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Judgment
This bunch of writ petitions under Article 226 of the Constitution of India read with Section 103 of the Constitution of J and K arises out of
common questions of facts and law and they are being disposed of by this common order.
Basic facts may be noted:
The petitioners are registered public carrier operating under a permit issued by an appropriate authority and are engaged in the business of a
carriage of goods entrusted by the consigners under a Carriage Contract for delivering to the consignees at the points of destination. They are
aggrieved by an order dated : 25.11.2000 passed by respondent No. 5 in exercise of power under Section 15A (8) (b) of the General Sales Tax
Act, 1962 (in short the Act) Through the medium of these writ petitions they are seeking a writ of mandamus praying the following reliefs:
Issuance of writ under Article 226 of the Constitution of India read with Section 103 of the constitution of Jammu and Kashmir in the nature of
Mandamus or any other appropriate writ declaring clause (b) to subsection 8 of section 15A added to subsection 8 of Section 15A by the Jammu
and Kashmir Taxation Laws Amendment Act, 2000 with effect from 3rd of April, 2000 dehors the General Sales Tax Act, 1962 in particular
section 15A thereof as well as ultravires the legislative competence, power and authority of the respondent State and as such void ab initio and
appropriate writ including writ in the nature of Mandamus declaring impugned order of penalty dated : 25th Nov. 2000 passed by the respondent
No. 3 against the petitioner ultravires the power, authority and jurisdiction vested in the respondent No. 3 under the Sales Tax Act, 1962 and an
appropriate writ including one in the nature of Certiorari quashing the impugned order of Penalty dated 25th Nov. 2000 passed by the respondent
No. 3 against the petitioner and an appropriate writ, order or direction including one in the nature of prohibition, prohibiting/restraining the
respondents from carrying into execution impugned order of penalty against the petitioner and or taking any prejudicial action against the petitioner
in pursuance or in furtherance to the impugned order of penalty dated : 25th of Nov. 2000 and such other writ, order or direction which this
Hon'ble Court deems just and proper to issue in the attendant facts and circumstances of the case.
From the nature of the relief prayed for, it will clearly appear that the sole grievance of the petitioner is to declare clause
(b) to subsection 8 of section 15A added to subsection 8 of Section 15A by the Jammu and Kashmir Taxation Laws Amendment Act, 2000 with
effect from 3rd of April, 2000 dehors the General Sales Tax Act, 1962 particularly Section 15A.
Since the core question is amendment of subsection 8 of Section 15A of the Act by inserting clause (b) by an amendment of Jammu and
Kashmir Taxation Laws (Amendment Act) No. 111 of 2000 published in the official Gazette on 3rd of April, 2000 we shall straight way refer to
the amended portion, by the aforesaid amendment clause (b) has been inserted. It reads :
b). Where a Transport Agency (by whatever name called) to whom goods are handed over an superdnama, in accordance with the rules issued
under the Act releases such goods without obtaining the release order from the competent authority, such Transport agency shall be liable to
penalty equal to double the amount of the Tax payable on such good"". (Emphasis supplied.)
It is the specific contention of Mr. R.A. Jan, learned counsel for the petitioners that the impugned clause (b) added to subsection 8 of Section
15A of the Act exfacie dehors the statutory scheme as envisaged under Section 15A of the act. Prior to amendment Section 15A of the Act reads
:
15A. Establishment of check posts and inspection of goods in transit:
If the government consider that with a view to prevent or check evasion of tax under this Act in any place or places in the state it is necessary so
to do, they may by notification in the Government Gazette, direct the setting up of the check posts, (hereinafter referred to as the 'notified area')
and erect barriers where necessary for the purpose of regulating the passage of goods across such notified area.
No person shall transport within the state across or beyond the notified area any consignment of goods exceeding such quantity or value as may
be prescribed, by any vehicle or any other mode of conveyance unless he is in possession of:
Explanation:
the term 'goods' referred to in the subsection shall not include luggage of persons who cross the notified area.
a. either a bill of sale, or delivery note or declaration or certificate of ownership containing such particulars as may be prescribed and
b. a way bill in such form and containing such particulars as may be prescribed.)
(2A). Notwithstanding the provisions of subsection (2), the government may in addition to the requirements under subsection (2), by notification
require a person importing such goods, as may be notified from time to time, to furnish such declaration and in such manner as maybe prescribed.)
(a). In any notified area or at any other place, an Officer Incharge of the area or the Commissioner or any other Officer, not below the rank of
the Inspector duly authorized by the Commissioner may require :
i). The driver or any other person incharge of the vehicle or any other conveyance, as the case may be, to stop the vehicle or conveyance and put it
stationary, as long as may be necessary, for the purpose of examining the goods under transport and other contents of the vehicle including records
relating to the goods which are in the possession of the driver or such other person.
ii). any person incharge of the godown or any other premises of transport agency, clearing or forwarding agency, other than a rail head or a post
office, to produce for inspection transport receipts, account books and other documents concerning the goods carried, transported, loaded,
unloaded, consigned or received for transport maintained in the ordinary course of business and in the prescribed manner:
b). the commissioner and any other officer referred to in clause (a) of this subsection shall for the purpose of investigation have powers to
i). search the vehicle or conveyance and the driver or other person incharge of the vehicle or conveyance;
ii). break, open any package under transport in a vehicle or found in godown or other premises of the transport agency or the clearing or
forwarding agency;
iii). examine on oath a driver or owner of the vehicle or conveyance or the person incharge of the transport agency or clearing or forwarding
agency; and
iv). seize the receipts, account books, and other documents;
Provided that before seizing shall record the reasons in writing and make an inventory of the goods seized, a copy of which shall be handed over to
the driver or owner of the vehicle or the person incharge of the transport agency or clearing or forwarding agency as the case may be. The seized
records shall be case may be. The seized records shall be impended, in the prescribed manner so long as their retention may be necessary for the
purpose of this act. (4) (a). The goods which are covered by subsection (2) whether found in vehicle or other conveyance, or godown or any other
premises of any transporter, clearing or forwarding agency, or any other place, but which are not supported by the documents supplied in said
subsection, or, if supported, such documents are fake, false or suspected to be a fake or false in respect of the particulars contained therein shall
be seized by the Officer Incharge, Notified Area or any other Officer referred to in subsection (3) after recording reasons in writing and the owner
of such goods shall be liable to penalty which shall be equal to double the amount of tax payable on such goods deeming the invoice value or
market value thereof, whichever is higher, as sale price;
Provided that the goods liable to seizure and or seized may, subject to the security furnished in prescribed form for a value equal to the amount of
maximum leviable penalty be released,
(b). No order of penalty under clause
(a). shall be made unless the affected person is given a reasonable opportunity of being heard. The goods for the value equal to the amount of
penalty or the security furnished under subsection (4), as the case may be, shall not be released unless the amount of penalty levied is paid.
(5). The officer who detained or seized the goods may release them temporarily on cash or other prescribed scrutiny being furnished by the person
concerned to the extent of the (penalty leviable) if such officer is satisfied, that it is necessary to do so in the public interest or such other
circumstances and subject to such other conditions as may be prescribed.
(6). Nothing contained in subsection (4) or subsection (5) shall apply in the case of goods transported which are exempted from tax under any of
the provisions of this Act without any condition or restriction.
(7). Nodealerorany person, including a carriage of goods or agent of a transport or booking agency on behalf of a dealer shall take delivery of, or
transport, from any vehicle or other conveyance, station, airport, or any other place, whether of similar nature or otherwise, any consignment of
goods, the sale of which is taxable under this Act, except in accordance with such conditions, as may be prescribed, with a view to ensuring that
there is no evasion of tax.
(8). The transport agency (by whatever name called) which has booked the goods referred to in subsection (4) for transport and delivery to the
consignee or to which is attached the vehicle which has carried or is carrying those goods, shall pay, by way of penalty a sum not less than 10 %
but not more than 20 % of the invoice value or the market of such goods, whichever is higher;
Provided that if the vehicle is not attached to any transport agency or the transport agency has no place of business in the state, a person deemed
to be an agent of such transport agency available in the State or the owner of the vehicle, • shall be liable to the said penalty;
Provided further before levying penalty the affected person shall ordinarily be given an opportunity of not less than seven days unless there are
reasons to be recorded in writing forgiving a shorter notice, to prove to the satisfaction of the concerned Officer that the lack of supporting
documents specified in subsection or the fakeness or the falsity thereof was not within his knowledge. A certified copy of the order of levying
penalty or dropping the proceedings shall be issued to the said person.
Explanation : the lack of supporting documents or the fakeness or falsity thereof shall be deemed to be within the knowledge of the owner of the
vehicle or conveyance if he without reasonable cause fails to comply with any of the requirements of the provisions contained in this section. (9).
Where the taxable goods are transported on behalf of an unregistered dealer, the officer incharge of the notified area check post, or any officer
authorised under subsection (3) shall detain and seize the goods, unless the dealer, the driver of the vehicle or conveyance, or any other person
incharge of the goods, furnished security in the prescribed form for an amount equal to double the amount of tax, payable on the market value or
invoice value, whichever is higher of the invoice value of such goods. The security thus furnished shall be adjusted against the tax, penalty, interest,
fee or any other sum that may be payable by such dealer under the provisions of the Act. The excess amount of security, if any, shall be refundable
in the manner laid down in this Act. The provisions relating to (detention and search of goods) contained in this section shall, in so far as may be
applicable apply under this subsection;
Provided if the said dealer fails to obtain a certificate of registration under this act within a period of 180 days from the date of deposit of security
and the assessing authority has no information in his possession that the dealer is carrying on regular business of selling taxable goods, the amount
of security deposited shall be deemed to be the tax payable by the dealer and no claim for refund of such amount or any part thereof shall be
entertained. (10). The officer referred to in subsection (9) shall maintain a register in the prescribed form containing the names and addresses of the
dealers against whom action has been taken and such other particulars as may be prescribed. He shall also furnish such information in this behalf,
as may be prescribed to the Dy. Sales Tax Commissioner having jurisdiction over the place of business of the said dealer"".
(11). If the goods seized under subsection (4) of subsection (9) are not claimed within a period of 180 days from the date of seizure or in case of
perishable goods in a lesser period as determined by the Authority making the seizure, such goods shall be sold by auction in the prescribed
manner and the sale proceeds thereof as reduced by the amount of penalty and security payable under this act besides other expenses, incurred on
unloading handling and auctioning, shall be deposited in the Treasury under appropriate Head of Account. This amount shall be refundable to the
owner of such goods on an application made in prescribed form and in prescribed manner within a period not exceeding 180 days from the date of
auction. In case no claim of ownership is made within the said period, the amount shall be fortified to the government. No interest shall accrue on
such amount.
It is the specific case of the petitioners that Section 15A prescribe statutory frame work but with regard to the grounds on which the seizure of
goods can be lawfully and validly affected and the manner and procedure required to be followed in the method of seizure in regard to the
dispossession of the goods seized. Further case of the petitioner is that Section 15A as quoted does not empower or authorize respondent No. 5
to release or handover the seized goods on superdnama to a driver or a transport agency. Mr. R.A. Jan further submits that the insertion of clause
(b) in subsection 8 of Section 15A of the Act dehors rule 40D of the rules framed for the purpose.
Counter on behalf of the respondents has been filed. The respondents recited the circumstances culminating in the amendment of the Act by
inserting clause (b) as hereunder:
It is further submitted that there was a healthy practice when the goods handedover on ""superdnama"" to any transport agency were released to the
owner of the goods only after due process of law. But with the eruption of turmoil during the last about one decade, certain unscrupulous
transporters started to release the goods, which were handedover to them for safe custody, without proper authorisation. This has not only caused
loss to the state revenue but has eroded the very system. Though under the existing system transporters cannot escape liability of the goods which
were handed over to them for safe custody on ""superdnama"" yet to make them more responsive and reasonable, the State Legislature amended
and inserted ""clause (b)1 to subsection
(8) of Section 15Aofthe J and KG.S.T. Act, 1962 whereby a transport agency has now been expressly made liable to pay penalty equal to double
the amount of Tax if such goods are released without proper authorisation. Even if this express provision had not been inserted in the act, even then
Transporters were legally bound to retain and maintain goods handed over to them for safe custody. They are legally bound to handover such
goods to the department as and when demanded. There is no explanation as to how, and why, the transport agencies or forwarding agencies can
release the goods without authorisation which they have undertaken themselves to protect and keep in safe custody while executing superdnama,
on statutory form ST31A.
It is submitted that the respondent No. 5 herein had made numerous seizures under section 15A (4) and (9) and transferred the same to the Dy.
Sales Tax Commissioner, (Vigilance and Inspections) of Kashmir and Jammu and Divisions. Some of the transport agencies in order to help
unscrupulous dealers to evade payment of tax leviable under the J and K GST Act, 1962 released the goods seized under section 15A (4) and (9)
of the J and K GST Act, 1962 without authorisation from the competent authority and without any payment of tax/penalty. Accordingly replaying
respondent No. 3 initiated action under Section 15A (8) (b) of the act, which culminated in the order under challenge. The present petition has
been filed with the sole intention to escape liability under the provisions of the Act and same is devoid of any merit and as such deserves to be
dismissed in limine.
Respondent further stated that rule 40D of the Rules quoted by the petitioners have now been amended and the Act has been subsequently
amended in tune with the amended Rules of Rule 40D and since the petitioners have not assailed amended Rule 40D the petition is not
maintainable and it is liable to be dismissed in limine. Respondents have also denied that section 15A of the Act does not empower respondent
No. 5 to hand over the goods on ""superdnama"" to the driver or transport agency.
In the facts and circumstances as adumberated above let us now examine core question. Section 15A as referred to above prior to amendment
empowers respondent No. 2 to 5 :
a. search the vehicle or conveyance and the driver or other person incharge of the vehicle or conveyance;
b. break, open any package under transport in a transport vehicle or found in godown or other premises of the transport agency or the clearing or
forwarding agency;
c. to examine on oath a driver or owner of the vehicle or conveyance or the person incharge of the transport agency or the clearing or forwarding
agency;
d. seize the receipt, account books and other documents.
As ready stated subsection (8) of Section 15A of the Act has been amended by inserting clause (b). In clause (b) the word ""superdnama"" has
been added and it further stated in accordance with the rules.
Therefore, before we advert further on this point at this stage, we may refer to Rule 40D before the amendment and after it stand amended. Rule
40D before amendment reads :
40D. Detention and seizure of goods : (a) A copy of the inventory of the goods detained or seized duly signed by the Officer detaining or seizing
the goods shall be handed over to the person incharge of goods and the signatures of such person obtained on the original inventory in token of
having received a copy thereof. Copies of the inventory shall simultaneously be forwarded to the Commissioner/ Dy. Sales Tax Commissioner of
the area in which the notified area is located and Deputy Sales Tax Commissioner of the Division in which the dealer whose goods have been
seized has his place of business or Head Office.
The aforesaid Rule 40D stand amended vide SRO 136 dated, April 4,1991, which reads :
40D. Detention and seizure of goods:
(ai) The authorized officer seizing the goods under subsection (4) or subsection (9) of Section 15A of the Act, shall prepare an inventory of the
goods seized and copy of the inventory shall be handed over to the person incharge of the goods against a proper receipt. The goods seized may
be kept in official custody or handed over to any person for safe custody against declaration from ST31A.
(aii). In case the goods are seized under subsection (4) or (9) of Section 15A of the Act in any godown or any other premises of the Transport,
clearing or forwarding agency or in any vehicle or conveyance or any other place, the goods shall be kept in official custody or handed over to the
person incharge of the godown or any other premises of the Transport clearing or forwarding agency or any other person against declaration in
form ST31A"".
Form ST31A as mentioned in amended Rule 40D is ammended in the counter of the respondents, is extracted below: Form ST31A (See Rule 40
0) 40D (ai) and (aii)
I,S/oR/o Driver vehicle No. representative of M/son behalf of the Transport Company/partner or proprietor of M/s hereby executed this
undertaking that I have taken over the goods as per the inventory annexed/covered under RG No. dated from the goods have been seized under
Section 15 (5) of the GST Act, 1962 and I undertake that these goods shall not be delivered to any person without the orders of the said.
I further undertake that these goods shall be kept under my safe custody. I shall be liable on behalf of myself/my principals/The Transport
Company for action under the provisions of the relevant law for any contravention in respect of safe custody or delivery of the goods without the
orders of the competent authority.
Executed thisday of Executant
Form St31A is nothing but in the form of a ""Superdnama""., Rule 40D as amended referred to the goods seized under subsection (4) or
subsection (9) of section 15A. Subsection (4) of Section 15A even prior to insertion of clause (b) empowers the officer to seize and after
recording the reasons in writing the owner of such goods shall be liable to penalty which shall be equal to double the amount of tax payable on such
goods. Admittedly the petitioners have not assailed the Rule 40D (ai) and (aii) of the act in this bunch of writ petitions. The word ""Superdnama
appearing in impugned amended Act of subsection, (8) of section 15A by inserting clause (b) is nothing but an undertaking not to deliver the seized
goods without obtaining written release order from the competent authority. From the impugned notice dated, 25.11.2000 it clearly appear that the
seized goods have been given to the petitioner on Superdnama in form ST31A and after issuing a notice the petitioner has been able to produce
the release order in respect of 30 seized goods but failed to produce the release order of 332 out of 362 seized goods and given to the petitioner
on ""superdnama"".
We have already noted that the word ""Superdnama"" appearing in the amended Act has already found place in form ST31A appended to the
amended Rule 40D (ai) and (aii). Counsel for the petitioner also raises question of Legislative Competence of amending rule 15A subsection (8) by
inserting clause (b) which is already quoted. We are of the clear view that the Legislative Competence cannot be questioned unless such an
amended Act or Rules are framed amended or contrary to the provisions of the statute. The main contention of the petitioner is taken in para 8 of
the petition. It reads :
The petitioner says and submits that from above extracted legal position obtaining under the Act of 1962, it is evident and manifest that nothing in
Section 15A empowers or authorises respondent No. 5 to release or handover the seized goods on ""superdnama"" to a driver or a transport
agency. This legal position is further indicated by Rule 40D of the Jammu and Kashmir General Sales Tax Rules, 1962. Rule 40D ordains thus :
40D. Detention and seizure of goods.
(a). A copy of the inventory of the goods detained or seized duly signed by the officer detaining or seizing the goods shall be handed overt the
person incharge of goods and the signatures of such person obtained on the original inventory in token of having received a copy thereof. Copies
of the inventory shall simultaneously be forwarded to the Commissioner/Dy. Sales Tax Commissioner of the area in which the dealer whose goods
have been seized has his place of business or Head Office.
We have already said that Rule 40D cannot come to the aid to the petitioners' case as the said rule relied on by the petitioner stands amended.
In the amended rule 40D, form ST31A is appended with an undertaking on ""superdnama"". Since the petitioners' have not assailed the varies of
Rule 40D as amended, no case is made out for our interference. Clauses (b) inserted by an amended Act is in consonance with form ST31A
appended to Rule 40D as amended.
The object of inserting clause (b) in subsection (8) of section 15A brought by an amendment Act is to stop of evading liabilities is clearly
demonstrated. The penalty sought to be imposed is a conditional and available only in the event of superdar failure to produce the goods which has
been placed on superdari under Rule 40D of the Rules. The appropriate government is within its power to enact law or frame rules not only to
regulate the procedure to realise the tax but also within its power to regulate procedure to stop evading of payment of tax or liabilities by
unscrupulous treaders/transporters. The impugned amendment has been enacted with a view to supplement the requirement of subsection (8) of
Section 15A in respect of consignment which has been placed on ""superdnama of transport company or any other person failed to produce in
violation of Rule 40D. Such amendment has been made by the way of effective check of evading liabilities. In other words to enforce Rule 40D of
the Rules, of the Rules, we donot see any infirmities or the same being suffered from lack of Legislative Competence.
A fascicule reading of subsection (4) and (9) of section 15A and subsection (8) (b) of section 15A as amended, alongwith Rule 40D as
amended, would clearly posits that such amendment has been brought to achieve the harmonious construction of the Act and Rules framed for the
purpose and neither dehors the Act of rules as alleged.
No other arguments have been advanced before us with regard to the legislative competence of amendment of the Act.
In the result, this bunch of writ petitions are devoid of merit and they are accordingly dismissed. Parties are asked to bear their own costs.
Interim order, if any, stands vacated.