State. This requirement being mandatory its violation is punishable. 10.The Ld. AETC (L) has referred about the mandatory provision of subsection (7) of Section 22 of H.P. GST Act, as neither the proceedings were shown to have been submitted by the officer detaining the goods to such officer as may be authorized in that behalf by the State Govt. for conducting the inquiry, nor the notice on the owner of the goods was shown to have been given and served, nor there is a positive finding of such officer that there has been an attempt to evade the tax due under the Act. The Ld. AETC (legal has further argued that the improper or wrong authority has decided the appeal;. The Dy. The Ld. AETC (legal has further argued that the improper or wrong authority has decided the appeal;. The Dy. ETC (Flying Squad) (NZ) had no jurisdiction and as per Section 3 of H.P. GST Act no authority except the State Govt. could confer such powers. He has further argued that the above stated defects are of such nature that no authorities could be permitted to conduct quasi-judicial proceeding in a manner not permitted as per the Act and therefore needs to be corrected. The Ld. AETC (legal) has further alleged that the principles of natural justice require the legal requirement must be complied with and all the acts must be done in the strict fashion or manner in which it has been provided in the Act and Rules. 11.The Ld. AETC (Legal) has further alleged that all points raised by the Ld. Counsel for the appellant are of secondary nature and can only be taken up for consideration if the conditions provided in the Act are fulfilled. 12. The Ld. AETC (legal) has in the alternative argued the case on merits that the acts of the driver of the goods carriage were the acts of the owner of the goods, as he (driver) was to declare he goods on behalf of the owner of the goods and it was the owner of the goods, who was to be benefited and none else. Therefore, as per the statement of the driver, his admission that he had given incomplete documents for the purpose of declaration at the barrier, the adopting of convenient longer route to bring the goods, the authority inspecting the consignment had rightly and legally imposed the penalty and the same has rightly been upheld in appeal. 13. In the instant case the truck driver being the person in charge of the goods belonging to the defaulting four dealers including the appellant had not declared the goods at the barrier. The only reasonable inference that can be drawn from non-compliance of this mandatory requirement is that it was intentional attempt to evade tax. The Ld. AETC (L) argued that the fact, that the required declaration had not been filed, has since been admitted and proved, the action of the assessing authority is fully justified and is, therefore, according to law the said appeal has rightly been rejected by the learned first Appellate Authority. The Ld. AETC (L) argued that the fact, that the required declaration had not been filed, has since been admitted and proved, the action of the assessing authority is fully justified and is, therefore, according to law the said appeal has rightly been rejected by the learned first Appellate Authority. He was also of the opinion that the grounds of the violation of the Principles of natural Justice do not carry much weight in as much as ho prejudice has been caused to the appellant on that account. According to him although the assessing authority has not recorded a finding about the attempt to evade tax, but the first Appellate Authority has based his opinion on the fact that in any case as it was the appellate alone who could be the beneficiary and the truck took a longer route via Nalagarh and not via Kiratpur. He strongly stressed that no interference is required in the impugned orders and prays that the present appeal be dismissed. 14. I have heard the parties and also carefully gone through the records, the provision of Section 22 of the Act, as well as the relevant law on the subject without going into the detailed merits of this case and thrashing the law cited by the Ld., Counsel for the appellant, it is essential to show the requirement of necessary compliance of Section 22(7) of the H.P. GST Act, 1968. It is an undisputed fact that|| the driver of the said truck did not declare the goods of the appellant at the Barrier and without any doubt he has contravened the provisions of Section 22(4) of the Act. But the crucial question for consideration is whether he did it deliberately with some ulterior motive or it was a human error resulting from negligence without any mens-rea relating to evasion of tax. It is also clear that Section 22(7) of the Act required the assessing authority to hold an inquiry and penalty under this sub-section can be imposed only if the inquiry proves beyond all reasonable doubt that non-compliance of the provisions of sub-section (4) was with an intention to evade tax. It is settled law that under the ^fiscal statutes, imposition of penalty is not automatic. It is settled law that under the ^fiscal statutes, imposition of penalty is not automatic. The assessing authority under the Sales Tax law being a quasi-judicial authority should act on the evidence and material on record with an open mind and not to act under pre-conceived notions. The guilt should be proved according to law. The inquiry could have been conducted in a more elaborate manner by examining the inspector on duty and the person responsible for preparing the Form St-XXVI-A at the concerned barrier by the legally empowered authority or officer as required under Section 22 of H.P. GST Act. 15. The sum and substance of above discussion is that there is failure to follow the mandatory provisions under Section 22(7) of HP. GST Act. The one and the same authority or officer has conducted inspection or raid and has also conducted the inquiry as an assessing authority. No compliance is there to issue mendatory notice to the owner of the goods. No positive finding is there regarding the conduct of dealer and the driver of the vehicle, who was the person incharge of the goods carriage. I am also in agreement with the plea of Ld. AETC (legal) that the proper appellate authority was DETC (CZ) and the DETC (Flying Squad) (NZ) neither had the jurisdiction nor could be authorized by any officer except the State Govt., as proved under section 3 of HP GST Act 1968. 16. The appellant has clearly taken a sand in h is grounds of appeal and at the same time argued that the Appellant Authority has not considered and decided the complete points legal and others taken in an appeal, which has resulted in causing illegality and specifically stressed that the Assessing Authority being a member of the inspecting party cannot be a judge in his own cause. Nemo Judex in Cause Sua. 17. Therefore, the non compliance of the mandatory provisions of Section 22 of the Act ibid has rendered the proceedings illegal and improper and no authority can be permitted to follow the wrong and improper legal procedure, which may cause prejudice to the parties and harm the interest of justice. Nemo Judex in Cause Sua. 17. Therefore, the non compliance of the mandatory provisions of Section 22 of the Act ibid has rendered the proceedings illegal and improper and no authority can be permitted to follow the wrong and improper legal procedure, which may cause prejudice to the parties and harm the interest of justice. Therefore I hereby accept the appeal and both the orders dated 23.5.2000 and 27.11.2003 of the Assessing Authority and the Appellate Authority respectively and remand the case back to the inspecting authority to adopt the proper and legal procedure as provided under Section 22(7) of the Act. The appropriate authority should give a speaking and reasoned finding reading the guilt of the appellate, if any. The penalty amount deposited is directed to be kept in the Govt. treasury till the disposal of this case afresh by the appropriate authority. The appropriate authority is to decide the case within a period of two months from the date of receipt of the order. Order announced in the open court file after completion be consigned to the record room. Announced.