Commercial Taxes Officer vs M/s. Globe Transport Corporation

Jainendra Kumar Ranka, J.—This revision petition has been filed against the order passed by the Rajasthan Tax Board (In short, "Tax Board") dt. 25/08/2010 by which it has affirmed the order dated 30/01/2009 of the Deputy Commissioner (Appeals) (in short, DC(A)) by which the DC(A) has deleted the penalty imposed upon the respondent assessee by the assessing officer. The brief facts of the case, emerging from the face of record, are that the respondent-assessee is a transport agency indulged in the business of carrying goods from one place to another. On 05/06/1999, goods, were being carried in Vehicle No. RJ-14-G-7421, and was sought to be checked at the check post of Shahjahanpur border by the CTO, Anti Evasion, Alwar but the vehicle did not stop and apprehending it to be a matter of tax evasion, the vehicle was chased and then it was stopped. The driver of the vehicle was required to produce necessary bills, vouchers declaration forms and he produced GR No. 111843, 111844 dt. 31/05/1000 and alongwith these bilties, he also produced invoice No. 271 dt. 31/05/1999, 273 dt. 31/05/1999 and challan of Globe Transport Corporation bearing No. 14421 dt. 04/06/1999. The goods, i.e. 144 bundles of iron springs and 25 bundles of axles, were being sent from Khanna (Punjab) to Sarkhej (Gujarat) and on enquiry, it was conveyed by the driver (Prahlad) that he does not have permit of Gujarat. On further checking, the officers found GR No. 016232 dt. 01/06/1999; challan No. 14420 dt. 04/06/1999; GR No. 011698, 026103 dt. 27/05/1999; 026107 dt. 02/06/1999 of M/s. Globe Transport Company Pvt. Ltd. (from U.P. Border to Bhilwara, Raj.) and it was mentioned as "self". The officers also found challan No. 4 dt. 04/06/1999 from U.P. Border to Bhilwara and on this challan vehicle No. RJ-14-G-7421 was written and it mentioned name of National Auto Store, 82, Transport Nagar, Bhilwara. In this challan, three bilties were recorded wherein it was mentioned about 20 articles of Hardware, 4 articles of motor parts, 25 bundles of axles and 144 bundles of iron springs.

Finding the above discrepancies i.e. the vehicle not being stopped; it was not having permit of Gujarat; the vehicle not having documents relating to Bhilwara and statements of driver, the assessing officer was satisfied that there is a clear cut case of tax evasion and it was with the intention of evasion of tax that the goods were transmitted to be sent to Gujarat, but in-fact, being sent to Bhilwara with the ulterior motive and intention to evade tax accordingly, the assessing officer, being dissatisfied, issued a notice to respondent-assesses wherein the representative of the respondent-assessee appeared and produced bills, registration certificate, purchase order, affidavit of transport clerk and it was further submitted that M/s. Capital Steel and Allied Industries, Khanna (Punjab) had received orders from M/s. Gaux Automobiles, Sarkhej (Ahmadabad) and M/s. National Automobiles, Bhilwara on 10/04/1999 and 15/04/1999 respectively and since form ST-18A could not be received, the incomplete documents relating to Bhilwara were handed over to the driver, due to inadvertence by the office clerk. However, the CTO was not inclined to accept the submission of the respondent and according to the CTO, it was an afterthought and in view of the above facts and circumstances, on the discrepancies being found with the respondent-assessee, in contravention of the provisions of Section 78(5) of the RST Act, held that there was violation of section 78(5) which proves that there was tax evasion and it was with the intention of tax evasion that goods were being carried and accordingly imposed penalty @ 30% to the tune of Rs. 75,000/- after working out the value of the said goods at Rs. 2,50,000/- which was estimated by the Manager of the respondent-assessee, referred to herein above.

Dissatisfied with the imposition of the said penalty, the respondent-assessee preferred an appeal before the DC(A) and reiterated the facts pleaded before the CTO, and further submitted that without holding the bills and vouchers to be bogus, the CTO was unjustified in holding the respondent-assessee liable for penalty. It was pleaded that there might be some discrepancy, but even than all the papers were complete in all respect and there was no question of tax evasion by the respondent-assessee. It was further submitted that no prior notice was given either to the consignor or the consignee and imposition of penalty on the respondent-assessee (transporter) is wholly unjustified. It was further claimed before the DC(A) that the CTO did not make further independent verification and merely on assumptions and presumptions, held the bills were bogus and merely on the basis of alleged statement of the driver the penalty has been imposed which is unjust & in violation of principles of natural justice as well. The DC(A) was satisfied with the facts pleaded before it and after considering the authorities, referred to by the respondent-assessee, deleted the penalty.

Dissatisfied with the deletion of the said penalty, an appeal was preferred before the Tax Board by the petitioner-department, assailing the deletion of the penalty. The Tax Board, after hearing detailed arguments; referring to the submissions at length and after considering the authorities, sustained the deletion of penalty by the DC(A).

Being not satisfied with the deletion of penalty, the petitioner-department has filed instant revision petition.

Mr. R.B. Mathur, learned counsel for the petitioner-department submitted that despite of several discrepancies noticed by the CTO i.e. the driver having not stopped at the check post; no plausible reasoning coming forth from the driver or the respondent-assessee in the light of several discrepancies and two sets of bills/vouchers etc. having been found, the penalty was rightly imposed by the assessing officer and the appellate authorities were not justified in quashing the penalty.

Mr. Sarvesh Jain, learned counsel for the respondent-assessee argued that both the appellate authorities have rightly deleted the penalty and it being essentially a finding of fact, therefore, even otherwise, the revision petition does not lie. It was argued that all documents were found in order and the penalty was wrongfully imposed on the respondent-assessee (transporter) when he was simply carrying the goods. He further submitted that no independent verification or enquiry was got conducted either from the consignor or the consignee and the imposition of penalty on the transporter is in utter violation of the principles of natural justice. Counsel for respondent-assessee also referred to certain authorities and argued that in the light of the said facts and circumstances and the authorities, which have direct bearing, the penalty has been rightly deleted, therefore, the revision petition be dismissed.

Having considered the arguments advanced by learned counsel for the parties, this Court is satisfied that the appellate authorities have rightly deleted the penalty for the following reasons:-

The CTO, as a matter of fact, did not find any of the bills/vouchers or builty as bogus or forged and merely on account of discrepancies had imposed the penalty. All necessary forms bills/vouchers, receipts, etc were available with the driver though two sets of papers were found and it was explained by the respondent before the CTO that the seller namely; M/s. Capital Steel and Allied industries, Khanna (Punjab) had received two orders from M/s. Gaux Automobiles, Sarkhej (Ahmadabad) and M/s. National Automobiles, Bhilwara (Raj.) and since form 18-A was received from the firm registered at Bhilwara, therefore, both the papers were available with the driver. Merely finding two sets of bills despite of both being complete in all respect and have not been held to be bogus or forged, the penalty has rightly been deleted.

Further, no enquiry whatsoever was made either from the purchaser(s) or the seller and, therefore, without further verification and merely on account of noticing certain deficiencies/errors, one cannot be held to be guilty and the CTO was not justified in imposing penalty. Had he interacted with the purchaser(s) as well as seller and had there been any other discrepancy, after interaction, he could certainly come to the conclusion of imposition of penalty. As regards not stopping the vehicle, drivers as they are, being not educated, it might be possible that the driver of the vehicle would have got terrorized upon trying to stop the vehicle or chasing it by the Flying Squad and upon putting indifferent questions. So, the proper course, available with the CTO, was to make proper enquiry from the persons concerned (purchasers/sellers) and merely on the basis of the statement of a poor driver and noticing certain discrepancies, without holding further enquiry in the matter from the concerned persons, the penalty could not have been imposed.

It is found as a fact that though two sets of bills, receipts, vouchers were found with the driver of the vehicle but they have been found to be proper/original and no other objection stands noticed by the assessing officer except that why two sets of papers were found and that the vehicle had no permit for Gujarat.

The Hon''ble Apex Court, in the case of State of Rajasthan and Another Vs. M/s D.P. Metals, has held that if on giving chance, the papers are properly produced by the assessee, then under such circumstances, no penalty need be levied though it has been held in the said judgment that penalty can be levied, The judgment of the Apex Court in the case of D.P. Metals (supra) is squarely applicable in the facts of the instant case.

The Hon''ble Apex Court in the case of State of Kerala Vs. M.M. Mathew and Another, has held as under:-

It is now well settled that strong suspicions, strange coincidences and grave doubts cannot take place of legal proof. To establish the charges against the respondents, it was, in our judgment, essential for the prosecution to establish that the secret books of accounts related to the business transactions carried on by the respondents and none else.

This Court in the case of State of Rajasthan and another Vs. M/s. Sodhi Transport Co. and anr., reported in (2001) 10 Sales Tax Today 219 (RHC, Jaipur) has affirmed the order passed by the Rajasthan Taxation Tribunal (2001) 10 Sales Tax today 220 (RTT), which has held as under:-

If a vehicle was carrying goods from one State to another State through Rajasthan even with a view to evade tax of other State, the authority empowered under the Rajasthan Sales Tax Act, 1954 had no jurisdiction to impose any penalty u/s 22A (7) of the Rajasthan Sales Tax Act, 1954, For evasion of any tax taking place outside Rajasthan, the Act had no application to it.

The only question before us is whether the person incharge of the goods at the time of checking can be made liable for the payment of penalty in case he fails to produce the requisite documents. The principle laid down in Sant Lal''s case (supra) was also followed by the Madhya Pradesh High Court at Jabalpur in Swastik Roadways and Another Vs. Commercial Tax Officer and Others, It was held that no duty on clearing and forwarding agents and transporters or common carriers to furnish to the Commissioner, information including statement of accounts in respect of the transactions of any dealer or to maintain the registers in the prescribed forms could be cast No penalty could be imposed upon them in the case of contravention of such provisions.

In this view of the matter Section 22A, RST Act not being applicable, confined as it is to the checking of evasion of tax under the RST Act in Rajasthan, the question of imposing penalty u/s 22A(7) RST Act in cases of goods transiting through Rajasthan cannot arise, The sales tax authorities of Rajasthan can, of course, stop and check any vehicle but if it contains goods coming from another State and bound for another State they can only insist and ensure that the goods leave Rajasthan.

This Court in the case of ACTO, Fs, Bharatpur Vs. M/s. S. Vrindavan Oil Products, Bharatpur, reported in (2006) Tax Up-Date (Vol. 15 Part 3 June 1-15-2006), 109, has held as under:-

This court has consistently held that it is incumbent upon the Assessing Authority in the penalty proceedings under Sec. 78(5) of the Act to undertake said exercise of cross-examination of driver or any other representative of the firm before imposition of penalty on the consignor or consignee of the goods, otherwise it is Hazardous and unsafe to rely upon such confessional statement. Nobody would normally give such confessional or suicidal statement of tax evasion and more so the driver of the carrier who has normally no direct connection with sales tax collection by the consignor or representative of assessee himself. Here in the present case, the very identity of person (sic) on whose statement the learned ACTO proceeded to impose the penalty was denied by the respondent-assessee, therefore, it was sit the more necessary for the learned ACTO to not only establish his link with the respondent-assessee but to verify the truthness of the alleged confessional statement made by him. Having not undertaken this exercise which in fairness and in accordance with principles of natural justice, the learned authority should have done the imposition of penalty on the consignor was absolutely unjustified. The Appellate Authorities were, therefore, only justified in setting aside such illegal penalty imposed by the Assessing Authority.

This court has also consistently held that for incomplete filled up from ST-18A or ST-18C or even blank forms, no such penalty can be imposed particularly when other accompanying documents are available and the veracity of which is not under challenge. Passing of such penalty orders in hot haste only reflects adversely on the conduct of the Assessing Authority who appears to be more interested in imposing penalty rather than finding the truth or willful breach of any provisions of law for which the penalty can be imposed or has been prescribed. Such illegal imposition of penalty could not have been sustained in the eyes of law.

This Court, in the case of Asstt. Commercial Taxes Officer, Flying Squad, Bhadra Vs. M/s. Agarwal Pesticides & Fertilizers, Sriganganagar, reported in (2001) 29 RTJS 90 (RHC) has held as under:-

I am of the view that production of (sic) subsequent to the checking were not after thought, keeping in view the aforesaid circumstances. The documents have been produced by the buyer soon after receipt of the notice without even waiting for the date of hearing ruled out the possibility of after thought. With this conclusion the appellate authority also ruled out any possibility of mens rea on the part of the respondent about any attempt of avoidance or evasion on his part, in purchasing these goods.

After considering the authorities (supra) viz-a-viz the facts of the instant case available on record, it is dear that no penalty under law ought to have been imposed and for the reasons given herein above, the learned Tax Board has rightly sustained the order passed by the DC(A) who had deleted the penalty. Both the appellate authorities have found it as a finding of fact, no perversity has been noticed and on such find of fact, the instant revision petition does not lie. Consequently, the revision petition, being devoid of any merit, is hereby dismissed.