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THE STATE OF GUJARAT Versus SUNDHA TRADERS

2016 (5) TMI 76 - GUJARAT HIGH COURT

Refund of amount paid to get the goods released - truck not stopped at the checkpost - Held that:- the powers under section 68 of the Act can be exercised at the time when the truck passes through the check-post. The same does not apply to a truck which has already crossed the check-post and has entered the State. Insofar as a truck which has already entered the State is concerned, it is the provisions of section 69 of the GVAT Act which are applicable. Under subsection (1A) of section 69 of the .....

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Consequently, the recovery of the tax and penalty from the respondent dealer for release of the goods which had been seized in the purported exercise of powers under sub-section (4) of section 68 of the GVAT Act was without any authority of law. - The Tribunal in the impugned order has held that it is the transporter’s liability under section 69(1) to obtain a transit pass from the check-post authority at the time of entry of the vehicle in the State and not of the owner and hence, whatever .....

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DHWANI, JJ. FOR THE APPELLANT : MR CHINTAN DAVE, ASSISTANT GOVERNMENT PLEADER FOR THE OPPONENT : KUNTAL A PARIKH, ADVOCATE COMMON ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Since all these appeals arise out of a common order passed by the Tribunal in Second Appeals No.45 to 48 of 2015 and the parties and facts are also common, the same were taken up for hearing together and are decided by this common order. 2. The appellant-State of Gujarat, has challenged the common order dated 9 .....

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o the owner and thereby quashing the order? (3) Whether the Hon ble Tribunal has erred in law and in facts in holding that no tax and penalty can be levied as no tax incidence arose in the State of Gujarat? 3. For the purpose of appreciating the controversy in the present case, it would be germane to cull out the facts from the record of the case. The facts are that the respondent dealer had purchased goods, namely, granite from M/s. Jee Granites and Marble Tiles of Telangana State under invoice .....

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rcial Tax Officer at Songadh Check-post, thereafter issued memos No.240 to 243 dated 1.7.2014, to the truck driver and the truck and the goods were seized on the spot. The respondent dealer being the purchaser of the goods in question was in need of the seized goods for its commercial purpose. Under the circumstances, having no other alternative, despite the absence of demand notice and an order confirming the demand under the said Act, the respondent paid the tax and penalty. After collecting t .....

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e for consideration before it was whether the liability of the transporter can be fastened upon the dealer under the provisions of section 69 of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the GVAT Act ) and held that it is the liability of the transporter to obtain transit pass and if the transporter has committed any default, the dealer cannot be held liable and, accordingly, set aside the orders passed by the first appellate authority and directed the Department to refun .....

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69 of the GVAT Act have been violated. Mr. Dave further submitted that the truck driver did not stop the truck at the check-post for verification and that but for the fact that the officers of the Anti Corruption Bureau had intercepted the truck, the respondent would have never disclosed the transaction and would have evaded payment of tax. It was submitted that merely because the respondent resides and has a place of its business at Rajasthan, is not a guarantee that the goods were not intended .....

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d that since the respondent had failed to establish that the goods were transit goods, the incidence of tax falls in Gujarat. 4.1 Referring to the provisions of section 68 of the GVAT Act, it was contended that the liability under sub-section (5) thereof is appropriately placed on the owner, as unlike section 69, section 68(5) of the GVAT Act specifically includes the owner. It was, accordingly, urged that the Tribunal has erred in holding that the liability cannot be imposed on the owner and it .....

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he GVAT Act, to submit that the liability to pay penalty under the said provision lies on the driver or the person in-charge of the vehicle and that no penalty can be imposed on the owner thereof. It was submitted that though the order passed by the Commercial Tax Officer is purported to have been passed in exercise of powers under section 68(5) of the GVAT Act, essentially the same is an order under section 69 of the GVAT Act and hence, no tax and penalty could have been levied upon the respond .....

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erence. It was submitted that the appeals, therefore, deserve to be dismissed. 6. The facts are not in dispute. The trucks in question which were carrying the goods of the respondent had crossed the Songadh Check-Post without stopping there and had been intercepted by the Anti Corruption Bureau. It appears that thereafter, the trucks were brought back to the check-post and in connection therewith the impugned order dated 7.8.2014 had been passed. It would, therefore, be pertinent to refer to the .....

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e Added Tax Act, 2003 and since the conditions of sub-sections (2) and (3) have not been satisfied, the officer-in-charge of the Check Post has formed the opinion that - (1) The vehicle had not stopped at the checkpost, and despite the fact that the goods were being transported to Rajasthan, a transit pass had not been obtained. Hence, for the purpose of further scrutiny thereof. As indicated vide the order at reference (2), the truck together with the goods has been seized under subsection (4) .....

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ion 69(1). It is compulsory to produce the bill bilty etc. documents in respect of the goods which are transported and the legal obligation to produce them before the incharge of the check-post in their correct form at the time of transport is cast upon the person in-charge of the vehicle/dealer. And in respect of the goods being transported by way of OUT TO OUT transactions, it is the responsibility of the dealer to obtain a transit pass specified by the Government in Form 405. In not doing so, .....

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sum and substance, are the contents of the order dated 7.8.2014 passed by the Commercial Tax Officer, which has given rise to the present proceedings. 8. As is evident on a plain reading of the impugned order, it has been passed in the exercise of powers under sub-section (5) of section 68 of the GVAT Act. Reference may, therefore, be made to the provisions of section 68 of the Act, which provides for inspection of goods in transit. Sub-section (2) thereof provides that at every check-post or b .....

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sses of the owner of the vehicle as well as of the consignor and consignee of such goods; and where any of the consignors or consignee is a dealer registered under the Act or the Central Sales Tax Act, 1956, the driver or any other person in-charge of the vehicle shall also give the number and place of issue of the certificate of registration, if any, of such dealer. Sub-section (3) provides for further documents which the driver or person in-charge is required to carry. Clause (b) thereof provi .....

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n of penalty in addition to tax payable under the Act after giving an opportunity of being heard to the owner, driver or person-incharge of the goods. Thus, section 68 of the GVAT Act provides for action to be taken at the time when a truck passes through the check-post or barrier set up under sub-section (1) of section 68. It is at that stage that the officer-in-charge of the check-post or barrier would call upon the driver to produce the documents which he is required to keep with him and in c .....

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the check-post, the same was intercepted by the Anti Corruption authorities and was brought back to the check-post. In the opinion of this court, the powers under section 68 of the Act can be exercised at the time when the truck passes through the check-post. The same does not apply to a truck which has already crossed the check-post and has entered the State. Insofar as a truck which has already entered the State is concerned, it is the provisions of section 69 of the GVAT Act which are applic .....

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Sub-section (2) of section 69 provides that if the driver or person-in-charge of such vehicle fails to deliver such transit pass throughout the State, he shall be liable to pay such penalty not exceeding one and a half times the amount of tax on goods carried by him as may be determined, after giving a reasonable opportunity of being heard. Thus, under subsection (1A) of section 69 of the GVAT Act, it is the liability of the driver or the person in-charge of the vehicle to pay the penalty as ma .....

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in the facts of the present case the trucks in question have entered into the State without stopping at such check-post. Therefore, the authorities under the GVAT Act would have been justified in invoking the provisions of section 69 of the GVAT Act and taking action thereunder. However, curiously, the concerned authorities have adopted a novel course of action, inasmuch as, trucks which had already crossed the check post without obtaining transit passes, had been intercepted by the Anti Corrupt .....

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intercepted at such check-post, the same can be detained and the goods can be seized under section 68(4) of the Act, but ultimately, it is at that check-post that a transit pass is required to be issued and hence, it follows as a necessary corollary that there cannot be a breach of section 69 at the stage where the truck is stopped at the first check-post after its entry into the State. Besides, for breach of the provisions of section 69 of the GVAT Act, action can be taken under that provision .....

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of section 69 of the GVAT Act but chose to resort to the provisions of section 68 thereof. The reason is not far to seek. Under sub-section (2) of section 69 of the GVAT Act, it is the driver or the person-in-charge of the vehicle who is liable to pay penalty as prescribed thereunder. Moreover, section 69 does not empower the authorities under the GVAT Act to seize the goods or detain the truck in case the driver or person-incharge of the vehicle fails to carry a transit pass. Sub-section (2) o .....

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detain the truck, the authorities would not be in a position to coerce the owner of the goods to pay the penalty levied thereunder. Therefore, it appears that the authorities under the GVAT Act with a view to circumvent the provisions of section 69 of the GVAT Act which does not permit them to seize the goods and detain the vehicle have in the purported exercise of powers under section 68(4), seized the goods and detained the trucks for breach of the provisions of section 69 thereof and thereby .....

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pressure and pays the tax and penalty demanded by the authorities under the GVAT Act despite there being no liability on his part to pay the amounts demanded. In the opinion of this court, the action taken by the authorities under the GVAT Act of seizing the goods and detaining the vehicles for breach of the provisions of section 69 of the GVAT Act in the manner described hereinabove, which is not backed by any statutory power is required to be deprecated in the strictest terms. At this stage it .....

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