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2017 (1) TMI 1381

companying 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 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 - 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 resorting to subterfuges. No doubt, when a person transports goods from outside the State of U.P. to outside the State of U.P. in terms of Section 52 of the Act and Rule 58 of the Rules, the authorities under the Act have no power to seize the goods and demand security for release thereof but where, as in the present case, the transaction is sham, no .....

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er, the respondent filed Appeal No.254 of 2016 under Section 57 of the Act before the Member of Commercial Tax Tribunal, Ghaziabad (Division Bench)- II, Ghaziabad, which has been partly allowed by the impugned order dated 11.11.2016 directing for release of the entire goods without security except twenty articles valued at ₹ 81,000/- which was directed to be released on security of ₹ 32,400/-. Aggrieved with the aforesaid order of the tribunal, the applicant has filed the present revision. Submissions:- 3. Learned standing counsel submits that the goods were loaded within the State of U.P. Out of total 78 invoices accompanying the goods, seventy six invoices were found totally 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 invoic .....

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ransported from outside the State of U.P. to outside the State of U.P. Consequently, the mobile squad 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, Commissioner, Trade Tax U.P., Lucknow Vs. Vikram Tewari, Karol Bagh, Delhi, 2007 NTN (Vol.33)-376 and Dev Nandi Trading Co. Vs. Commissioner, Commercial Tax, 2013 NTN (Vol.53)-232. He supports the impugned order of the Tribunal. 5. Considering the submissions of learned counsels for the parties and the questions, following questions of law are formulated under Section 58(2) of the Act for answer in this revision:- (i) 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? (ii) Whether .....

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the case may be, containing value of goods undervalued to the extent more than fifty percent of the value of goods prevalent at the relevant time in the local market area where the said transaction had taken place, with intention to evade payment of tax: PROVIDED that a list of all the goods seized under this sub-section shall be prepared by such officer and be signed by the officer and not less than two witnesses. (2) Where any officer referred to in sub-section (1) has reason to believe that the goods found in any vehicle, vessel, building or place are not traced to any bonafide dealer or documents issued by a bonafide dealer with respect to accompanying goods contains wrong particulars or that it is doubtful if such goods are properly accounted for by any dealer in his accounts, registers or other documents, maintained in the ordinary course of his business, he shall have power to seize such goods, and the remaining provisions of this section shall mutatis mutandis apply in relation 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 ( .....

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ent of tax on him may not be necessary. (8) The penalty or such part thereof as remains after adjustment of any amount deposited under sub-section (7) shall be deposited in the prescribed manner within thirty days of the date of service of the copy of the order imposing the penalty. In default, the assessing authority shall cause the goods to be sold in such manner as may be prescribed and apply 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, is not deposited in accordance with the provisions of this Act, the officer seizing the goods or the assessing authority, as the case may be, may, without prejudice to any other action that may be taken in accordance with other provisions of this Act, cause the goods to be sold by public auction in .....

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, 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 declaration or the certificate and return to the registered dealer or the person other than the registered dealer, as the case may be, the duplicate portion thereof after endorsing thereon a receipt for the retained original portion. The assessing authority may, in his discretion, direct the dealer or the person concerned to furnish copies of bill or cash memorandum or challan or invoice received by him from the selling dealer or the consignor of the other State for verification of the contents of the declaration or the certificate. (3) The concerned authority of rail, air, or post shall not deliver the consignment to the dealer or person concerned unless the declaration or certificate dully endorsed as aforesaid, is furnished before him. (4) The provisions in rule 54, and rule 56, except sub-rules (1), (6),(8) and (11) thereof and of rule 57 except sub rule (1) and (6) thereof shall mutat .....

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f as helper moved an application that owner of the goods has not come and the driver has gone to his village and, therefore, physical verification be done only when the owner of the goods/transporter comes. The authorities granted time as requested but none turned up even on 29th or 30th September, 2016 and instead, the aforesaid Kayyum again moved an application and stated that he shall not allow physical verification of the goods until owner of the goods or transporter comes. Again on 01.10.2016, the aforesaid person 'Kayyum' moved a similar application denying physical verification of the goods. On 02.10.2016 and 03.10.2016, he moved applications submitting that he has no information 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 the .....

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, the transportation has been shown from outside the State of U.P. to outside the State of U.P. 7. 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 helper of the truck, namely, Sri Saddam and Sri Kayyum. However no one appeared on the date fixed. Consequently, Mobile Squad Authority passed an ex parte order under Section 48 of the Act for seizure of the goods giving an option for release thereof on deposit of cash security of ₹ 10,90,250/- being 40% of the estimated value of goods amounting to ₹ 27,25,624/-. 8. It is undisputed that the goods in question were loaded from Ghaziabad (U.P.) and 76 invoices out of total 78 invoices accompanying the goods, were found to be fake. The Mobile Squad Authority checked TIN number of each of th .....

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d and non-existent and details Kachcha Parcha indicated that the actual price of goods was several times higher than those mentioned in the invoices. He also noted details of four invoices, the numbers of which were overlapping. After detailed discussion and noticing judgments of this court, he concluded as under: 12. However, in Appeal No.254 of 2016 filed by the respondents, the Member Commercial Tax Tribunal, Ghaziabad (DB)-II, Ghaziabad partly allowed the appeal by the impugned order dated 11.11.2016 on the ground that the goods were brought from Delhi to U.P. Border where they were loaded in the truck in question and thereafter TDF was downloaded for carrying the goods from outside the State of U.P. to outside the State of U.P. The Tribunal took the view that Chikambarpur Ghaziabad is a transshipment area where the respondents have transshipment branch and the goods have been loaded from that place, which is a free zone area and consequently, the seizure of the goods is invalid. 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, .....

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e provisions of Section 165 of the Indian Evidence Act that who are actual consignors and consignees and how respondent transporter shall know or trace the alleged purchasers and where the alleged purchasers shall approach the respondent when he neither has any branch or office or a contact address at Siliguri? Answer (iii):- The transporter has no address of the purchasers as per record. 14. From 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 on their behalf. Thus, it is evident that the respondents are well aware of the real owners of the goods but they have suppressed the information and did not allow the real owners/consignors to come forward and instead preferred to pursue the case through authorised representative of a very distant pla .....

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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 court held that the power to apprehend, inspect and seize goods is exercisable throughout the length and breadth of the State. If that power exists and exercisable statutorily throughout the State, surely a circular of the Commissioner cannot eclipse the same. That apart, in exercise of powers conferred under Section 52 of the Act read with Rule 58 of the Rules, the Commissioner of Commercial Tax has issued a circular dated 03.09.2013 providing for the procedure for vehicles passing through the State which person incharge of the vehicle is bound to follow. Paragraph-6 of the aforesaid circular dated 03.09.2013 provides as under: 17. The circular dated 31.01.1987 has been heavily relied by the respondents on the basis of certain judgments of this court contending that the area of Chikambarpur, Ghaziabad is a no man's land as per the circular. It is relevant to note that even the aforesai .....

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signee is fictitious and the goods are seized, it is not likely to effect the right of the transporter. In that eventuality, the consignor or the consignee should come forward and assign reasons for their concealing the real identity. The law does not help those who are torch bearers of dishonest persons. 22. In view of the above, 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 a .....

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pplied by me) 24. In the case of United India Insurance Company Ltd. V. B.Rajendra Singh and others, 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 Estate Ltd. V. Beasley 1956(1)QB 702). (Emphasis supplied by me) 25. In the case of Ram Chandra Singh Vs. Savitri Devi and others, 2003(8) SCC 319, Hon'ble Supreme Court defined fraud and considered the effect of fraud and misrepresentation and held in paragraphs 15, 16, 17, 18, 25 and 37 as under : "15. Commission of fraud on court and suppression of material facts are the core issues involved in these matters. Fraud as is well-known vitiates every solemn act. Fraud and justice never dwells together. 16. Fraud is a conduct either by letter or words, which induces the other person, or aut .....

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n be summarily thrown out at any stage of the litigation." (Emphasis supplied by me) 27. In the case of Jainendra Singh Vs. State of U.P., 2012 (8) SCC 748, Hon'ble Supreme Court considered the fact of appointment obtained by fraud and held in para 29.1 to 29.10 as under : "29.1 Fraudulently obtained orders of appointment could be legitimately treated as voidable at the option of the employer or could be recalled by the employer and in such cases merely because the respondent employee has continued in service for a number of years, on the basis of such fraudulently obtained employment, cannot get any equity in his favour or any estoppel against the employer. 29.2 Verification of the character and antecedents is one of the important criteria to test whether the selected candidate is suitable to the post under the State and on account of his antecedents the appointing authority if find not desirable to appoint a person to a disciplined force can it be said to be unwarranted. 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 favou .....

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, JT 2009(5) SC 278, para 13 to 18 and 28 and JT 2008(8) SC 57. 29. 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. 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 and benefit to the persons who played fraud or misrepresented or suppressed facts and in such circumstances, the court should not allow perpetuation of fraud by entertaining the technical pleas. The very foundation of the case of the respondent is based on falsehood and fraud. The respondents have sup .....

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