2010 (3) TMI 865 - SC - VAT and Sales Tax

Court dismisses civil appeal over failure to produce endorsed declaration copy, emphasizing tax compliance and obligations.

The court dismissed the civil appeal, emphasizing that the appellant, as a declarant, had an obligation to transport goods outside West Bengal. Failure to ... Restriction on movement of goods - declarant's obligation under rule 211A(1) - production of countersigned/end orsed declaration at exit check post - legal presumption of tax evasion on non production of endorsed declaration - application of section 68(3) to any person including clearing and forwarding agents/CHA - penalty under section 71B for contravention of section 68 when goods are not availableDeclarant's obligation under rule 211A(1) - production of countersigned/end orsed declaration at exit check post - legal presumption of tax evasion on non production of endorsed declaration - Whether a person who signs the declaration under rule 211A(1) (the declarant) is bound to produce the countersigned/end orsed copy at the exit check post and whether non production gives rise to a presumption of tax evasion. - HELD THAT: - The Court held that rule 211A(1) requires 'any person' taking delivery to make the prescribed declaration and clause (4) of the declaration imposes a statutory obligation on the declarant to transport the consignment to its destination outside West Bengal. The procedure in the Rules contemplates triplicate declarations, countersignature at the first check post and production of the countersigned copies at the exit check post under sub rule (6). Failure to produce the endorsed countersigned copy before the assessing authority raises a legal presumption, unless rebutted, that the goods have been consumed, used or disposed of within the State. The presumption is consequential to the regulatory scheme designed to prevent tax evasion and operates against the declarant who undertook the obligation by signing the declaration.A declarant who signs the declaration under rule 211A(1) must produce the countersigned/end orsed copy at the exit check post; non production gives rise to a rebuttable legal presumption of tax evasion.Application of section 68(3) to any person including clearing and forwarding agents/CHA - restriction on movement of goods - Whether section 68(3) and rule 211A apply only to a 'transporter' or also to other persons (including CHAs/clearing and forwarding agents) who make the prescribed declaration. - HELD THAT: - Section 68 uses the expressions 'no person' (in sub section (1)) and 'any consignment of goods may be transported by any person' (in sub section (3)), and rule 211A repeatedly refers to 'any person' as the declarant. The Court concluded that these expressions include clearing and forwarding agents and customs house agents. Once such a person makes the declaration, he undertakes the obligation to transport the consignment to its destination outside the State and, for the purposes of the regulatory scheme, stands in the same position as a transporter for liability under the Act and Rules. The separate definition of 'transporter' for sections 72-73 does not restrict the application of section 68(3) or rule 211A to only those defined as transporters in those sections.Section 68(3) and rule 211A apply to 'any person' who makes the prescribed declaration, including CHAs/clearing and forwarding agents; they are not confined to persons defined as 'transporter' for other sections.Penalty under section 71B for contravention of section 68 when goods are not available - legal presumption of tax evasion on non production of endorsed declaration - Whether imposition of ad valorem penalty under section 71B was justified when the declarant failed to produce the countersigned declaration and goods were not available for seizure. - HELD THAT: - Section 71B prescribes penalty where goods have been transported in contravention of section 68 and are not available for seizure. The non production of the countersigned declaration creates the presumption that goods have been unauthorisedly sold or disposed of within the State. In the present case the appellant (declarant) did not produce the endorsed countersigned copy nor adduce evidence to rebut the presumption that the goods did not leave the State; the statutory scheme therefore authorized imposition of penalty on an ad valorem basis under section 71B read with rule 211A.Imposition of penalty under section 71B was warranted where the declarant failed to produce the countersigned declaration and did not rebut the presumption that the goods were not available for seizure.Final Conclusion: The appeal is dismissed; the Court affirmed that a person who signs the declaration under rule 211A(1) (including CHAs) is obligated to produce the countersigned/end orsed copy and, upon failure and absence of rebuttal, is subject to the presumption of tax evasion and to penalty under the Act and Rules. Issues Involved:1. Scope and effect of section 68(3) of the West Bengal Sales Tax Act, 1994, read with sub-rule (6) of rule 211A of the West Bengal Sales Tax Rules, 1995.2. Applicability of the term 'any person' in section 68(3) of the Act.3. Responsibility of a Customs House Agent (CHA) under section 68 of the Act.4. Legal presumption of tax evasion due to non-production of the endorsed copy of the declaration.5. Applicability of sections 68, 71B, and 72 of the Act to a CHA.6. Request for instalments in case of penalty imposition.Detailed Analysis:1. Scope and Effect of Section 68(3) of the Act and Rule 211A(6) of the Rules:The court examined the scope and effect of section 68(3) of the West Bengal Sales Tax Act, 1994, and sub-rule (6) of rule 211A of the West Bengal Sales Tax Rules, 1995. Section 68(3) allows any consignment of goods to be transported by any person after furnishing particulars in the prescribed form. Rule 211A outlines the procedure for transporting goods from ports or check-posts to destinations outside West Bengal. The court emphasized that these provisions aim to prevent tax evasion and ensure compliance with regulatory measures.2. Applicability of the Term 'Any Person' in Section 68(3):The court clarified that the term 'any person' in section 68(3) includes clearing and forwarding agents, transporters, and customs house agents (CHA). This term is not limited to transporters alone. The court highlighted that the regulatory measures under the Act are designed to prevent tax evasion and that any person making a declaration in the prescribed form must comply with the Act's provisions.3. Responsibility of a Customs House Agent (CHA) Under Section 68:The appellant, a CHA, contended that he had no obligation under section 68 regarding the transportation of goods. However, the court held that the appellant, as a declarant, undertook the obligation to transport the consignment to its destination outside West Bengal. The declaration made by the appellant included a statutory obligation to ensure the goods reached their final destination. Failure to produce the endorsed copy of the declaration raised a legal presumption of tax evasion.4. Legal Presumption of Tax Evasion Due to Non-Production of the Endorsed Copy:The court noted that non-production of the endorsed copy of the declaration before the assessing authority raised a legal presumption of tax evasion. The appellant failed to provide evidence to rebut this presumption. The court emphasized that the regulatory measures under the Act are integral to the charging provisions and are intended to prevent tax evasion.5. Applicability of Sections 68, 71B, and 72 of the Act to a CHA:The appellant argued that sections 68, 71B, and 72 of the Act applied only to transporters and not to CHAs. The court rejected this argument, stating that once a CHA makes a declaration, he assumes the role of a transporter. The court clarified that the term 'transporter' in sections 72 and 73 is specifically defined for those sections and does not exclude CHAs from the obligations under section 68.6. Request for Instalments in Case of Penalty Imposition:The appellant requested the court to allow payment of the penalty in instalments if the appeal was rejected. The court did not express any opinion on this request and dismissed the civil appeal with no order as to costs.Conclusion:The court dismissed the civil appeal, holding that the appellant, as a declarant, had an obligation to transport the goods to their destination outside West Bengal and that failure to produce the endorsed copy of the declaration raised a legal presumption of tax evasion. The court emphasized the importance of compliance with the regulatory measures under the Act to prevent tax evasion.