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2019 DIGILAW 377 (GAU)

Superton Electronics (P. ) Ltd. v. State of Assam

2019-03-25

A.S.BOPANNA, ARUP KUMAR GOSWAMI

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JUDGMENT : A.S. BOPANNA, J. The petitioner is before this court seeking that the seizure list dated 10.12.2013 be quashed. The petitioner in that regard is seeking that subrule (5) of rule 41 of the Assam Value Added Tax Rules, 2005 (‘Rules, 2005’) be declared ultra vires the Assam Value Added Tax Act, 2003 (‘Act, 2003’). In that light, the petitioner is also seeking that the circulars dated 8.9.2011, 18.11.2011, 14.3.2012, 14.3.2012 and 18.5.2012 be declared illegal and void ab initio. Further, the orders dated 22.5.2014 and 30.5.2014 passed by the Superintendent of Taxes and the Inspector of Taxes imposing the tax and penalty be quashed. 2. The petitioner is a private limited company which has its registered office at Kolkata and the Branch Office at Guwahati. It has been carrying on business relating to sale and supply of electronic goods. The petitioner is registered under the various enactments including the Act, 2003. In the course of its business, the registered office at Kolkata transferred 300 numbers of Hard Disk Drive under the transfer invoice-cum-challan dated 9.12.2013 valued at Rs. 10,09,500 through M/s. Team United under the consignment note dated 10.12.2013 containing 12 cartons. The present issue relates to the said consignment, wherein the competent authority has arrived at the conclusion that there was an attempt to evade the tax payable on the said goods and has, accordingly, imposed the penalty at three times the quantum of tax payable. It is in that Light, the petitioner claiming to be aggrieved is before this court assailing the imposition of the penalty. The proviso in sub-rule (5) of rule 41, which provides for furnishing the documents in the electronic format and the non-compliance of which has resulted in the present action is assailed on the ground that the power vested with the Commissioner to issue circulars amounts to sub-delegation by the Government and, therefore, the same is not sustainable. Hence, it is contended on behalf of the petitioner that if the said proviso is declared as ultra vires, the compliance in the electronic format would not arise and, in that circumstance, since the goods were otherwise accompanied by the requisite documents in its physical form, the requirement of law would be met and the levy of penalty would not be justified. 3. 3. The respondents through their affidavit-in-opposition have sought to sustain their action by contending that the impugned circular itself indicates the object with which the furnishing of information in the electronic format is provided for. In that circumstance, it is contended that while checking the goods as empowered under section 75(12)(B)(II) of Act, 2003, the transporter could not produce the required documents and, as such, the consignment was seized. The petitioner also had not uploaded the document in the electronic format and, in such circumstance, the uploading which was attempted after five days would not meet the requirement. Accordingly, opportunity was granted to the petitioner and, on considering the reply, the penalty as provided in law was imposed. In that light, they seek to sustain their action. 4. In the background of the contentions, we have heard Mr. O.P. Bhati and Mr. M.K. Gogoi, learned counsel for the petitioner. Also heard Mr. B. Gogoi, learned standing counsel, Finance (Taxation) Department, for the respondents and perused the petition papers. 5. Since the learned counsel for the petitioner has with reference to the prayer in the petition sought for declaring sub-rule (5) to rule 41 of Rules, 2005 as ultra vires the Act, 2003, the said issue would require consideration at the outset since the remaining prayers would be consequential on such consideration. In that regard, the learned counsel for the petitioner at the outset referred to provisions contained in section 75 of the Act, 2003 which provides for establishment of check posts and the requirement under sub-section (3) therein to carry such documents that may be prescribed. It is pointed out that as provided in sub-section (5) to section 75, on examination of the documents in the physical form or inspection of the records, if the Officer in-charge finds that the owner is not carrying the documents and is attempting to evade payment of taxes, only then the seizure of the goods would arise. In that background, reference is made to sub-rule (9) of rule 41 of Rules, 2005 to point out the specified documents that are required to be carried along with the goods. In that background, reference is made to sub-rule (9) of rule 41 of Rules, 2005 to point out the specified documents that are required to be carried along with the goods. It is the further contention of the learned counsel for the petitioner that section 106 of Act, 2003 provides for the Government to make rules in furtherance of the provisions of the Act and, in such circumstance, through sub-rule (5) of rule 41 of 2005 Rules, when the power is given to the Commissioner, the proviso permitting the Commissioner to direct providing the relevant information in the electronic format before transporting the goods would amount to sub-delegation, which is not permissible in law. In aid of his contention, the learned counsel has relied on the decision in the case of A.K. Roy v. State of Punjab, (1986) 4 SCC 326 and in the case of Sahni Silk Mills (P) Ltd. v. Employees' State Insurance Corporation, (1994) 5 SCC 346 and submits that in the said cases the sub-delegation of the power is held unsustainable. 6. In order to appreciate the contention, we have at the outset taken note of the decisions relied upon by the learned counsel for the petitioner. In the case of A.K. Roy (supra), the issue was with regard to the complaint lodged by the Food Inspector, Faridkot and the issue was as to whether he was competent in that regard. To consider the same, the provisions of the Food Adulteration Act, 1954, was taken into consideration, wherein the complaint was to be lodged by the person authorized by the Government. Since the complaint was not lodged by the person authorized, the cognizance taken was held unsustainable, since through the impugned notification, the Food (Health) Authority who was to file the complaint had in turn authorized the Food Inspector. 7. In the case of Sahni Silk Mills (P.) Ltd. (supra), the regulation provided for the Corporation to delegate, but it did not permit any officer or authority subordinate to the Director General to be delegated when the power had been delegated by the Corporation. In that regard, it was held that the Corporation having delegated the power to the Director General could not have empowered the Director General to authorize any other officer to exercise such power. 8. In that regard, it was held that the Corporation having delegated the power to the Director General could not have empowered the Director General to authorize any other officer to exercise such power. 8. As against the said position, in the instant case, though the learned counsel for the petitioner contends that the power of the government to make Rules could not have been delegated to the Commissioner, what is required to be taken note is that under section 106 of Act, 2003, the Government is vested with the power to make Rules as indicated therein. Based on such power, the Rules, 2005 has been framed and the rule 41 essentially is to satisfy the requirement of section 75 relating to establishment of check-posts and to regulate the production of necessary documents and the manner in which the check-posts would function. In that regard, through sub-rule (5), a procedure is contemplated to enter the relevant information in the computer from the documents which would accompany the goods. Through the proviso, the Commissioner is empowered to direct the relevant information in the electronic format to be uploaded. Such proviso is a part of the rule which is framed by the Government by which it provides for the Commissioner to issue appropriate directions. The same cannot be considered as sub-delegation of the power. Hence, the contention in that regard cannot be accepted and the decisions rendered would not be relevant for the said purpose. 9. In that circumstance, it would be necessary to take note of the remaining contentions. In the instant case, the fact that the petitioner had not uploaded the documents in the electronic format is not in dispute. Yet the issue would be as to whether the documents which are required to accompany the goods as provided under rule 41(9) of the Rules, was available along with the goods or whether the documents subsequently tendered along with the reply were genuine documents which were in existence simultaneously at the point when the goods were dispatched. To that extent, a perusal of the seizure list (Annexure D) would indicate a common ground of seizure relating to three items of goods of which only Item No. 2 belongs to the petitioner. The common ground observed is that the person in-charge of the transported goods could not produce proper and genuine documents which are required as per Act, 2003. The common ground observed is that the person in-charge of the transported goods could not produce proper and genuine documents which are required as per Act, 2003. There is no specific indication with reference to the different items of goods seized. In that background, the communication dated 11.12.2013 referring to the said seizure on 10.12.2013 and seeking for the relevant documents from the petitioner for the verification would be relevant. In respect of the same, the petitioner through their communication dated 11.1.2014 has referred to the documents which they claim had accompanied the consignment. However, through the order sheet in the proceedings of the Superintendent of Taxes, the indication is that the transporter has not made on-line declaration of the consignment which essentially is the non-compliance of sub-rule (5) to rule 41 of Rules, 2005. The same also indicates that the dealer is, therefore, asked to show-cause why taxes and penalty should not be imposed. Subsequent thereto, the order dated 22.5.2014, impugned herein, is passed wherein it is indicated that the petitioner had made the on-line declaration on 16.12.2013, about 5 days after arrival of the goods on 10.12.2013. The same is considered as a lapse and it is concluded that the dealer seems to have attempted to evade the tax payable under Act, 2003. It is in that view, through the order dated 30.5.2014 (Annexure K), the Inspector of Taxes has proceeded to impose penalty of three times on the tax which is levied by the Superintendent of Taxes. Neither in the order dated 22.5.2014nor in the order dated 30.5.2014, a specific reference is made to indicate that the documents submitted in the physical form was also not sufficient to satisfy the authorities about the compliance and as to whether even in that circumstance there was any attempt to evade taxes. From the perusal of the said orders, it appears that both the authorities, namely, the Superintendent of Taxes and the Inspector of Taxes have arrived at their conclusion merely because the documents were not uploaded in the electronic format. Though sub-rule (5) to rule 41 provides for uploading the documents in electronic format, the non-compliance of the same does not indicate any consequence nor the circulars issued in that regard specifies any consequence for non-compliance. The circular only indicates the ease with which the checking could be completed at the check posts. Though sub-rule (5) to rule 41 provides for uploading the documents in electronic format, the non-compliance of the same does not indicate any consequence nor the circulars issued in that regard specifies any consequence for non-compliance. The circular only indicates the ease with which the checking could be completed at the check posts. In that background, when penalty is to be imposed for non-compliance of the requirement of production of the documents provided for in section 75(3) and rule 41(9) and when presumption of evasion of taxes is rebuttable by production of the documents, the Authorities were required to apply their mind to this aspect of the matter. In that regard, the documents as referred to by the petitioners in their reply dated 7.1.2014 were to be examined to find out as to whether the said documents were genuine and whether the documents were in existence as on the date of movement of the goods. In that regard, if the authorities were satisfied that the documents in the physical form was available as on the date of the movement of the goods, in such event a consideration was necessary to be made as to whether penalty was leviable only because the uploading in the electronic format was not done. 10. In the instant case, no such exercise has been done, but the penalty has been imposed only on the observation that on-line declaration had not been made. Insofar as the tax levied at Rs. 50,475, in any event, the same was required to be paid and the petitioner having paid the same, has secured the release of the goods through interim order passed by this court, which has only stayed the recovery of penalty. In that circumstance, it would be appropriate to set aside the orders dated 22.5.2014 and 30.5.2014 and remit the matter to the Superintendent of Taxes to take a decision at the outset and, thereafter, to enable the Inspector of Taxes to take a decision thereafter, if need be. 11. Accordingly, the order dated 22.5.2014 passed by the Superintendent of Taxes, Guwahati, Unit-B (Annexure J) and the order dated 30.5.2014 passed by the Inspector of Taxes, Guwahati, Unit-B (Annexure K) are quashed. The matter is remitted to the Superintendent of Taxes, Guwahati, Unit-B, to reconsider the matter in terms of the observation contained herein above. 11. Accordingly, the order dated 22.5.2014 passed by the Superintendent of Taxes, Guwahati, Unit-B (Annexure J) and the order dated 30.5.2014 passed by the Inspector of Taxes, Guwahati, Unit-B (Annexure K) are quashed. The matter is remitted to the Superintendent of Taxes, Guwahati, Unit-B, to reconsider the matter in terms of the observation contained herein above. Subsequent to the decision to be taken therein, liberty is reserved to the Inspector of Taxes, Guwahati, Unit-B, to thereafter take a decision in accordance with law. 12. The writ petition is, therefore, allowed in part with no order as to costs.