The Commissioner,Commercial Tax vs Tewari Export

Sudhir Agarwal, J.—Heard Sri B.K. Pandey, learned Standing Counsel for the revisionist and Sri S.D. Singh, learned Senior Advocate assisted by Sri Rahul Agrawal, Advocate for respondents.

The following question of law was formulated to have arisen in the matter when revision was admitted on 10.03.2014:

Whether under the facts and in the circumstances of the case the Commercial Tax Tribunal was legally justified in directing for release of the goods without any security specially when it was established from the facts of the case that there is no possibility of payment of any tax in U.P. on a transaction of central sale which is taking place in U.P. from Kanpur to Kolkata?

During course of argument, however, another question has arisen and with the consent of parties they have been allowed to address the Court on the said question also, which is:

"Whether a ground not raised before Tribunal can be taken in the revision?"

Before coming to the issues, the facts, in brief, giving rise to present dispute may be noticed as under.

M/s. National Textile Corporation (hereinafter referred to as the "NTC") a Company owned by Government of India got a supply contract of certain clothing items to be supplied for National Cadet Corps (hereinafter referred to as the "NCC") for its use. The agreement was executed between the Ministry of Defence, Government of India and NTC on 29.02.2012. In furtherance of its execution of aforesaid agreement, NTC placed manufacturing order with M/s. New City of Bombay Manufacturing Mills Ltd. to make supply of requisite items and in furtherance thereof M/s. New City Bombay Manufacturing Mills Ltd. gave job work order to M/s. Liner Design Pvt. Ltd., Mumbai.

M/s. Liner Design Pvt. Ltd. also received certain further job orders from NTC and in its turn it entered into a job contract with M/s. Tewari Exports at Kanpur, respondent No. 1 to manufacture clothing items and supply directly to NCC, Directorate, West Bengal.

In discharge of its contract M/s. Tewari Export claimed to have purchased clothing items from M/s. Aditi International, Kanpur and after manufacturing clothing items on job work basis, as required, the same was sought to be supplied at NCC Directorate, West Bengal against Challan dated 21.04.2013, which accompanied the consignment.

It is contended that respondents-Unit, namely, respondents No. 1, 5 and 6 are only sub-contractors performing the job work under orders of NTC which was to be supplied to NCC Directorate. There was no sale of goods by respondents No. 1, 5 and 6 to respondent No. 4 or directly to respondent No. 3. The ready goods were handed over to M/s. National Carrying Corporation, respondent No. 2, the Transporter against G.R. No. 18306 dated 24.01.2014. The goods were inspected by Trade Tax Authorities who found that NTC was not a dealer registered in U.P. though goods were loaded from a factory at Dada Nagar, Kanpur, showing supply of goods by M/s. Tewari Exports, Kanpur but without any bilty issued by said supplier hence there was clear intention to evade Value Added Tax and Central Sales Tax.

A show cause notice was issued on 25.01.2014 by Assistant Commissioner (Trade Tax) Mobile Squad, 5th Unit, Kanpur, which was replied by all the respondents. The trade tax authorities, however, seized the goods on 31.01.2014, where against respondents preferred representation u/s 48(7) of U.P. Value Added Tax Act, 2008 (hereinafter referred to as the "Act, 2008") before Joint Commissioner (SIB) Commercial Tax, Range D, Kanpur, which was rejected on 12.02.2014. There against respondents preferred appeal before Commercial Tax Tribunal, Bench IV, Kanpur, who has allowed the same by order dated 21.02.2014. The Tribunal has directed to release goods without any security observing that there was nothing to show an intention to evade tax since all the transactions were recorded.

The question as to what issues can be looked into at the time of revision is no more res integra having answered by a Division Bench of this Court in Ganesh Brick Supply Co. Vs. The Commissioner of Sales Tax by relying on a Constitution Bench judgment in Commissioner of Income Tax, Bombay Vs. Scindia Steam Navigation Co. Ltd., and the same having been crystallized in para 11 of the judgment, I may reproduce the same as under:

When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.

When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is therefore one arising out of its order.

When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order.

When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it.

This is what has been said by Apex Court also in another decision, i.e., State of U.P. and others Vs. D.S.M. Group of Industries and others, 2003(37) STC 171. The Court has said:

"The jurisdiction of the High Court which is revisional is only limited to the question whether the order passed by the Tribunal was in accordance with law or not, when the point with regard to the applicability of the Act was not even raised before the Tribunal, the question of the High Court entertaining the same did not arise."

Whether the transaction in question constituted central sale was not the question considered by Tribunal inasmuch as goods having been seized by trade tax authorities, the Tribunal considered the question, whether seizure of goods was justified and there was any material to show that there was an attempt to evade tax or not and demand of security for release of goods was justified or not.

These are the only questions which were raised before Tribunal and have been answered. Rest of the issues can be looked into at regular proceedings and not at this stage. Therefore, I find no reason to look into any other aspects of the matter. I confine myself to consider, whether seizure of goods and demand of security for release of goods is justified or not and the order of Tribunal is justified or not.

In this regard, the Tribunal has recorded a finding of fact that all the entries regarding agreements, job work, etc. have been entered in various records and after perusal thereof it has recorded its satisfaction in this regard. The aforesaid satisfaction shown by Tribunal is not shown perverse or contrary to material on record. This is a finding of fact. I am not inclined to interfere with the same unless the same is shown perverse or contrary to material on record. That being so, the Tribunal has rightly found that all the entries are recorded and there was no intention to evade tax. In absence of anything to assail the above findings, it cannot be said that the order of Tribunal is not in accordance with law.

In view thereof, the questions raised in this revision, are answered against Revenue. The revision is hereby dismissed.

No costs.