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2007 DIGILAW 871 (RAJ)

ASSISTANT COMMERCIAL TAXES OFFICER, FLYING SQUAD, CHIRAWA v. PURAN LAL DRY CLEANERS.

2007-04-26

R.M.LODHA, R.S.CHAUHAN

body2007
JUDGMENT R. M. Lodha, J. - The Assistant Commercial Taxes Officer, Chirawa, District Jhunjhunu, has approached this court under articles 226 and 227 of the Constitution of India being aggrieved by the order dated September 29, 1997 of the Rajasthan Taxation Tribunal, Jaipur (for short, "the Tribunal"). The Tribunal in the revision application filed by the present respondent No. 1 under section 86(1) of the Rajasthan Sales Tax Act, 1994 set aside the order of the Rajasthan Tax Board, Ajmer, dated November 5, 1996 and thereby set aside the penalty of Rs. 1,26,843 levied under section 22A(7) of the Rajasthan Sales Tax Act, 1954 (for short, "Act of 1954"). On September 23, 1994, a truck was checked at Mahara-Neem-Ka-Thana road. The said truck was found to be carrying a laundry machine. The driver was not having form No. ST-18. Consequently, the goods were seized and on that very day, notice was issued to the driver of the said truck. In response to the notice, respondent No. 1 filed two replies. He also procured declaration form ST-18 on October 7, 1994 and produced the same at the concerned check-post on October 8, 1994. The Assistant Commercial Taxes Officer, Flying Squad, Chirawa, District Jhunjhunu passed an order on October 17, 1994 imposing a penalty of Rs. 1,27,843 upon respondent No. 1. Respondent No. 1 dissatisfied with the order of the Assistant Commercial Taxes Officer dated October 17, 1994, preferred an appeal before the Deputy Commissioner (Appeals). The appeal was allowed on March 28, 1995 and the order of the Assistant Commercial Taxes Officer, dated October 17, 1994 was set aside. Upset by the order of the Deputy Commissioner (Appeals), the Assistant Commercial Taxes Officer preferred an appeal before the Rajasthan Tax Board. The Tax Board by its order dated November 3, 1996 set aside the order of the Deputy Commissioner (Appeals), dated March 28, 1995 and restored the order of the Assistant Commercial Taxes Officer. This time it was for the present respondent No. 1 to challenge the order of the Rajasthan Tax Board by preferring a revision to the Rajasthan Taxation Tribunal, Jaipur. The Tribunal on September 29, 1997 allowed the revision application preferred by respondent No. 1 and set aside the order of the Tax Board. This time it was for the present respondent No. 1 to challenge the order of the Rajasthan Tax Board by preferring a revision to the Rajasthan Taxation Tribunal, Jaipur. The Tribunal on September 29, 1997 allowed the revision application preferred by respondent No. 1 and set aside the order of the Tax Board. The Tribunal restored the order of the Deputy Commissioner (Appeals) passed on March 28, 1995 and directed that if the amount of penalty has been recovered, the same shall be refunded to the present respondent No. 1 with interest within three months from the date of receipt of copy of the judgment. This is how the Assistant Commercial Taxes Officer, Flying Squad, Chirawa, has filed this writ petition. In para No. 7 of its order, the Tribunal observed thus : "7. Admittedly, laundry machine was being transported in the truck. It was not an electrical goods within the meaning of the above quoted circular. Form No. ST-18 was not thus required to be carried on with the vehicle in this case." Mr. R. B. Mathur, Advocate for the department, would submit that the question as to whether laundry machine was "electrical goods" or not, was never an issue before the Assistant Commercial Taxes Officer or the Deputy Commissioner (Appeals) or the Rajasthan Tax Board. Yet the Tribunal held that laundry machine was not "electrical goods" within the meaning of circular dated October 31, 1986. That the laundry machine is not specifically notified in the notification dated October 31, 1986 issued under the Rajasthan Sales Tax Rules, 1955, is not in dispute. The Tribunal observed that it was not "electrical goods" within the meaning of notification No. F. 4(51) FD/Gr. IV/85-38 dated October 31, 1986. Since the correctness of this finding has been raised in the writ petition, what is required to be seen by us is whether the laundry machine falls within the expression "electrical goods" of the circular dated October 31, 1986. The Notification No. F. 4(51) FD/Gr. IV/85-38 dated October 31, 1986. Since the correctness of this finding has been raised in the writ petition, what is required to be seen by us is whether the laundry machine falls within the expression "electrical goods" of the circular dated October 31, 1986. The Notification No. F. 4(51) FD/Gr. IV/85-38 dated October 31, 1986 reads thus : "All types of motor vehicles (including scooters, mopeds and motor cycles) (tractors, refrigerators, cooling equipments, water pumping sets, all kinds of electrical goods, television sets and all types of sanitary goods), (photocopiers, motor parts, cement and lubricants), (video cassette recorders and video cassettes players), (safety matches), (dry fruits, iron and steel, all types of utensils, audio and video cassettes, typewriters, wooden furniture, steel furniture and timber). This shall come into force on November 15, 1986." That the subject laundry machine is not operated manually and works on electric energy is the admitted position. The contention of the counsel for the petitioner is that the appliances or goods which run in the application of electric energy, is nothing but an electrical goods. The counsel placed reliance on the two judgments of the Madras High Court, first being William Jacks and Co. Ltd. v. State of Madras [1955] 6 STC 301; AIR 1955 Mad 656 and the other, the State of Tamil Nadu v. Best and Co. (P.) Ltd. [1984] 57 STC 174. Mr. Vikram Gogra, the counsel for respondent No. 1, on the other hand, submits that the laundry machine was brought by respondent No. 1 for his personal use. According to him, the laundry machine is in fact a machine and merely because the said machine works on electric energy, it cannot be classified as "electrical goods" within the meaning of the notification dated October 31, 1986. In support of his submissions, the counsel for respondent No. 1 placed reliance upon few decisions, namely, (i) K. B. Dani v. State of Karnataka [1979] 44 STC 276 (Karn.), (ii) Hind Rectifiers Ltd. v. State of Maharashtra [1981] 47 STC 303 (Bom), (iii) Karnal Machinery Store v. Assessing Authority, Karnal [1973] 31 STC 3 (P&H), (iv) Commissioner of Sales Tax, Delhi v. Envoys India (P.) Ltd. [1981] 48 STC 443 (Delhi) and (v) Commercial Taxes Officer, Special Circle, Kota v. Instrumentation Ltd. [1987] 1 RTJS 261. The Madras High Court in the case of William Jacks and Co. The Madras High Court in the case of William Jacks and Co. Ltd. [1955] 6 STC 301; AIR 1955 Mad 656 held that such articles, the use of which cannot be had except with the application of electric energy, can be termed "electrical goods" or appliances. In the case of Best and Co. (P.) Ltd. [1984] 57 STC 174 applying the principle that was laid down in the case of William Jacks [1955] 6 STC 301; AIR 1955 Mad 656 the Madras High Court held that mono block pump set, being a single block of machinery and not capable of being operated excepting with the use of electricity as motive power, is electrical goods. The Bombay High Court in the case of Hind Rectifiers Ltd. [1981] 47 STC 303 (Bom) held that the consumption of electricity was not a decisive guideline for the classification of any goods as electrical goods. A more accurate criterion for determining whether any goods can be classified as electrical goods would be to see whether the purpose of the goods has any direct connection with the utilisation, consumption, transmission or production of electricity. Goods which have such a nexus would fall in the category of electrical goods. The Division Bench of the Punjab and Haryana High Court in the case of Karnal Machinery Store [1973] 31 STC 03 (P&H), was concerned with the question whether the monoblock pumping sets, the main purpose of which is to pump water, can be classified as electrical goods or not. The Punjab and Haryana High Court held that merely because in the case of one tool, the motivation was by electrical energy, it would not fall under the heading "electrical goods". It was held that it is the intrinsic nature and the purpose for which a tool is used which would determine its nature. The Delhi High Court in the case of Envoys India (P.) Ltd. [1981] 48 STC 443 held that though the primary test for deciding whether a particular type of goods are "electrical goods" or not is, whether the goods can be operated otherwise than by electricity. But, in addition, the goods should also be intrinsically in the nature of "electrical goods" as understood by commercial men. But, in addition, the goods should also be intrinsically in the nature of "electrical goods" as understood by commercial men. In the case of BPL Ltd. v. State of Andhra Pradesh [2001] 121 STC 450, the Supreme Court while drawing the distinction between electronic goods and electrical goods held that all electronic goods are not electrical goods. The fact that the electronic goods manufactured by the assessee cannot be used without the aid of electricity, is not only the criterion to determine whether those goods can be treated as electrical goods. As to whether the laundry machine is covered by the expression "electrical goods" in the notification dated October 31, 1986 what is important to be seen is : is it intrinsically that such machines are treated as "electrical goods" by the commercial men, though electrical energy is used for its operation. We do not think so. It is true that the various appliances specified in the circular are illustrative instances of electrical goods and they are not exhaustive but a laundry machine is not called electrical goods by the commercial men. In our considered view, therefore, the view taken by the Tribunal that laundry machine is not "electrical goods" is a possible view. Now we shall assume that the view of the Tribunal that laundry machine is not "electrical goods" is an erroneous view. The question then arises : whether the restoration of the order of the Deputy Commissioner (Appeals) by the Tribunal whereby the penalty was set aside, suffers from any legal infirmity. Section 22A of the Rajasthan Sales Tax Act, 1954 (for short, "Act of 1954"), inter alia, provides for inspection of goods while in transit. Sub-sections (3) and (7)(a) of section 22A thereof read thus : "(3) The owner or person-in-charge of a vehicle, boat or animal shall carry with him a goods vehicle record, a trip sheet or a log book, as the case may be, and (such other documents), as may be prescribed in respect of the goods carried in or on the vehicle, boat or animal, as the case may be, and produce the same before any officer-in-charge or cheek-post or barrier or any other officer as may be empowered by the Government in that behalf. The owner or person-in-charge of a vehicle, boat or animal entering the State limits or leaving the State limits shall also give a declaration containing such particular as may be prescribed of the goods carried in or on the vehicle, boat or animal, as the case may be, before the officer-in-charge of the cheek-post or the barrier or the officer empowered as aforesaid and give one copy of the declaration to such officer, and keep one copy with him. ... (7)(a) The officer-in-charge of the check-post or barrier or any other officer not below the rank of an Assistant Commercial Taxes Officer, empowered in this behalf may, after giving the owner or person-in-charge of the goods a reasonable opportunity of being heard and after holding such further enquiry as he may deem fit, impose on him for possession of goods not covered by goods vehicle record, and other documents prescribed under sub-section (3) or for submission of false declaration or documents a penalty (i) equal to the amount of tax leviable under the Act in the case of pulses and oil-seeds as defined in section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956); and (ii) equal to five times of the tax leviable on such goods or thirty per cent of the value of the goods, whichever is less, in other cases." The Rajasthan Sales Tax Rules, 1955 have been framed by the State Government in exercise of its power conferred under section 26 of the Act of 1954. Rule 62A provides that the owner or person-in-charge of a vehicle, shall carry with him a bill of sale or despatch memo, and declaration as provided under the Act of 1954 and Rules framed thereunder. Sub-rule (2)(a) of rule 62A thereof reads thus : "(2)(a) If any person other than a registered dealer within the State wants to purchase from outside the State any goods, as notified by the State Government, of the value of rupees one thousand or more for use, consumption or disposal within the State, he shall make and furnish or cause to be furnished declaration in form ST-18, the blank forms of which shall be obtained by him, on simple application along with payment of a fee of rupee one for each form, from the Commercial Taxes Officer concerned of this area where he ordinarily resides. The counterfoil of the declaration shall be retained by such person and its portions marked original and duplicate shall be produced before the officer-in-charge of the check-post, who shall retain such original portion and return such duplicate portion duly sealed in token of having verified it to the person producing it : [Provided that (where any person importing scooters, mopeds and motor cycles) does not avail of the procedure and/or permission, in form S. T. 18 as prescribed herein above, he shall give intimation of particulars as prescribed in part 'A' of form ST-18AA herein prescribed duly verified and signed by him at least two weeks before the goods are despatched from outside the State to the Commercial Taxes Officer of the area in which he ordinarily resides and shall obtain two duplicate copies of the said form duly receipted or countersigned from the office of the said Commercial Taxes Officer, and one copy of form ST-18AA with its Part 'A' duly filled by him shall be produced or caused to be produced by him along with a declaration as prescribed in Part 'B' of form ST-18AA duly verified and signed by the driver or any other person-in-charge of the vehicle, boat or animal or of the goods before the officer-in-charge of the entry check-post of the State, who shall retain the same.]." We have assumed now that the laundry machine falls within the expression "all kinds of electrical goods" and, therefore, was notified goods under the notification dated October 31, 1986. Being notified goods, a declaration under form ST-18 ought to have been presented at the time of inspection which was not done. However, the fact of the matter is that it was done within 15 days of the incident. It is not in dispute that respondent No. 1 who brought the laundry machine, is not a registered dealer. That the laundry machine was brought by him for his personal use, is fortified by the fact that the concerned Commercial Taxes Officer did issue declaration in form ST-18 on October 7, 1994. If the laundry machine had not been brought by respondent No. 1 for his bona fide use, there was no question of issuance of declaration in form ST-18 to respondent No. 1. If the laundry machine had not been brought by respondent No. 1 for his bona fide use, there was no question of issuance of declaration in form ST-18 to respondent No. 1. The only lapse on the part of the respondent was that at the time when the goods were transported, form ST-18 was not presented before the concerned check-post. The Deputy Commissioner (Appeals) considered this aspect in his order thus : MATTER IN OTHER LANGUAGE The reasons given by the Deputy Commissioner (Appeals) are good enough for setting aside the order of penalty passed by the Assistant Commercial Taxes Officer. It is true that for imposition of penalty under section 22A(7) mens rea or guilty mind is not necessary but nevertheless the facts do not justify the imposition of penalty in the present case. It is not in dispute that along with the laundry machine at the time of checking, the bill and other documents were available with the driver of the vehicle. Immediately after the checking and much before the order came to be passed, the required form ST-18 was produced by respondent No. 1 at the check-post. As a matter of fact, it was done within fifteen days of the inspection. It is also not in dispute that the laundry machine was not meant for sale or for transfer otherwise. We are, thus, satisfied with the order passed by the Tribunal restoring the order of the Deputy Commissioner (Appeals) dated March 28, 1995. The order of the Tribunal does not call for any interference in this writ petition. Accordingly, the writ petition is dismissed with no order as to costs.