Neeru Enterprises vs Commissioner of Trade Tax

Prakash Krishna, J.—The present revision arises out of proceedings initiated against the applicant u/s 13-A(6) of the U.P. Trade Tax Act.

The counsel for the parties jointly agreed that the revision may be heard and decided finally at the admission stage itself. The learned standing counsel produced the original record of the case as directed by this Court by the order dated 4th of April, 2007 and the said record was made available for inspection to the learned Counsel for the applicant, yesterday.

The case of the applicant is that he is a registered dealer under the U.P. Trade tax Act and has purchased Mcniha from Sambhal (District Moradabad). During the course of the movement of goods from Sambhal to Rampur, the applicant made a subsequent sale in transit to one M/s. Hcma Herbs Pvt. Limited, Baddi, District Solan (Himachal Pradesh). The applicant instead of taking the I delivery of goods purchased from Sambhal party directly sold it to Solan party namely M/s. C''Heraa Herbs Pvt. Limited. The goods namely Menthjf being 1250 Kgs. was intercepted by the departmental authorities at Mohan Nagar Check post. The goods were detained on the ground that from 49 which was accompanying with the goods was not duly filled up. Proceeding u/s 13-A was initiated and ultimately a seizure order was passed directing the applicant to deposit Rs. 3,25,650/- as security for the release of said goods. An application for release u/s 13A(6) was filed before the Deputy Commissioner, Check post Mohan Nagar, Ghaziabad which was dismissed by the order dated 28l" of February, 2007. The said order was subject matter of appeal to the Trade Tax Tribunal, Ghaziabad. The appeal having been dismissed by the impugned order ''dated 13.3.2007, the present revision has been filed at the instance of the applicant dealer.

Heard Shri Ashok Kumar, the learned Counsel for the applicant and Shri B.K. Pandey, the learned standing counsel for the department. Perused original form 49 also.

The only ground for seizing the goods in question is that form 49 was not duly filled up. The defect which has been pointed out by the Department in the said form 49 as also been accepted by the tribunal is that against column No. 1 through "Speedage" was written. The deficiency is that the vehicle number was not mentioned. Column No. 2 was left blank and against column -3 bilti number was written as 8404884 which is incorrect. On the above deficiencies/error and omission, seizure order has been passed.

Section 8-A(5) of the U.P. Trade Tax Act requires that where any dealer transports any goods liable to tax, by a vehicle he shall produce prescribed for 49-A for inspection and on failure to produce the prescribed from on demand it shall be presumed : (a) that the dealer has not accounted for such goods with a view to evade payment of tax; or (b)(omitted). The contention by the department in the present case is that on account of omissions, error, a presumption that the dealer has not accounted for such goods with a view to evade payment of tax under clause (a) of section 8-A (5) is to be drawn. Rule 84-A which prescribes the form 49 reads as follows:

(1) The transport memo shall bo in Ibnn XL1X, issued by Assessing Authority.

(2) No blank form shall be issued except on payments of fee by the dealer at the rate of rupee one per form.

(3) Dealer shall duly fill the form and bifurcate it across the line just above the amount, which covers the minimum value of goods and it shall be carried along with the goods.

(4) Dealer shall keep the account of used form, reiain its remaining portion and give the details to the Assessing Authority as and when asked by him.

(5) Owner or incharge of the vehicles, shall duly fill and deliver the form, to the purchasing dealer at the time of delivery of such goods.

(6) The purchasing dealer shall retain the used form safely till the completion of assessment proceedings and shall produce it as and when demanded by the Assessing Authority.

Undoubtedly, the goods were accompanied with prescribed form 49. The said form was filed up but it was not complete in all respects. Against the column - 1 the name of the transport company was written but the vehicle number was not written. Column -2 which relates to the place ml date of loading the goods was left blank and against the column-3 wrong bilti number was written. The above facts are not disputed by the parties. The only question which falls for termination in the present revision is whether the impugned order demanding cash security or ink guarantee for a year to the tune of Rs. 3,22,650/- can be justified or not. The form 49 has jfeen enforced in the State of U.P. w.e.f. 31" of December, 2003 and for this a wide publication nrough circular was made on 30lh of January, 2004. It was also made known to the public that in case of absence of form - 49 or if the said form is found incomplete action shall be taken u/s 13A read with Section 8-A(5) of the Act. The format of form 49 is reproduced below:

TRADE TAX DEPARTMENT, UTTAR PRADESH Goods Transport Memo Form No. XLIX (See Rule 84-A under the U.P. Trade Tax Rules, 1948) (Original Copy) (Serial No.).... (To be filled in by the Trade Tax Office)

Registration No. of dealer and its date of validity....

Seal of issuing office....

Date of issue....

(To be filled in by the consignor/selling dealer)

Name and address of the consignee of goods....

...

...

Name of commodity....

Quantity of goods (No. of packages/packets)....

Weight of goods....

Value of goods (in figures) Rupees....

in words Rupees....

No. and date of bill/cash-memo/challan issued in respect of goods....

Date....

Signature dealer/representative.... (Stamps).... (To be filled in by the owner/Driver/Person incharge of the vehicle, if found unfilled goods will be seized)

Vehicle No. (in figures)....

Place from where goods loaded....

Time and date when vehicle started journey (in figures)....

(in words)....

Meter reading of vehicle at the loading place of goods....

Name and address of transport Company....

Goods receipt No. and date....

A perusal of the said form shows that it can be divided in three parts. Part - 1 is to be filled up by the Trade Tax Officer. Part - 2 is to be filled up by the consignor/selling dealer and the part -3 is to be filled up by the owner/driver/person-in-charge of the vehicle. It is not in dispute that the parts 1 and 2 contain the necessary details to connect the goods in question with the consignee of goods were filled up. To me it appears that the second part of the form 49 is its material part and if the said part is truly and correctly filled up and no discrepancy is found therein and if there is some omission or mistake in filling part-3 of form 49 it would not be of much importance, depending upon the facts and circumstances of each case. For example, if goods receipt number is wrongly filled up but other particulars such as name of the commodity, its quantity and weight and value are correctly filled up as required under part -2, the incorrect filling of column 6 of part-3 will not in any way show the bad intention of a dealer. What weight to be attached to the omission or wrong or incorrect filling of any column of part 3 should be judged in the light of columns contained in part -2 of form 49. One must remember that to err is human. For every error or omission a person cannot be penalized or held responsible. Gravity of alleged error or omission should be examined in the light of other facts and the attending circumstances of a particular case. It Is expected from the authority concerned that they will act as a prudent person and take into account all other facts which are available on the record before holding a person liable u/s 8A(5) read with. section 13-A of the Act. Rule 84-A which is relevant Rule is in the nature of procedural rule which prescribes only this much that the dealer shall fill the form and bifurcate it across the line just above the amount, which covers minimum value of the goods and it shall be carried along with the goods and the said form duly filled shali be delivered to the purchasing dealer at the time of delivery of such goods.

Apart from above, Section 8A(5) provides a presumption that the goods have not been accounted for with a view to evade payment of tax. It goes without saying that the said Bppaption is not a conclusive presumption but is a rebuttal presumption. It follows with that such praesumption shall be rebutted at the appropriate stage before the appropriate forum. Nonetheless it Egtcxpccted from the authority concerned before passing the order of seizure and demanding security to act fairly and not with a view to penalize a dealer simply on the ground that there is Borne omission or in some columns incorrect information has been furnished in part 3 of form 49 unless such omission or incorrect information has a bearing to the relevant and material facts.

The Apex Court in the case of Sodhi Transport Co. and others Vs. State of U.P. and others, has held with reference to section 28 A of U.P. Trade Tax Act that the Words "shall presume'' require the court to claim a presumption accordingly, unless fact is disapproved. They contain a rule of rebuttal presumption. The relevant paragraphs -14 and 16 of (he report arc as follows:

A presumption is not in itself evidence but only makes a prima facie case for party in whose favour it exists. It is a rule concerning evidence. It indicates the person on whom the burden of proof lies. When presumption is conclusive, it obviates the production of any other evidence to dislodge the conclusion to be drawn on proof of certain facts. But when it is rebuttable it only points out the party on whom lies the duty of going forward with evidence on the fact presumed, and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed the purpose of presumption is over. Then the evidence will determine the true nature of the fact to be established: The rules of presumption are deduced from enlightened human knowledge and experience and are drawn front the connection, relation and coincidence of facts, and circumstances.

XX XX XX XX XX XX XX XX XX XX 16. In our opinion a statutory provision which creates a rebuttable presumption as regards the j proof of a set of circumstances which would make a transaction liable to tax with the object of preventing evasion of the tax cannot be considered as conferring on the authority concerned the power to levy a tax which the Legislature cannot otherwise levy A rebuttable presumption which is clearly a rule of evidence has the effect of shifting the burden of proof and it is hard to see how it is. unconstitutional when the person concerned has the opportunity to displace the presumption by leading evidence.

The official seizing the goods has not pointed out any other defect or deficiency while passing the seizure order. The form 49 contains six columns to be filled in by the owner/driver/person-in-charge of the vehicle. Besides the aforestated three columns, it prescribes the meter reading of vehicle at the loading place of goods, name and address of the transport company, goods receipt number and date, It is not the case of the department that the remaining columns were not duly fulfilled. The defects which have been pointed in form No. 49 by the check post authorities is not of such nature to hold that the filling of the said form suffers with material irregularity. The irregularity pointed by the department in form 49 was not of such significance on account of the fact that the columns which were not correctly filled up could be verified and found out from the documents accompanying the goods. In form 49 the material facts to connect the goods with the dealer was described with sufficient accuracy. The registration number and date of Sambhal dealer was duly described. The name of the dealer from whom the goods were purchased namely M/s. Shobhit Mentha Udyog, Sambhal was described. There is no discrepancy with regard Hpue of purchase and the amount. The name of the goods namely Mentlyt was described. It Bp igned by the Manager of M/s. Shobhit Mentha Udyog.

In the case on hand the authority concerned has demanded cash security to the extent of 30% of the value of the goods in question. The maximum security which has been prescribed u/s 13-A(4) which can he demanded is not exceeding 40 per cent of the value of such goods. '' The part 2 of the said form was truly and correctly filled up and no discrepancy was pointed out therein, In this view of the matter, the demand of cash security/bank guarantee to the extent of 30 per cent of the value of the goods cannot be said to be justified. It is wholly arbitary. It is expected when a power has been conferred on authority he should act reasonably and and in a judicious manner. It is expected from an authority on whom discretionary power has been conferred to act, reasonably. In the case on hand the authority has failed to do so.

While it is true that collection of revenue is a serious matter for the State and the bounden duty of the authorities functioning under the Act is to implement the provisions of the Act, there should be safety and assurance to an honest tax payer. An honest tax payer should not be subjected to unnecessary harassment and an action not warranted in law, which can be of very serious consequence to the tax payer if is allowed to remain without correction, such harassment and brow beating of an honest tax payer will otherwise drive even such honest lax payers to become cynical and lead to a situation where tax payers will gel a feeling that paying taxes honestly is not worthwhile exercise; that the lax authorities are a menace to the society rather than simply being representatives of the State for enforcing the tax provisions (2005) 142 STC 153 Ragliavendra Sherrigar v. Assistant Commissioner of Commercial Taxes.

It may also be taken into consideration that Section 6(2) of the Central Sales Tax Act permits sale during the course of movement of goods without obtaining the delivery of the goods.

Viewed from any angle the impugned order cannot be sustained. The question as to whether the applicant has been able to rebut the presumption of law as provided for u/s 8A(5) shall be considered by the assessing authority at the time of framing final assessment. I think the interest of Revenue would served by ordering the applicant to deposit the amount equivalent to tax leviable on such goods as security. The seizure order is, therefore, modified accordingly. The seized goods shall be released forthwith on deposit of trade tax at the rate applicable in the State of U.P. on the goods in question, in cash with the department. The revision is allowed in part. No order as to costs.