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2017 (1) TMI 1060 - HC - VAT and Sales TaxClandestine removal - TIN numbers mentioned in each invoices were found to be fictitious. Consignors were found non-existent - invoices were found to be fake and bogus - In the paper sheet (manifest) of the respondent, the transportation of goods is shown from U.P.B. to Chhapra or Siwan. Respondent could not prove from who they received goods and to whom they shall deliver. Whether under the facts and circumstances of the case, seizure of goods and demand of cash security for its release under Section 48 of the U.P. VAT Act, 2008 is valid? - Held that: - the goods in question originated for transportation from Ghaziabad, were being carried by the respondent in a fraudulent manner under the cover of bogus invoices with fictitious TIN numbers printed thereon. Respondents downloaded TDF-1 by submitting false information, suppressing material information, identity and particulars of real owners of the goods, so as to give it colour of transportation of the goods from outside the State of Uttar Pradesh to outside the State of Uttar Pradesh under Section 52 of the Act, with intent to evade tax under the Act. Under the circumstances, seizure of the goods under Section 48 of the Act and demand of cash security by the Mobil Squad Authority for release of the goods, does not suffer from any illegality. Whether Delhi - U.P. Border area of District Ghaziabad is "no-man's land"? - Held that: - the circular dated 31.01.1987 is non-existent. That apart, it has no relevance in view of the facts found and the constitutional provisions mentioned. Delhi - U.P. Border area of District Ghaziabad is not "no man's land" rather it is part of District Ghaziabad (U.P.). Whether transporters are strangers to the transaction of sale and purchase and totally ignorant about the consignors and consignees? - Held that: - it cannot be said that transporters are strangers to the transaction of purchases and sales and totally ignorant about the consignors and consignees. In cases like the present case where transactions have been fictitiously carried on in false names and addresses, bogus invoices with fictitious TIN numbers printed therein and TDF-1 is downloaded on the basis of false particulars and forged papers by a transporter then he makes himself party to the episode of fictitious transaction with sole purpose of evasion of tax by undisclosed non-bonafide dealers. By seizure of goods in such cases transporter is not affected if he is really a transporter. Therefore, instead of being torch bearer of dishonest persons, he should allow the real consignors or consignees to come forward and assign reasons for concealing their real identity. The action of the departmental authorities in such cases to unearth evasion of tax is one of their fundamental duties under the Act. Whether fraudulent transportation of goods and colourable devices used to give impression of transportation of goods from outside the State of U.P. to outside the State of U.P. shall fall under Section 52 or would be a case falling under Section 48 of the U.P. VAT Act, 2008? - Held that: - Once a transportation of goods under the cover of Section 52 of the Act is shown to be fraudulent, sham, bogus, circuitous or a device designed to evade tax under the Act, the statutory authorities under the Act and the court can always examine the substance of the transaction because the legislature never intends to guard fraud. No authority or court may recognise such transportation or transaction on the basis of the provisions of Section 52 of the Act. Law is manifestation of principles of justice, equity and good conscience. Hence section 52 of the Act cannot be interpreted and understood in a manner so as to encourage tax evaders and to discourage those who abide by law. Revision application allowed - decided in favor of applicants.
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