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2008 DIGILAW 3 (JK)

Gopal Sharma v. Assessing Authority

2008-01-08

Vinod Gupta

body2008
1. This appeal has been preferred by the appellant under section 11-A of the J&K GST Act, 1962 (hereinafter referred to as `the Act' in short) against the order dated 06-07-2002 passed by the Dy. Commissioner, Sales Tax (Appeals), Jammu (hereinafter referred to as `the Appellate Authority' in short) whereby the appeal filed by the appellant against the order dated 26-11-2001 passed by the Assessing Authority, Sales Tax, Checkpost, Railway Station, Passenger Side, Jammu (hereinafter referred to as `the Assessing Authority' in short) under section 15-A(4) and 15-A(9) of the Act, has been dismissed. 2. The brief facts of the case are that on 06-11-2001 the Assessing Authority detained goods of following description 1. Lamination Film rolls : 6" 15 Pcs, 9" 20 Pcs., 18" 15 Pcs 2. Electric Lamination Machines : 11 pcs. 3. All colour printer/ scanner / copier (c 7218-A PSC 500) : Two Pcs. 4. Toner 190 Grams : 20 Nos. 5. 10 Photostat Machine Ink. 6. Photostat Machine Drums (NP 1215, NP2020) : 20 Pcs. 7. Spiral Binding Machine (AF-39) 8. DCE (B-35) Blades 10 Pcs. 9. Spiral four packets. 10. Two Nos. old Photostat Machines (Canon) (reconditioned). being imported by the appellant under section 15-A(4) and 15-A(9) of the Act. After issuance of notices in forms ST-40 an ST-40 A and hearing the appellant, the Assessing Authority vide order dated 26-11-2001 imposed penalty of Rs. 34,982 under section 15-A(4) of the Act and levied security to the extent of Rs. 46, 723 under section 15-A(9) of the Act. Being aggrieved by this order, the appellant preferred an appeal before the learned Appellate Authority which was dismissed on 06-07-2002. Being again aggrieved by this order, the appellant has preferred this second appeal before this Tribunal. 3. I have heard the learned counsel for the parties and have also perused the record on the file. 4. Mr. S. Dutt, Advocate appearing for the appellant, has contended that no reasons have been assigned specifically by the Assessing Authority at the time of seizure of the goods and thus the subsequent actions are illegal. He has further contended that the notices issued to the appellant were defective and invalid and thus vitiates the further proceedings. In the last, he has argued that the goods were imported by the appellant not for sale but for personal use, as such section 15-A has no application in the matter. He has further contended that the notices issued to the appellant were defective and invalid and thus vitiates the further proceedings. In the last, he has argued that the goods were imported by the appellant not for sale but for personal use, as such section 15-A has no application in the matter. On the other hand, Mr. M.A. Bhat, Advocate appearing for the Revenue, has contended that the Assessing Authority has assigned reasons at the time of seizure of the goods and the notices issued by the Assessing Authority to the appellant are proper and valid. He has further contended that the goods in bulk were imported by the appellant which suggests that the goods imported were for sale and not for personal use. 5. The first contention raised by the learned Counsel for the appellant is that no reasons have been recorded by the Assessing Authority before the seizure of goods, as such seizure is illegal and proceedings are liable to be quashed. In order to appreciate this contention, the provisions contained in section 15-A(4) (a) of the Act is to be examined. For reference Section 15-A (4) (a) is reproduced here under:- Section 15-A(4) -- (a) The goods which are covered by sub-section (2) whether found in vehicle or other conveyance, or godown or any other premises of any transporter, clearing or forwarding agency, or any other place, but which are not supported by the documents specified in said sub-section, or if supported, such documents are fake, false or suspected to be fake or false in respect of particulars contained therein, shall be seized by the Officer Incharge, Notified Area or any other office referred to in sub-section (3) after recording reasons in writing and the owner of such goods shall be liable to penalty which shall be equal to double the amount of tax payable on such goods deeming the invoice value or market value thereof, whichever is higher, as sale price. Provided that the goods liable to seizure and or seized may, subject to the security furnished in prescribed form for a value equal to the amount of maximum leviable penalty be released. Provided that the goods liable to seizure and or seized may, subject to the security furnished in prescribed form for a value equal to the amount of maximum leviable penalty be released. This sub section un-mistakably lays down that before the seizure of goods on the ground that goods are not supported by documents or if supported but are fake, false or suspected to be fake or false, the officer incharge of notified area or any officer authorized shall have to record reasons in writing for such seizure. This is a mandatory requirement provided by statue with sole purpose of preventing the misuse of powers of such seizure by the competent officer. 6. In the instant case at the time of seizure of the goods, the Assessing Authority, prepared a memo of Detention of Goods, which reads as under: "Detained on 06-11-2001. Nags 15 Nags Containing Electronic goods from Sh. Gopal Sharma S/o Sh. Ram Saran R/o Panjtirthi, Mubarak Mandi, Jammu for want of proper documents as required under section 15-A(2) of the J&K GST Act, 1962. The documents produced are fake and false in respect of Value/ quantity of goods. The goods has been detained under section 15-A(4)/ 15-A(9) of the J&K GST Act, 1962 for want to embossing seal/ Entry Tax. The goods has been detained on request of the importer and the same are of sufficient value to recover the tax/ penalty. Value to assessed at the time of released" From this Detention memo, it is not evident as to whether the goods were detained for want of proper documents or the documents produced were fake and false.It is further not clear as to whether the goods were detained for want to embossing seal/ entry tax. This is a printed memo and irrelevant reasons have not been crossed/ cut. 7. Similarly, seizure memo alongwith the inventory prepared at the time of seizure of goods of the appellant does not contain the specific or particular reasons for the seizure of the goods . This evidence clearly reveals that the Assessing Authority has not specifically recorded any reasons in writing before the seizure of the goods and seizure has been made without any application of mind. Recording of reasons before seizure of goods in writing is a condition precedent for exercising jurisdiction under section 15-A(4) of the Act. This evidence clearly reveals that the Assessing Authority has not specifically recorded any reasons in writing before the seizure of the goods and seizure has been made without any application of mind. Recording of reasons before seizure of goods in writing is a condition precedent for exercising jurisdiction under section 15-A(4) of the Act. Recording of reasons is absolutely necessary otherwise the power conferred under this provision would become arbitrary. Since no specific reasons has been recorded in writing before the seizure of goods as such seizure made by the Assessing Authority is bad. Reliance is placed on cases, Commissioner of Commercial Taxes V/s Ram Kishan Shri Kishan Jhaver & Ors. (1967) 20 STC 453 and Oriental Rubber Works V/s A. K Sinha & Ors., (1974) 34 STC 30 . 8. The learned counsel for the appellant next contended that the notices issued by the Assessing Authority are defective and invalid and thereby vitiates the proceedings in the case. In dealing this issue the learned Appellate Authority has held as under:- "As regards the n0tices issued in the matter, it is seen that the Assessing Authority has issued the prescribed statutory notices. A perusal of these notices shows that there is nothing in these which could prejudice the recipient. The fundamental requirement of any notice issued is that the party receiving the same should be made clearly aware of the nature of the proceedings against him and of the action required by him. These ingredients are not lacking in the notices issued by the Assessing Authority. Further, Hon'ble Supreme Court in the case of State of Orissa V/s Chakobhai Ghelabhai and Co (1960) 11 STC 716 SC) has inter alia held that a notice is not invalid merely because the unnecessary words in the prescribed form are not scored out (as the recipient can easily ignore the words not applicable to him) Thus the notices issued by the Assessing Authority cannot be held as invalid merely because the unnecessary words in these were not scored out. 9. I have perused the notices issued by the Assessing Authority after the seizure of the goods of the appellant. In notice Form ST-40 the Assessing Authority has clearly mentioned that the goods have been seized under subsection (4) of Section 15-A of the Act because such goods are not supported by the documents specified by the subsection (2) of the Section. In notice Form ST-40 the Assessing Authority has clearly mentioned that the goods have been seized under subsection (4) of Section 15-A of the Act because such goods are not supported by the documents specified by the subsection (2) of the Section. He has also cleared his intention to impose penalty thereon and gave the appellant an opportunity of being heard before passing the order. Similarly in notice issued under section 15-A(9) of the Act in Form ST-40 A, it is clearly mentioned that the goods have been transported by the appellant as an unregistered dealer and the appellant was asked to show cause as to why the security required under section 15-A(9) of the Act may not be obtained from him. The contents of both notices clearly show that the notices are specific and proper and are not defective. Thus this contention of the learned counsel for the appellant cannot be accepted. 10. In the last the learned counsel for the appellant has contended that the goods were being imported for personal use and not for sale as such Section 15-A of the Act is not applicable in the instant case and the provisions of J&K Entry Tax, 2000 are applicable. The Assessing Authority while passing the order of imposition of penalty under section 15-A(4) of the Act has held that the goods were seized because the documents accompanying it were found fake and false. The valuation of the goods was not done on spot and the mention of the same was made on the inventory prepared at that time that the valuation of the goods would be assessed at the time of the release of the goods. This order clearly shows that the reasons assigned for the seizure of the goods in the order is quite contradictory and distinct than the reasons specified in notice in Form ST-40, wherein it is metioned that the goods were seized as the same were not supported by the documents as required under section 15-A(2) of the Act. The issuance of notice before starting any proceedings under any taxation matter is a condition precedent because it confers jurisdiction on the Authority to initiate proceedings against the defaulter. Also the penalty proceedings are quasi criminal in nature and in such matters a notice specifying the ground on which the penalty is proposed to impose should be clear and specific. The issuance of notice before starting any proceedings under any taxation matter is a condition precedent because it confers jurisdiction on the Authority to initiate proceedings against the defaulter. Also the penalty proceedings are quasi criminal in nature and in such matters a notice specifying the ground on which the penalty is proposed to impose should be clear and specific. In the instant case, from the perusal of the record and the order of the Assessing Authority, it transpires that the Assessing Authority was not clear and specific about the reasons for the seizure of the goods being imported by the appellant and the Assessing Authority acted arbitrarily in detaining the goods only in order to seize the same with a wavering mind about the reasons of seizure. 11. The appellant in his objections before the Assessing Authority has stated specifically that the seized goods are for his personal use and are not for sale in the market. He has further stated that the two photocopy machines were sent to Delhi for repair under permission from the Authority on 17-06-2001. The learned Assessing Authority did not accept this plea raised by the appellant before him by holding that the two photocopier Canon, 2020 were sent to Delhi for repair without any proper permission and no proper bill of purchase of these two photocopier were produced by the appellant. The learned Assessing Authority also did not consider the bills produced by the appellant afterwards on the ground that the same have to be furnished at the time of import of the goods. At the time of the import of the goods the dealer furnished only one bill bearing No. 215 dated 05-11-2001 for Rs. 46, 592 for the goods under import. This bill clearly indicates that the goods are being carried in five cartoons and those five cartoons were seized at the checkpost on 06-11-2001. All the goods packed in five cartoons were not covered by this bill furnished by the dealer and according to the Assessing Authority dealer produced other five more bills to cover up his fault and the same cannot be entertained. Valuation of the goods have been ascertained by the inspector of the checkpost after market survey and on that basis the penalty has been imposed by the Assessing Authority. 12. Valuation of the goods have been ascertained by the inspector of the checkpost after market survey and on that basis the penalty has been imposed by the Assessing Authority. 12. The learned Appellate Authority has also held the seizure of the goods of the appellant valid on the ground that the bill produced was false in respect of the particulars (Value, quantity and nature). After scrutinizing the whole evidence in the case it was held that the bill accompanying the goods under import was false and fake because of inter polation of words made in the bill. Both the authorities did not consider the other bills produced by the appellant afterwards. In doing so, both the authorities acted contradictory to the allegations made in the notice ST-40, wherein it was alleged that the goods were being imported without documents. 13. The scope and object of Section 15-A of the Act is to prevent and check evasion of tax under the Act. From the plain reading of the whole section it is evident that this section is applicable only on the sale of taxable goods in the state under the Act. This Act is applicable only when the imported goods are sold further in the state which clearly shows that this section is applicable when the goods are brought by any dealer for sale in the state. This is also clear from the wording used in the seizure memo/ inventory prepared in the instant case wherein it is stated that the appellant has been found importing taxable goods for resale in the state. 14. The case of the appellant from the very beginning is that the goods have been imported for his personal use. It is further stated by the appellant that the appellant and his family own 6 shops in Jammu and the goods imported were for use in all 6 shops. The learned Assessing Authority and the learned Appellate Authority did not accept the plea of the appellant on the ground that the goods in bulk have been imported and as such it cannot be for personal use. In my opinion, this observation of the Authorities below is not correct. There is no limit of quantity prescribed for importing goods for personal use. In my opinion, this observation of the Authorities below is not correct. There is no limit of quantity prescribed for importing goods for personal use. On the other hand the appellant has explained that the goods in bulk have been imported for use in shops owned by him and his family members. This assertion of the appellant has not been rebutted by the Department by leading any evidence. Also in case the Assessing Authority feels that the goods were not imported for personal use but were imported for sale, the burden lies on the department to prove that the goods were imported for sale in the state. Mere observation that the goods were imported for sale in the state was not sufficient specially when the appellant disputed this fact from the date of seizure. In cases where provisions are penal, the authorities are required to prove with evidence the charge or allegation against the defaulters which has not been done and lower authorities came to the conclusions merely on assumption i.e, goods in bulk have been imported. 15. As stated above both the authorities have not considered the other bills/ invoices produced by the appellant before the Assessing Authority on the ground that the same were not accompanying the goods at the time of seizure. In my opinion, this view of the lower authorities is also not correct. The words "across or beyond the notified area" in sub-section (2) of Section 15-A of the Act suggest that documents are required when any checkpost is crossed. The documents are not required when any vehicle enters the checkpost. The Assessing Authority or competent Authority can detain those goods if not accompanying with the goods being transported within the state and would not allow to cross any notified area. Those detained goods shall not be released till documents are produced or if it is found that such documents are fake and false or suspected to be fake and false requisite penalty is levied. In the instant case as stated above the appellant produced the documents of the goods imported afterwards but the learned Assessing Authority did not consider the same. The learned Appellate Authority has also taken the same view that those bills were not submitted at the time while transporting the goods as such the same cannot be considered. In doing so, the Assessing Authority and Appellate Authority were not correct. The learned Appellate Authority has also taken the same view that those bills were not submitted at the time while transporting the goods as such the same cannot be considered. In doing so, the Assessing Authority and Appellate Authority were not correct. If documents are produced before the crossing of goods from checkpost or before levy of penalty, those documents are required to be considered by the authorities. Only thing is to be seen that those documents are genuine and no unscrupulous dealer takes benefit by manufacturing any evidence. 16. Both the Authorities below have found the bill No. 215 accompanying the goods at the time of seizure as fake and false on the ground that this bill was not correct in respect of the quantity of the goods being imported by the appellant. In considering this point both the Authorities below were wrong because no proper notice was served upon the appellant before initiating of such proceedings. As stated above, the Assessing Authority issued notice ST-40 upon the appellant stating that the goods had been seized under subsection (4) of Section 15-A of the Act because such goods were not supported by the documents specified by the sub-section (2) of this section. No notice informing the appellant about the imposition of penalty on the ground that the documents accompanying the goods were fake or false or suspected to be fake or false, was ever served upon the appellant. Without service of any notice, the Assessing Authority cannot assume any jurisdiction to impose penalty on this ground. It is only the service of notice with specific allegation which confers the jurisdiction upon the Assessing Authority to impose penalty. Without service of any notice in this respect the Assessing Authority could not have considered this ground for imposing penalty. A penalty cannot be imposed for any default without any service of notice. 17. The last contention of the learned counsel for the appellant that the provisions of J&K Entry Tax on goods Act is applicable in this case in my view cannot be considered at this stage in this case because proceedings in the matter were initiated under section 15-A of the Act and after considering the same I have come to the conclusion that the same is not applicable. While hearing the appeal the Appellate Court cannot go into the question which is alien to the matter. While hearing the appeal the Appellate Court cannot go into the question which is alien to the matter. No case under entry tax is pending before this forum and this contention was raised by the learned counsel for the appellant in alternate. 18. For the foregoing reasons, I would hold that section 15-A of the Act is not applicable in the instant case because the goods transported by the appellant were for personal use and not for sale and the learned Assessing Authority has wrongly assumed the jurisdiction in seizure of the same under section 15-A of the Act. Also at the time of seizure no specific reason in writing were recorded by the Assessing Authority. Thus there is merit in this appeal which is accordingly allowed and the order dated 26-11-01 imposing penalty and demanding security under section 15-A of the Act by the learned Assessing Authority and duly confirmed by the order dated 06-07-02 by the learned Appellate Authority, are hereby quashed. The appeal file be consigned to records and the files of the lower authorities be sent back forthwith.