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2017 (1) TMI 1381

Evasion of the duty - Seizure - Invoices are fictitious - No registration under VAT - Held that: - Facts of the present case as noted above, leave no manner of doubt that the alleged invoices accompanying the goods are fake, the TIN numbers printed therein are fictitious, the alleged consignors are non-existent and identity of real owners of the goods have been concealed by the respondents with only motive to evade tax under the Act or to help undisclosed persons to evade tax. - Once a trans .....

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nded to be sold within the State of U.P. with intent to evade tax then it would be a case falling under Section 48 of the Act - Decided against the assessee. - Sales/Trade Tax Revision No. 460 of 2016 - Dated:- 9-1-2017 - Surya Prakash Kesarwani, J. Counsel for Applicant : Bipin Kumar Pandey ORDER 1. Heard Sri B.K. Pandey, learned standing counsel for the applicants and Sri Suyash Agarwal, learned counsel for the respondent. This revision was initially heard on 29.11.2016 and it was admitted. Fa .....

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n under proviso to Section 48(7) of the Act before the Joint Commissioner (SIB), Commercial Tax, Range Barellie in which he took the stand that the goods were being transported from transshipment area at Delhi-U.P. Border. The same were accompanied with TDF-1, bills, bilties and weighment slip. The respondent also took the stand that transporter has no right to collect information about the consignor and whosoever books the goods, the same is transported by him for the given destination where th .....

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fake and bogus in enquiry and the alleged sellers were found non-existent. Only two invoices which were with respect to exempted goods were found to be genuine. TIN numbers of the alleged sellers printed in the aforesaid 74 invoices were also found to be forged and fake. Entire action of the respondent was fraudulent. As per transit declaration form, the purchasers are unregistered as TIN No. of none of the purchasers have been disclosed either in the transit declaration form or in the fake invo .....

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er and is engaged merely in transportation of goods. He used to collect goods of dealers and brings it at its branch at Chikambarpur, Ghaziabad at the Ghaziabad-Delhi Border which is known as transshipment area. From there goods are loaded in trucks for transportation to its destination after weighment. He submits that in the present case, the respondent has booked the goods of various dealers for transportation from Delhi to Siliguri (West Bengal). He submits that as per circular of the Commiss .....

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uad authority committed a manifest error in seizing the goods and demanding security which has been lawfully set aside by the Tribunal. Section 52 of the VAT Act is not relevant in view of the judgment of this court in the case of Madhya Bharat Transport Carrier, Gwalior Vs. Commissioner of Trade Tax, 2003 U.P.T.C.-1218, New Indore Delhi Road Lines Vs. Commissioner of Commercial Tax, U.P. Lucknow, 2012 NTN (Vol.49)-19, Saiya Transport Pvt. Ltd. Vs. State of U.P. and others, 2006 U.P.T.C.-967, Co .....

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all under Section 52 or would be a case falling under Section 48 of the U.P. VAT Act, 2008? Relevant Provisions: U.P. VAT Act, 2008: Section 46 . Power of search, inspection and seizure in case of a person other than dealer:- Where a person carries on any activity ancillary or incidental to or in connection with business of a dealer, any officer authorized under subsection (1) of section 45, for the purpose of investigation into tax liability of a dealer, subject to provision of sub-section (11) .....

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ch officer has reason to believe to belong to the dealer and which are found in any place of business, vehicle, vessel or any other building or place, but are not account for by the dealer in his accounts, registers or other documents maintained in the ordinary course of his business. (iii) which are found in any place of business, vehicle, vessel or any other building or place, and such goods are accompanied by any tax invoice or sale invoice or any other document pertaining to value of goods, .....

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ion to such seizure. (3) An officer seizing the goods under sub-section (1) shall take all the measures necessary for their safe custody and forward the list, referred to in the proviso to sub-section (1), along with other documents relating to the seizure to the assessing authority concerned. (4) The said assessing authority shall serve on the dealer or, as the case may be, the person in charge of the goods at the time of seizure (hereinafter in this section referred to as the person in charge) .....

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under sub-section (5) shall be served on the dealer or, as the case may be, the person in charge. (7) The officer seizing the goods shall serve on the dealer or, as the case may be, the person in charge an order in writing mentioning the fact of such seizure and indicating the amount, not exceeding such amount as would be sufficient to cover the penalty likely to be imposed, on deposit whereof in cash, the goods so seized may be released in favour of the dealer or, as the case may be, the perso .....

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the sale proceeds thereof towards the penalty imposed, and subject to the provisions of section 40, refund the balance, if any, to the dealer or, as the case may be, to the person-in charge. (9) Where the officer seizing the goods, before forwarding the list and other documents referred to in sub-section (3), or the assessing authority at any time thereafter, is of the opinion that the goods are subject to speedy and natural decay or where the tax assessed or penalty imposed, as the case may be .....

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vehicle coming from any place outside the State and bound for any other place outside the State carrying goods referred to in sub-section (1) of section 50, passes through the State, the driver or other person in charge of such vehicle shall carry such documents as may be prescribed failing which it shall be presumed that the goods carried thereby are meant for sale within the State by the owner or person in charge of the vehicle. U.P. VAT RULES, 2008: Rule 58. The transit of goods by road throu .....

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al and duplicate portions of the declaration or certificate as the case may be duly filled in and signed by him to the assessing authority within whose territorial jurisdiction he carries on business or, if he does not carry on business, ordinarily resides. (2) The assessing authority to whom a declaration or certificate is submitted for endorsement shall, after satisfying himself about their correctness and completeness, sign and stamp with his official seal, retain the original portion of the .....

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sub-rule (1). (5) The commissioner may from time to time issue instructions with regard to the procedure to be followed regarding taking of delivery of goods and submission of declaration or certificate. Section 165 of Indian Evidence Act 165. The Judge may, in order to discover or to obtain proper proof of relevant facts, ask any question he pleases, in any form, at any time, of any witness, or of the parties, about any fact relevant or irrelevant; and may order the production of any document o .....

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zure of goods and demand of cash security for its release under Section 48 of the U.P. VAT Act, 2008 is valid? 6. Perusal of the record shows that on 27.09.2016, a truck bearing Registration No.UP22T/4924 was intercepted by the Assistant Commissioner, Commercial Tax, Mobile Squad Pilibhit. The driver of the truck was required to produce the documents. The authorities also intended to make physical verification of the goods and for that, time was fixed at 10.30 A.M. on the next day i.e. 28.09.201 .....

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ation as to when the owner of the goods or respondent-transporter shall come and the driver has gone leaving him and therefore, the goods cannot be checked. Ultimately on 05.10.2016, when neither respondents nor the owner of the goods turned up then the authorities recorded statement of one Sri Tahir, who was Khalasi of the truck. He stated that the driver of the truck and the helper, both have gone and he shall open the truck only when they come. On 06.10.2016, he took Mobile No.9412191336 of t .....

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Kayyum whereby the respondents authorized him as their representative for checking of the goods. Thus, the respondents and actual owner of goods did not deliberately turn up for 12 days for physical verification of the goods loaded in the truck in question. On 09.10.2016, the driver as well as the helper, namely Sri Saddam Hussain and Sri Kayyum appeared for physical verification of the goods. They produced weighment slip bearing Serial No.1950 dated 25.09.2016 of M/s Mahabir Dharm Kanta G.T. R .....

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By notice dated 09.10.2016, No.134 under Section 48 of the U.P. VAT Act, 2008 (hereinafter referred to as 'the Act'), the Assistant Commissioner (Office In-charge), Commercial Tax, Mobile Squad Authority, Pilibhit required the respondents/person in-charge of the vehicle to submit reply and to appear with evidences and show cause why goods be not seized under Section 48 of the Act. The date was fixed for 14.10.2016. The aforesaid notice was duly received by the driver as well as the help .....

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und to be fictitious. 9. The invoices accompanying the goods loaded in the truck inquestion as found with the truck are available in the records of the Mobile Squad Authority which has been produced before the court. The court perused the invoices and found that in none of the invoices, addresses of the consignees have been given. Merely Siliguri has been mentioned in the invoices. All the aforesaid fake invoices bear name of firms showing some addresses of Delhi which all were found to be untra .....

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before the Joint Commissioner (SIB), Commercial Tax, Bareilly, Zone-B, Bareilly, who passed a detailed order dated 02.11.2016. He examined each and every paper, the inquiry report etc. and noted details of 62 alleged consignors who were not found in existence and their TIN numbers as mentioned in the invoices were found to be forged. The goods mentioned in the bilties were different. He mentioned details of invoices with respect to two alleged consignors and TIN numbers which were also found for .....

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The aforesaid findings of the Tribunal are not only baseless and perverse but also in conflict with the evidences on record. It is undisputed that the goods were loaded from Ghaziabad and, thereafter, TDF was downloaded whereas TDF is required to be downloaded before entry of goods within State of U.P. That apart, the invoices accompanying the goods were found to be forged and TIN numbers mentioned therein were fictitious. The name of dealers mentioned therein were found to be non-existent. Doc .....

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he court to the respondents as recorded in the order of this court dated 09.12.2016 which were answered as under: (a) Question (i): Whether there is any branch or office or contact address of the respondent at Ghaziabad (U.P.) and Siliguri (West Bengal)? Answer (i):- It is not relevant for transportation and delivery of the goods. (b) Question (ii):- When goods of 76 invoices relating to different alleged purchasers showing their address merely as 'Siliguri' are being transported by the .....

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om the facts as afore-noted, it is evident that from own applications of persons In-charge of the vehicles moved on 29.09.2016, 30.09.2016, 01.10.2016, 02.10.2016, 03.10.2016, 07.10.2016, 08.10.2016 and the statement of the driver of the truck, Sri Kayyum dated 06.10.2016 before the Mobile Squad Authority that the goods shall be allowed to be checked in the presence of the owners of the goods who are coming. However, owners of the goods had not turned up rather respondents persuaded the matter o .....

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of U.P. to outside the State of U.P. 15. In view of the above discussion, prima facie I have no difficulty to hold 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 .....

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ircular of the Commissioner Sales Tax dated 31.01.1987 was issued in view of Establishment of Check Posts under the U.P. Sales Tax Act, 1948. Section 49 of the U.P. VAT Act provides for establishment of check posts and barriers but this provision has been omitted w.e.f. 27.08.2009 by the U.P. VAT (III Amendment) Act, 2009, (U.P. Act No.23 of 2009) published in the notification dated 27.08.2009. In the case of Om Logistic Ltd. Vs. Commissioner of Commercial Tax, 2016 NTN (V.61) 250 (All.), this c .....

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which is reproduced below: 18. Thus, 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 above. Delhi - U.P. Border area of District Ghaziabad is not no man's land rather it is part of District Ghaziabad (U.P.). Question No.(iii) Whether transporters are strangers to the transaction of sale and purchase and totally ignorant about the consignors and consignees? 19. Before the authorities and the .....

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classifications vis-a-vis transportation of such goods in and outside the State making themselves party to the episode of such fictitious transactions for the sole purpose of evasion of tax by the dealers purchasing and selling such goods. 20. The activity of transporter or any other carrier, forwarding agent, person who holds any goods belonging to a dealer and person who handles goods of a dealer in any other capacity; have also been statutorily recognised under section 46 of the Act to be an .....

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lse 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 .....

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IR 1959 SC 270; CIT v. Vadilal Lallubhai (1973) 3 SCC 17 and the views expressed by Viscount Simon in Latilla v. IRC, (1943) AC 377 : 25 TC 107 (HL) stated as follows: (McDowell and Co. Ltd. V. CTO, (1985) 3 SCC 230, SCC pp.254-55, para 45) "45. Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that is honourable to avoid the payment of tax by resorting to dubious .....

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s, JT 2000(3)SC.151, considering the consequences of fraud, Hon'ble Supreme Court held in paragraph 3 as under : "Fraud and justice never dwell together". (Frans et jus nunquam cohabitant) is a pristine maxim which has never lost its temper overall these centuries. Lord Denning observed in a language without equivocation that "no judegment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud, for fraud unravels everything"(Lazarus Es .....

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ing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. 25. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res-judicata. 37. It will bear re .....

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t for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He .....

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ed. 29.3 When appointment was procured by a person on the basis of forged documents, it would amount to misrepresentation and fraud on the employer and, therefore, it would create no equity in his favour or any estoppel against the employer while resorting to termination without holding any inquiry. 29.4 A candidate having suppressed material information and/or giving false information cannot claim right to continue in service and the employer, having regard to the nature of employment as well a .....

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ial information or making false statement relating to his involvement in the criminal case, conviction or detention, even if ultimately he was acquitted of the said case, inasmuch as such a situation would make a person undesirable or unsuitable for the post. 29.9 An employee in the uniformed service pre-supposes a higher level of integrity as such a person is expected to uphold the law and on the contrary such a service born in deceit and subterfuge cannot be tolerated. 29.10The authorities ent .....

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the Act or to help undisclosed persons to evade tax. It is a clear case of fraud, misrepresentation and suppression of facts by the respondents. This court cannot act to protect perpetuation of legal fraud. The courts are obliged to do justice. Fraud and justice never dwell together (Frans Et Jus Nunquam Cohabitant). This maxim has never lost its temper over all the centuries. The courts are not meant to permit dishonesty even on technical pleas. Dishonesty cannot be permitted to bear the fruit .....

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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 considered and understood in a manner so as to encourage tax evaders and to discourage those who abide by law. It is the obligation of every citizen to pay the taxes honestly without resor .....

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