Mangal Chand Lachhi Ram Kedal Ganj vs Commercial Taxes Officer

Jainendra Kumar Ranka, J.—Instant revision petition has been filed by the petitioner against the order dated July 29, 1998 passed by the Rajasthan Tax Board, Ajmer (in short, "the Board") in Appeal No. 878 of 1993 whereby the Tax Board affirmed the order passed by the Deputy Commissioner (Appeals) II, Commercial Taxes Department, Jaipur, (in short, "the DC(A)). The DC(A) also upheld the order passed by the CIO (Frying Squad), HQ, Jaipur, whereby the penalty of Rs. 1,10,135 was imposed against the petitioner. The revision petition was admitted on November 5, 1998 on the following questions of law:

(1) Whether the penalty u/s 22A(7) could be imposed upon the goods in transit, which is STP in the hands of the consignor?

(2) Whether the petitioner could be bound to produce the books of accounts of the third party?

(3) Whether the petitioner have a right to know about the progress of the enquiry conducted by the authorities regarding the transactions'' genuineness?

The brief facts emerging on the face of the record of the case are that on November 23, 1991 a tanker bearing No. DL-IG.6906 was checked by the officer of the Flying Squad, Jaipur, which was containing oil. On enquiry, by the officer from the driver of the vehicle, the driver stated that the oil was filled in the tanker from one factory situated in Matsya Industrial Area, Alwar, while the bill of purchase belongs to M/s. Mangal Chand Lachhi-ram, with address of Kedal Ganj Alwar, who is a trader. The purchase bill showed weight of the goods as 9 tonnes, i.e., 9000 kgs. while the weighment parchi issued by "Jain Dharamkata" showed the weight of the goods as 10,960kgs., which created doubt in the mind of the officer of the Department. Therefore, the oil was seized. After seizure of the goods, on further checking again the driver confirmed his earlier statement and stated that the oil was filled in the tanker from M/s. Agarwal Oil and General Mills, MIA, Alwar. On examination of the bills, from M/s. Mangal Chand Lachhi-ram, i.e., the petitioner one partner Shri Shrawan Kumar appeared and informed that the goods were purchased from M/s. Yogendra Trading Co., Kedal Ganj, Alwar by Bill No. 204 dated November 22, 1991. The petitioner was asked to produce account books of M/s. Yogendra Trading Co., to confirm and justify the said purchase as also other documentary evidence to substantiate his claim about purchase from Yogendra Trading Co. and not from M/s. Agarwal Oil and General Mills as it was prima facie proved by the Department that the goods were purchased from M/s. Agarwal Oil and General Mills and not from M/s. Yogendra Trading Company rather only a bill was placed of Yogendra Trading Company. Therefore, on the basis of wrong information and on producing false and fictitious documents, show-cause notice u/s 22A(7) of the Sales Tax Act was issued. On further enquiry, it was found that the earlier name of Yogendra Trading Co. was M/s. Agarwal Oil Mills, 82, Azad Nagar, Daudpur but from February 13, 1991 the name and title of the firm was Yogendra Trading Co., Alwar. It was also noticed that the said firm filed return for one quarter for the year 1990-91, with negligible turnover and though subsequent returns were filed but the turnover for the subsequent period was shown as nil and even for the year 1991-92 no return was filed.

The petitioner was confronted with the above facts by the respondent. It was desired by the respondent-Department to get the confirmation/other material to justify the claim of the petitioner that the goods (oil) in the tanker was purchased from Yogendra Trading Company and also to produce the records of Yogendra Trading Co. However, on the contrary, a certificate was submitted from M/s. Agarwal Oil and General Mills that the goods were not sold to the petitioner but neither confirmation nor affidavit was filed, what to talk of producing books of accounts of Yogendra Trading Company. Thus no satisfactory explanation was submitted by the petitioner.

Considering the above facts and circumstances of the case, it was held that the petitioner has failed to substantiate its claim that the goods in question was purchased from M/s. Yogendra Trading Company and not from M/s. Agarwal Oil and General Mills, rather some adjustment was made, knowingly and that it is a clear-cut case of evasion of tax. It has further been stated that when confronted with the aforesaid fact that the partner of the petitioner-firm has denied purchase of goods from M/s. Agarwal Oil and General Mills, MIA, Alwar and that it was purchased from Yogendra Trading Co., the driver of the tanker on the second occasion again stated that he is not aware of the fact but he was very categorical and stated that the oil was filled in the tanker from M/s. Agarwal Oil and General Mills, MIA Alwar. Accordingly, the respondent-Department held that the bills found in the possession of the driver were bogus and fictitious and accordingly imposed penalty u/s 22A(7) amounting to Rs. 1,10,135.

This order of imposition of penalty was challenged before the learned DC(A) by the petitioner where also same facts were reiterated that the version of the driver cannot be believed when all other facts are very clear. It was further stated that the imposition of penalty is made on the basis of conjunctures and surmises and the penalty deserves to be deleted. However, the DC(A) also agreed with the findings arrived at by the CTO (FS), the officer of the respondent-Department and confirmed the penalty, so imposed.

The matter was farther challenged by the petitioner before the Rajasthan Tax Board, Ajmer, where also the aforesaid facts were reiterated. The Tax Board, after analysing the aforesaid facts also upheld the order passed by the DC(A) and the CTO (FS) and confirmed the penalty so imposed.

Hence, this revision petition.

The learned counsel for the petitioner Mr. Vivek Singhal, argued that the entire order is based on conjunctures and surmises and which cannot be made basis for such imposition of penalty. He further submitted that under the law, the statement made by the driver cannot be relied upon for coming to such a conclusion. He further pleaded that under law, the petitioner was not at all obliged to produce the records of the third party which was not under the control of the petitioner as the said concern M/s. Yogendra Trading Co. was neither related to the petitioner nor the petitioner could force the said concern to produce his record for verification by the respondent-Department. He submitted that it is not the concern of the petitioner that Yogendra Trading Company did not file any return or if the returns were filed, the turnover was shown as nil, rather he submitted that when this factum is known that Yogendra Trading Company does exist, the burden is discharged and stands shifted to the respondent to prove further, he further submitted that action if any, ought to have been taken against Yogendra Trading Company rather than penalizing the petitioner. He has relied upon the judgment rendered by this court in the case of ACTO (Flying Squad), Sri Ganganagar v. C.D. Motors, Sri Ganganagar 112 Tax Up Date Vol. 26 Part 3 and submitted that the co-ordinate Bench of this court has held that "since identity and existence of the respondent-assessee, a duly registered dealer was not in doubt, the bill in question could not be held to be false or forged merely because they showed the goods to be ST paid". He further submitted that something more has to be proved by the respondent while imposing the penalty when the goods were sales tax paid and once burden was discharged by the petitioner therefore, the penalty imposed is unjustified and deserves to be deleted.

On the other hand, Ms. Tanvi Sahai, learned counsel appearing on behalf of the respondent-Department, submitted that the vehicle was carrying forged, false and fictitious bills and on interrogation of the driver of the vehicle, by the officer he carried it to the premises of the factory of M/s. Agarwal Oil and General Mills, MIA, Alwar, from whom the oil in the tanker was filled in. She further submitted that despite repeated opportunities granted to the petitioner to produce by acceptable or other evidence as to goods having been purchased from Yogendra Trading Company the same was not done, neither confirmation was filed nor any affidavit or any other document was produced except the mere bill of Yogendra Trading Company and on the contrary, a certificate of M/s. Agarwal Oil and General Mills, MIA, Alwar was produced about non-selling of the goods to the petitioner which had no relevance at all. She submitted that the certificate/affidavit ought to have come from Yogendra Trading Co. of the sale of goods to the petitioner in support of the alleged sale. She further submitted that the Department was well within its right to ask the petitioner to produce the books of accounts of Yogendra Trading Company when the sale was doubtful. She further submitted that fair and full investigation was made by the respondent-Department and the petitioner utterly failed in discharging its burden, therefore, the penalty has rightly been imposed. She further submitted that it is not a case of conjunctures and surmises. She further submitted that the facts of the judgment relied upon by the learned counsel for the petitioner is not at all applicable to the facts and circumstances of the present case. She further submitted that on the one hand the petitioner claimed that the goods was tax-paid whereas the question of tax paid does not arise when Yogendra Trading Co. had not filed any return and if filed, the turnover was shown as nil and it has not been proved by anyone as to goods being sales tax paid. She further submitted that even at a later stage, the petitioner could not prove by acceptable or other evidence that Yogendra Trading Company did exist and had filed proper returns and paid due tax, therefore, the penalty has rightly been imposed. She further stated that no question of law arises and it is clearly a finding of fact arrived at by both the lower authorities and that no question of law arises.

I have gone through the arguments advanced by the learned counsel for the parties and perused the material on record as well as the impugned orders. I agree with the submission made by the counsel for the respondent-Department that a detailed investigation was made in this case and the penalty has rightly been imposed against the petitioner, though normally the statement of the driver of the vehicle may not be relied upon in a given case but after considering the surrounding circumstances and applying the test of human probability the version of driver in so far as the case is concerned, cannot be ignored, as when on first occasion, without having been tempted, as a lay man he (driver) took the officer of the Department to the place from where he filled the oil in the tanker and the said place belongs to the factory premises of M/s. Agarwal Oil and General Mills, MIA, Alwar and second time again he stood on his stand that oil was filled from the aforesaid factory of M/s. Agarwal Oil and General Mills, even when confronted with the fact that the partner of the petitioner asserted that the goods were purchased from Yogendra Trading Company and not M/s. Agarwal Oil and General Mills. A less literate man or a common man will not tell a lie unless tutored by someone. It is also apparent from the perusal of the findings that the purchase bills were issued by Yogendra Trading Company and the petitioner-firm was asked to lead further evidence, if any, of the goods having been purchased from Yogendra Trading Company despite repeated opportunities neither any evidence in the shape of confirmatory letter was placed before the respondent-Department nor any affidavit was filed from M/s. Yogendra Trading Company to confirm the sale of goods. It is true, that the respondent-assessee petitioner may not be required to produce the record of the third party but certainly something more was to be proved by the petitioner in the facts and circumstances of the present case. If Yogendra Trading Company did sell the goods and had issued proper bills, there was no difficulty in substantiating its claim by submitting confirmation/affidavit that the goods have been sold to the petitioner by them and that such goods are duly recorded in their books of account. It is also apparent from the perusal of the findings arrived at by the authorities on record that though Yogendra Trading Company does exist on record but whereabouts were not known and such premises were found despite spot inspection by the respondent-Department.

It is also apparent on record that even at a later stage of the proceedings, no confirmation or affidavit was filed from Yogendra Trading Co. except making submission that the goods were purchased through proper bills. Purchase of goods through a proper bill can be said to be sacrosanct but in a case like this when doubt arises, it was certainly the duty of the petitioner to prove by other acceptable modes that the alleged goods were sold to the petitioner by the said concern. I have also considered the judgment relied upon by the learned counsel for the petitioner, namely, ACTO (Flying Squad), Sri Ganganagar v. C.D. Motors, Sri Ganganagar 112 Tax Up Date Vol. 26 Part 3 viz-�-viz the facts of the present case and notice that it is distinguishable to that of present case, inasmuch as in that case it was proved by acceptable evidence and observed by court that "since identity and existence of the respondent-assessee, a duly registered dealer, was not in doubt, the bill in question could not be held to be false or forged merely because they showed the goods to be ST paid". Whereas in the present case very identity of the seller of the goods is doubtful and even it has not been proved that the goods were tax-paid.

In view of the above facts and circumstances of the case, the orders passed by the Tax Board and DC(A) appear to be just and proper and no error, illegality or perversity have been committed by the Tax Board while sustaining the penalty, the same has rightly been sustained and even otherwise, it is a case of finding of fact and no question of law is found to be involved.

Accordingly, the revision petition is dismissed. There is no order as to costs.