TMI Blog2002 (4) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... supari to M/s. Sai Traders. It also carried Bilty No. 32348 dated January 4, 2002 of petitioner, M/s. Lalji Mulji Transport Company showing despatch of supari from M/s. Malabar Trading Company, Maloth to M/s. Sai Traders of Delhi through truck No. HR-55/5769. The said truck proceeded from Maloth, Mangalore (Karnataka) towards Delhi. The assessing authority on receiving information that the truck containing supari was being brought within the State with fake bills and bilties and, therefore, the second respondent, viz., the Assistant Commercial Taxes Officer, Ward-II, Nimbahera, intercepted and checked the petitioner's truck on January 12, 2002 at the check-post of Nimbahera. The driver of the vehicle produced documents, viz., bill dated January 4, 2002 for ₹ 5,01,600 and bilty No. 32348 dated January 4, 2002 bearing seals of transit check-post. The second respondent suspected the genuineness of the Central sales tax/L.C. number given in the bill. The driver of the vehicle was confronted with the situation. As per the say of the assessing authority, the driver-in-charge produced a fax copy of the registration certificate of M/s. Sai Traders, Delhi. The driver and the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iz., plastic scrap worth ₹ 56,160 for delivery at United Plastic Industries, Delhi. The petitioner's truck bearing No. HR 38/D-5084 was intercepted and checked by the second respondent, i.e., Assistant Commercial Taxes Officer, Pratapgarh, at the check-post Jalia Pipalia, Nimbahera. The driver of the truck, namely, Raghuvir Singh, under section 72(2) produced one bill No. 376 dated December 1, 2001 issued by M/s. N.K. Traders, Bangalore, in favour of United Plastic Industries, Delhi, pertaining to loose plastic scrap mentioning cost price as ₹ 56,160. He also produced a bilty No. 880 dated December 2, 2001 issued by M/s. Gill Sandhu Cargo Movers Pvt. Ltd. The name of the consignee was shown in the bilty as M/s. United Plastic Industries, Delhi. He also produced the challan No. 696 dated December 2, 2001 issued by M/s. Gill Sandhu Cargo Movers Private Limited bearing truck No. KA/ 32-1952 and also HR/38-5084. However, on inspection, it was found that the goods in transit was supari and not the plastic scrap as disclosed in the bills, bilties and the goods challan produced. According to the petitioner, goods, viz., supari were booked in the State of Kerala by a regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the value of the goods shown in the bill was less than the fair market price of such goods. On enquiry, it has also revealed that the value of the goods, viz., supari in the State of Rajasthan was ₹ 70 to ₹ 85 per kg., whereas in the State of Karnataka, it is ₹ 76 to ₹ 90 per kg. 3.. Though the constitutional validity of sub-section (5) of section 75 of the Act which is the soul of section 78 has been upheld by the apex Court, still in the instant petition, the petitioner has challenged the constitutional validity of sub-sections (4), (8), (10) and (11) of the Act. Mr. Vineet Kothari, learned counsel for the petitioner, submits that the rigour of certain provisions of section 78 of the Act has made a transporter suffer in the hands of the highhanded behaviour of the authorities of the Commercial Taxes Department. Thus, according to Mr. Kothari, the provisions are draconian in nature, inasmuch as the provisions are being utilised for the purpose of mopping up of additional revenue and that consequently, the penalties are imposed in situations which are totally unjustified. Relying on a decision of the apex Court in Hindustan Steel Ltd. v. Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in (1991) 10 RTJS 335. In the similar circumstances on earlier occasion also, the same petitioner was found indulging in tax evasion. It is also submitted by Mr. Lodha that by no stretch of imagination, the fake L.C. number in the bill can be said to be a bona fide clerical error. According to him, it is a very ingenious attempt to avoid payment of tax by making it appear as if it was an innocent inadvertent act. It is further submitted that the controversy raised in the instant petition is no more res integra after the decision of the apex Court in State of Rajasthan v. D.P. Metals reported in [2001] 124 STC 611; still the constitutional validity of some of the provisions has been challenged only with a view to avoid statutory alternate remedy. 5.. Before dealing with the contentions advanced, it may be apposite to refer the relevant provisions of the Act. Chapter VIII of the Act sets out provisions for inspection, search, seizure and antievasion. Section 77 deals with the power of the assessing officer or any other authority duly empowered to make entry in the place of business, inspection and seizure of accounts and goods of dealer. Section 78 deals with the inspection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of a transporting agency or person or other such bailee; (b) the goods which are being carried in a vehicle or carrier belonging to the owner of such goods; and (c) the goods which are being carried by a person. (3) Where any goods are in movement within the territory of the State of Rajasthan, an officer empowered by the State Government in this behalf may stop the vehicle or the carrier or the person carrying such goods, for inspection, at any place within his jurisdiction and the provisions of sub-section (2) shall mutatis mutandis apply. (4) Where any goods in movement, other than exempted goods are without documents, or are not supported by documents as referred to in sub-section (2), or documents produced appear false or forged, the in-charge of the check-post or the officer empowered under sub-section (3), may- (a) direct the driver or the person in-charge of the vehicle or carrier or of the goods not to part with the goods in any manner including by retransporting or rebooking, till a verification is done or an enquiry is made, which shall not take more than seven days; (b) seize the goods for reasons to be recorded in writing and shall give a receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (8) or on furnishing such security as may be directed by such in-charge or officer. (10) Where a transporter, while transporting goods, is found to be in collusion with a trader to avoid or evade tax, the in-charge of the check-post or the officer empowered under sub-section (3) shall detain the vehicle or carrier of such transporter and after affording him an opportunity of being heard and with the prior approval in writing of the Deputy Commissioner (Administration) having jurisdiction, may confiscate such vehicle or carrier. (11) If a transporter fails to give information as required from him under clause (d) of sub-section (2) about the consignor, consignee or the goods within such time as may be specified or transports the goods with forged documents, besides imposing the penalty under sub-section (5), it shall be presumed that the goods so transported have been sold in the State of Rajasthan by him and he shall be deemed to be a dealer for those goods under this Act. (12) The provisions of this Act shall, for the purpose of levy, collection and assessment of tax, determination of interest, payment and recovery of tax and interest, appeal, review or revision, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be levied without giving reasonable opportunity of being heard and holding such enquiry as the in-charge officer so empowered, may deem fit. Sub-section (6) permits a person having interest therein to get himself impleaded. The in-charge of the check-post or the officer empowered under sub-section (3) may release the goods to its owner or to anybody else authorised by him under sub-section (7) or to release the vehicle or carrier on payment of amount of penalty imposed under sub-section (8) or on furnishing such security as may be directed under sub-section (9). Sub-section (8) enables the incharge of the check-post or the officer empowered under subsection(3) to detain a vehicle carrying the goods in movement regarding which the driver or the person in-charge has been found guilty in violation of the provisions of sub section (2). This excludes the case falling under sub-section (10), i.e., the case of collusion between the transporter and the trader. This provision also enables the assessing authority to levy penalty on in-charge of the vehicle upto 30 per cent of the value of goods, but the provision is discretionary unlike sub-section (5), however such a penalty cannot be im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on any other ground. It will be profitable to extract paras 21, 22 and 23 of the judgment of the Apex court as follows: 21. The provisions of sections 22-A and 22-B of the Rajasthan Sales Tax Act, 1954, were the precursor to the present section 78 of the 1994 Act. The validity of section 22-A and other connected provisions were impugned in Writ Petition Nos. 1555-1556 of 1983 in Indian Roadways Corporation v. State of Rajasthan. By a short order dated April 23, 1986 the validity of these provisions were upheld in the following words: 'We have explained in Sodhi Transport Co. v. State of U.P. [1986] 62 STC 381 (SC); (1986) 2 SCC 486 decided on March 20, 1986, the object of establishing check-posts and introducing provisions in the sales tax law of a State which would facilitate inspection of goods which are carried from one State to another through a third State. In the above-mentioned decision we have upheld the provisions of section 28-B of the Uttar Pradesh Sales Tax Act, 1948 and the rules made thereunder. For the same reasons we uphold the provisions of sections 22-A and 22-B of the Rajasthan Sales Tax Act, 1954 and rules 61, 62, 62-A, 62-B and 63 and forms 18-A and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on July 23, 1996-Supreme Court) has been upheld which is in pari materia with section 78 of the Act of 1994. The validity of the said provision has also been examined and upheld by the Supreme Court in Gill Sandhu Haryana Transport Company v. State of Rajasthan (1991) 10 RTJS 335. Thus, in fact the entire controversy stands concluded after the decision of the Supreme Court in D.P. Metals case [2001] 124 STC 611. 9.. Be that as it may, we have given fresh look to subsections (4), (8), (10) and (11) of section 78 of the Act of 1994. Challenging the constitutional validity of section 78(4), it is contended by Mr. Kothari that the provision to detain a vehicle merely for the purpose of verification of documents for a long period of seven days is arbitrary. It is submitted that in absence of any guidelines, the provision is likely to be misused and may breed corruption. We are unable to agree with the submission of the learned counsel. Sub-section (4) of section 78 provides an outer limit for holding an enquiry in a case where the goods in movement are without documents or not supported by the documents referred to in subsection (2) or documents produced, appear false or forged. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing such security as may be directed by such in-charge or officer. Thus, we hold the subsection (8) intra vires of the Constitution. 11.. As regards sub-section (10), it is submitted by the learned counsel that while the Commissioner has not issued appropriate notification under section 80(3) of the Act for issuing of transit pass, the rigour of provisions of sub-section (10) of confiscation of vehicle is being given effect to. It appears that the learned counsel has challenged the validity of this provision only for the sake of challenge. In the instant case, this provision has not been invoked. In our view, there is nothing wrong in the provision, as this has been enacted to provide a deterrent provision to check the serious cases of evasion of tax where there is a collusion between the trader and the transporter. The Legislature has provided two safeguards firstly the opportunity of hearing to the party concerned and secondly, the approval of the Deputy Commissioner (Administration). It is wellsettled that non-arbitrariness is the essential facet of article 14 pervading the entire realm of State action. The audi alteram partem is the antithesis of arbitrariness. Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State Legislature. Thus, the plain and simple scheme of section 78 is that the vehicle passing through the State of Rajasthan carrying goods to be delivered in another State and carries the documents as referred in section 78(2) and produces at the check post or anywhere else where a person authorised ask him to do so, if it is done honestly and faithfully, there is absolutely no problem. However, if a transporter or a trader is entering into an adventurism with a view to evade tax, he must be ready to face the consequence of penalty at the rate of 30 per cent, seizure of vehicle and in aggravated case, the confiscation of the vehicle. The provisions cannot be said to be arbitrary, as they provide full opportunity of hearing to the parties affected. The Sales Tax Act also provides provision of appeal and review. The requirement of the laws is meant to be strictly construed particularly in areas of evasion of tax. We cannot lose sight of the fact that often there are attempts to avoid statutory obligation or requirement for oblique reason. An undue indulgence and leniency in favour of the tax evaders on technical or misplaced sympathetic ground leads to serious consequences a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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