Rions India vs State of Punjab and Others

Hemant Gupta, J.—This order shall dispose of three petitions, bearing C.W.P. No. 4621 of 2013, C W. P. No. 4634 of 2013 and C.W.P. No. 5748 of 2013 raising identical questions of law and facts. For facility of reference, the facts are being taken from C.W.P. No. 4621 of 2013. The petitioner is a dealer registered under the Delhi Value Added Tax Act and as also under the Central Sales Tax Act, 1956. The petitioner received an order from Guru Nanak Dev University, Amritsar, for supply of water purifiers. Such purchase orders dated February 12, 2013 and February 21, 2013 have been appended with the writ petition as annexure P1. The petitioner sent goods on free on rail (f.o.r.) basis and has charged full rate of Central sales tax at 12.5 percent. The goods were sent through truck No. HR55L-0596 and GR No. 50579 of Capital Transport Company, New Delhi. The truck reached Information Collection Centre (ICC), Shambu on February 27, 2013 for giving information as per the statutory requirement u/s 51 of the Punjab Value Added Tax Act, 2005, but the goods were detained and notice was issued for March 2, 2013.

The grievance of the petitioner is that the goods were detained though the goods under transport were during the inter-State sale on charging of Central sales tax but the payment was to be received after delivery of goods. Therefore, the authorities under the VAT Act had no jurisdiction to detain the goods and the vehicle except for the purpose of verification of the genuineness of the documents. The detention of the goods from February 27, 2013 till today has caused extensive loss to the petitioner not only on account of demurrage and detention of the truck but also for non-delivery of the goods to the university which was in time-bound manner.

In reply filed on behalf of the official respondents through Shri S.S. Bangar, Assistant Excise and Taxation Commissioner, it has been pointed out that the goods were routed through Vicky Scientific Company, Amritsar to Guru Nanak Dev University and that the order for the said goods have been received by the petitioner from the said Vicky Scientific Company. The statement of in-charge of the goods was recorded which has been produced as annexure R1. From the said statement, it has been sought to be inferred that there exist serious suspicion regarding the genuineness of the documents under transaction and that the petitioner is trying to camouflage an inter-State sale of goods meant for trade between a registered dealer of Delhi and Punjab by disguising the same in the shape of an inter-State sales of goods between a registered dealer at Delhi and an unregistered person in Punjab of goods not meant for trade. Thus, the goods along with vehicle were detained u/s 51(6)(a)(b) of the Punjab Value Added Tax Act, 2005 (for short, "the Punjab VAT Act") by the detaining officer. Reliance is also made to the statement of the proprietor recorded on February 28, 2013 that the goods are on f.o.r. basis and he is the owner of goods as no payment has been received by him regarding the said goods from the consignee. Thus, the goods were still the property of the petitioner. It is thus inferred that the prima facie case of attempt to evade the tax by concealing the transaction between the petitioner and the Vicky Scientific Company and by carrying business in the State of Punjab in violation of section 51 of the Punjab VAT Act, is made out.

Mr. Jhingan has pointed out that Mr. S.S. Bangar, who was impleaded as respondent No. 4 has been taking similar actions earlier which were commented adversely even in the year 2000 in C.W.P. No. 4288 of 2000 (Rachna Steel Corporation, Mandi Gobindgarh v. State of Punjab), decided on April 27, 2000; C.W.P. No. 2432 of 2000 and C.W.P. No. 2437 of 2000 (Varinder Kumar & Co., Khanna v. State of Punjab), decided on September 21, 2000; C.W.P. No. 6859 of 2007 Osaw Agro Industries Pvt. Ltd. Vs. State of Punjab and Others, , decided on August 6, 2007 as well as C.W.P. No. 14386 of 2011 (Azad Pipes Pvt. Ltd. v. State of Punjab and others), decided on August 12, 2011. In all these cases, it was Mr. Ban-gar-respondent No. 4, who was instrumental in detention of goods in similar circumstances and in each case, costs were imposed upon this officer personally and now he has again detained the goods in the present three cases. On the basis of the said argument, we called upon Mr. Bangar, respondent No. 4 to file his affidavit. Mr. Bangar has filed a short affidavit pointing out that the goods were detained by Mr. J. S. Waraich and that he has not passed any order and he had no role to play on the stage of detaining of goods.

We have heard learned counsel for the parties and Mr. Bangar, who appeared in person and find that action of Mr. Bangar is wholly unwarranted, perverse and smacks of mala fides. The documents produced by the petitioner shows that the goods have moved from Delhi on the basis of invoice, annexure P2, the net price is f.o.r. destination.

Ms. Radhika Suri, learned State Counsel, fairly admitted that receipt of price is not a pre-condition for movement of goods from the consignor to consignee in the course of inter-State sales. In fact, the definition of "sale" relied upon by Mr. Bangar contained in section 2(g) of the Central Sales Tax Act, 1956 itself contemplates that the sale with its grammatical variations and expressions means, transfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration.

The statement recorded by the detaining officer is to the effect that the order was provided to the petitioner by Vicky Scientific Company. If the order has been facilitated by Vicky Scientific Company, the said facilitator will not become purchaser of the goods. The movement of goods from the documents produced is from seller to purchaser as if the goods were sent from consignor to consignee, i.e.; the university. The pre-payment of price is not a condition of sale. Therefore, since no price was received, is not a ground to infer that it is not an inter-State sale.

The Division Bench judgment in Osaw Agro Industries Pvt. Ltd. Vs. State of Punjab and Others, , referred by learned counsel for the petitioner deals with the tests for inter-State sale. The counsel also relies upon the Supreme Court''s judgment reported as Union of India (UOI) and Another Vs. K.G. Khosla and Co. Ltd. and Others, State of A.P. Vs. National Thermal Power Corporation Ltd. and Others, and also the latest judgment of a Division Bench of this court in STR No. 2 of 1991 Punjab State Vs. Dada Motor Garage, decided on February 13, 2009. The courts have held that there are three tests to determine whether it is an inter-State sale or not in terms of section 3 of the Central Sales Tax Act. The tests are; firstly the movement of goods from one State to another; secondly, the sale is effected by transfer of documents of title to the goods and thirdly, such movement of goods must be from one State to another, where the sale concludes.

The said tests were taken into consideration by a Division Bench of this court in Osaw Agro Industries Pvt. Ltd. Vs. State of Punjab and Others, and Punjab State Vs. Dada Motor Garage, ) and held that the sale is in the course of inter-State sale.

10 In view of the tests laid down in the aforesaid judgment, we find that three tests are satisfied in the present case as well. Annexure P1 is the order placed by Guru Nanak Dev University, a statutory incorporated university placing order on the petitioner for purchase of certain goods. Annexure P2 is the invoice of sale of such goods. The suspicion is not on the genuineness of the documents, but on the ground that the order was facilitated by Vicky Scientific Company and that the price has not been received. Both the reasons to say the least are not available to return a finding that it is not a case of inter-State sale. The order for purchase can be directly placed by the university as alleged by the petitioner or through the medium of another person as stated by the State. In either case, the nature of transaction does not ceases to be in the course of inter-State sale.

We find that the first adverse comment was given against Mr. Bangar by the Division Bench in Rachna Steel Corporation''s case C.W.P. No. 4288 of 2000 on April 27, 2000 when it was observed as under:

We are amazed at the stand taken by the Excise and Taxation Officer. The power to impose penalty, if any or take any other action against the petitioner is, of course, with the Assistant Excise and Taxation Commissioner but in terms of sub-section (6)(i) of section 14B of the Act under which the goods have been detained, it is the duty of the detaining officer to release the goods if the consignor or consignee furnishes security or executes a bond with sureties in the prescribed manner. When the petitioner furnished a bond with sureties there was no reason why Shri Banger did not release the goods as under the statute he alone was duty-bound to release them no matter where the file was. The petitioner states that this officer keeps harassing the transporters at the barrier and detains goods some times on flimsy grounds and refuses to release them even when security is furnished. Similar allegations have been made against this officer in some other cases as well which are still pending before us. Without expressing any opinion on the merits of those cases, we cannot resist in observing that the excuse given by this officer in this case cannot be accepted and his conduct justified. The plea that the file was not with him appears to be more of a mode to harass the petitioner. We, therefore, allow this writ petition and direct the respondents to release the goods forthwith. Since the goods and the vehicle were detained even after the petitioner executed a bond with sureties, we direct respondent No. 2 to pay by way of compensation a sum of Rs. 10,000 to the petitioner. This amount shall be paid by Shri Banger personally and shall not be debited to the State account. The petitioner will also be entitled to have his costs which are assessed at Rs. 2,000.

Thereafter, in Varinder Kumar''s case C.W.P. Nos. 2432 and 2437 of 2000, decided on September 21, 2000, it has been observed as under:

The learned Deputy Advocate-General conceded that the action of Shri S.S. Bangar not to release the vehicles despite the directions given by the court was not justified but, at the same time, he pleaded that the officer concerned cannot be said to have acted with any ulterior motive. He also stated that in view of the critical observations made by the court, the officer concerned has been transferred.

In Osaw Agro Industries Pvt. Ltd. Vs. State of Punjab and Others, it has been held as under:

For the reasons stated above, this petition succeeds. The notice dated May 2, 2007 (annexure P4) is quashed and respondents are saddled with costs of Rs. 10,000 which initially shall be paid by the respondent-State to the petitioner. In view of the fact that the Excise and Taxation Officer, respondent No. 2, is not impleaded in person we direct the respondent-State to hold an enquiry and the costs of Rs. 10,000 be recovered personally from the officer who may be found guilty for having committed the lapse of detaining the goods. The enquiry shall be undertaken without any loss of time and can be completed within a period of two months from the date of receipt of certified copy of this order. It is needless to observe that the bank guarantee furnished by the petitioner shall be released immediately.

In Azad Pipes Pvt. Ltd.''s case C.W.P. No. 14386 of 2011, decided on August 12, 2011, the following observations have been made:

After considering the contentions raised by learned counsel for the parties, in our opinion, considering the conduct of the officer, who dealt with the case of the petitioner in the manner which was indefeasible and the State had to ultimately concede the relief prayed for, the officer deserves to be burdened with costs of Rs. 25,000. The amount shall initially be paid by the State, however, the same shall be recovered from the officer.

The common thread in all these judgments is Mr. S.S. Bangar. The officer has not learnt any lesson in the last thirteen years as the costs were imposed for the first time in the year 2000. Though, the affidavit filed by him is that he has not detained the goods but the fact remains that in reply filed by Mr. Bangar for and on behalf of the State, he has given wholly untenable reasons to detain goods. Therefore, we have no option but to allow the present petition with costs of Rs. 50,000 in each case, to be paid by Mr. Bangar personally within two months. It is further directed that the respondents shall release the goods and the vehicle forthwith.

Apart from the costs, the respondent No. 4-Mr. S.S. Bangar shall pay the demurrage charges which according to Mr. Jhingan is at Rs. 1,500 per day from the date of detention till the date of its realisation within two months. We direct the Excise and Taxation Commissioner not to post this officer against any post dealing with road-side checking directly or indirectly for the purpose of verification of goods and shall also initiate disciplinary proceedings against the officer for consistently acting in violation of the finding recorded and the law.