New Indore Delhi Road Lines vs Commissioner of Commercial Tax

Pankaj Mithal, J.—The instant revision u/s 58 of the U.P. Value Added Tax Act, 2008 (hereinafter referred to as, "the Act") has been filed by the transporter of the goods challenging the order of seizure dated March 5, 2012, rejection of its representation u/s 48(7) of the Act by the Joint Commissioner (SIB/Enforcement) vide order dated March 29, 2012 and the dismissal of its appeal by the Commissioner, Commercial Tax, Tribunal vide order dated April 4, 2012. The revisionist was carrying goods by a motor vehicle, i.e., truck from Delhi to Nagpur and in so carrying the goods it had to pass from the State of U.P. Accordingly, as prescribed by section 52 of the Act, rule 58 of the Rules framed under the Act and the departmental circular dated July 30, 2009, the revisionist while entering the State of U.P. on February 13, 2012 downloaded a transit declaration form from the official website of the Department and after duly filling the same proceeded for onward journey when he was intercepted and detained by the Revenue authorities on February 13, 2012 itself. In the transit declaration form the revisionist declared that it is carrying goods in 119 packages from Delhi to Nagpur against proper bilties and bills, it would enter the State of U.P. on February 13, 2012 at Kotwan and would exit from the State at Saiyan on February 16, 2012, after passing through Mathura and Agra. The goods were ultimately seized vide order dated March 5, 2012 on the grounds that sellers and purchasers are not genuine and the goods do not tally with the description contained in the transit declaration form or the other documents accompanying the goods.

I have heard Sri M.M. Rai, learned counsel for the revisionist and Sri B.K. Pandey, learned standing counsel for the Department.

Since the matter relates to the seizure and no other documents are required to be brought on record and the facts have clearly been stated in the impugned orders, they agree for the final disposal of the revision at the threshold.

Sri Rai, learned counsel for the revisionist has argued that the goods seized were fully covered by the invoice bilties and the transit declaration form and the discrepancy that some items were short and some were in excess is based only on account of the fact that the verification was done item wise whereas the goods were in packages. Actually, there is no discrepancy in this regard. Secondly, he has submitted that the genuineness of the dealers is not relevant for passing the seizure order. In the absence of any positive evidence that the goods were unloaded inside the State of U.P. and that some new goods were loaded the seizure on presumption that the goods are meant for sale in U.P. when they were duly covered by the requisite documents is wholly illegal.

Sri B.K. Pandey in reply to the above submission has submitted that the Tribunal has recorded a clear finding that the selling dealers mentioned on the bills on inquiry were found to be non-existence and that on verification 84 packages contained conduit pipes which were not declared in any of the bills and bilties.

It may be relevant to note that seizure of the goods in transit through U.P. can be made only on the grounds mentioned u/s 48 of the Act and the presumption that the goods are meant for sale in U.P. would only be available when they are not accompanied by the requisite documents, i.e., bills and bilties and the transit declaration form.

It is not the case of the Department that the goods were not accompanied by the relevant bills, bilties and transit declaration form. It is not even the case that the goods have entered from the wrong place or were likely to be taken out from a different place or was not following the disclosed route as contained in the transit declaration form. There is no whisper that the goods have overstayed in U.P., which may be a reason for the authorities to believe that they were meant for sale in U.P.

The object of providing safeguards or the transit declaration form in connection with the goods in transit through the State of U.P., is to ensure that the goods which enter the State passes out of U.P., and are not sold inside so as to evade payment of tax.

In the light of the above purpose, the existence of the selling and purchasing dealers or their non-registration in their respective States would not be a material and a valid ground for seizing the goods.

A Division Bench of this court in Saiya Transport Pvt. Limited v. State of U.P. (2006) UPTC 967 while considering a similar provision of section 28B of the U.P. Trade Tax Act, 1948 concerning seizure of goods in transit held that genuineness of consignor and consignee and their registration under the taxing statute is not relevant for the purposes of seizing the goods.

A similar view was taken by this court in the case of New Mahavir Transport Company of Bharat Vs. Commissioner, Commercial Tax, .

Thus, applying the above principle, I am of the opinion that the seizure of the goods in the case at hand on the ground that the dealers are non-existing is bad in law.

Now coming to the second aspect whether the goods were covered by the documents, it may be reiterated that the finding is that there were conduit pipes in 84 packages. This is said to be factually incorrect. It has been explained that conduit pipes cannot be transported in small packages or packets. In fact the packages contained PVC bends. The explanation appears to be reasonable and logical and the Department have incorrectly described the PVC bends as conduit pipes.

The transit declaration form clearly mentions that consignment in transit contained 119 packages. There is no finding that the above 119 packages were not found in the vehicle or that there was extra packages or that the packages were broken and new material was placed or the material therein had been replaced.

In the case of Madhya Bharat Transport Carrier Vs. Commissioner of Trade Tax, , his Lordship of this court while considering the provision of section 28-B of the U.P. Trade Tax Act relating to seizure of goods opined that if in the relevant form the goods have been described package-wise then verification cannot be done. It is on the basis of pieces available inside the packages.

In view of the above, as no discrepancy in the packages referred to in the documents was found, it cannot be said that the goods were not covered by the relevant documents. The verification on the basis of pieces inside the packages is permissible only when a finding is returned that the packages have been broken and the goods have been replaced.

In addition to the above, it has been emphasised that goods are not liable to be seized when the time for exit disclosed in the transit declaration form has not expired. In support reliance has been placed upon Madhya Bharat Transport Carrier Vs. Commissioner of Trade Tax, , wherein it has been held that prior to expiry of time for exit from the State the goods cannot be seized.

Admittedly, in the present case the goods were seized immediately on their entry in the State of U.P. without allowing the time for its exit to expire. In such situation, it is wrong to presume that the goods have been retained in U.P. for the purposes of sale. Apart from the above, as the goods were duly accompanied by the requisite documents, no presumption arises under law that they were likely to be sold within the State of U.P.

In view of the totality of the above circumstances, I find that the authorities were not justified in passing the order of seizure and the higher authorities committed jurisdictional error in rejecting the representation and appeal of the revisionist.

Accordingly, I allow the revision, set aside the orders dated April 4, 2012 passed by the Commissioner, Trade Tax Tribunal, March 29, 2012 passed by the Joint Commissioner (SIB/Enforcement) and seizure order dated March 5, 2012 passed by the'' Assistant Commissioner, Mobile squad Mathura. The authorities are directed to release the goods forthwith without any security. Revision is allowed but with no orders as to costs.