TaxTMI 
TaxTMI 
2009 (9) TMI 881
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....(ii) Whether contravention of such statutory obligations, imposed on the "transporters" can be made offences? (iii) Whether it is permissible for the Legislature to make such provisions, in such a fiscal statute, as would enable a "transporter" to opt for composition of such offences by making payment of such sum(s), which may be recoverable as the taxable liability of the "dealer", whose taxable consignment had been carried by the "transporter" or whose taxable liability the transporter has helped escaped assessment of? (iv) In the absence of any charging provisions imposing taxable liability on a "transporter", whether it would be permissible for the State to recover tax, which is, otherwise, payable by a "dealer", by making payment of such taxable amount as a condition for composition of an offence, which a "transporter" may have committed? Background facts: The petitioner, in all these writ petitions, is in the business of carrying goods of different "dealers", who have been carrying on business at Agartala and at other places in the State of Tripura. The persons, who fall within the definition of a "dealer", as given in the Tripura Sales Tax Act, 1976 (in short, "the ....
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....rier" or "transporting agent", as the case may be, may bring into the State of Tripura and carry the same from one place to another. Amongst other requirements, which rule 64A embodies, it is one of the requirements that the "transporter", "carrier" and "transporting, agent" shall maintain, in a register, in form No. XXII, a true and correct account of every consignment of goods transported into the State of Tripura and, in form No. XXIII, of all goods transported outside Tripura. Let me, now, set out the facts of each of the present three writ petitions. W.P. (C) No. 134 of 2005 By order dated August 13, 1998, the petitioner, which is a registered partnership firm, was directed by the Superintendent of Taxes, Charge V, to deposit a sum of Rs. 94,701 on the ground that the petitioner, as a "transporter", had delivered as many as 58 numbers of consignments of taxable goods, on being imported into the State of Tripura, without declaration form, as is required to be given in form No. XVIII, and that the petitioner had failed to maintain a register in form No. XXII, reflecting true and correct account of every consignment of goods imported into Tripura and delivered by the pet....
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....ds imported into Tripura and delivered by the petitioner, as "carrier" or "transporter", to the consignee, and the petitioner has, thus, committed offences under section 29(4), 29(5), 29(6) and 29(12) of the TST Act. The taxable liability of the said consignments were assessed at Rs. 2,67,427 and another sum of Rs. 5,34,854 was assessed as composition amount of the offences committed under section 29. As reflected by the proceedings, recorded in the order dated October 23, 1998, aforementioned, pursuant to reasonable opportunity given to the petitioner to satisfy the authorities concerned by producing relevant materials that no such offences, as alleged, had been committed by the petitioner, the Superintendent of Taxes concluded that the petitioner, as a "transporter", having not been able to produce requisite materials, shall be held to have committed offences under section 29(4), 29(5), 29(6) and 29(12) of the TST Act. The proceedings, as recorded in the impugned order dated October 23, 1998, further reflect that according to the Superintendent of Taxes, the petitioner's representative was informed about the provisions of section 32 of the TST Act, relating to composition of ....
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....ovisions of section 32 of the TST Act, relating to composition of offences committed under the penal provisions aforementioned, and, on being so informed, the petitioner's representative, as a "transporter", admitted guilt and opted to compound the offences instead of facing prosecution and incurring punishment. The petitioner was, therefore, as already indicated above, held liable to pay, in all, a sum of Rs. 5,23,011 as total liability of the said 16 numbers of consignments, the taxable liability being Rs. 1,74,337 and another sum of Rs. 3,48,674 being composition amount. A notice of demand, in terms of rule 25 of the Tripura Sales Tax Rules, was accordingly raised by the Superintendent of Taxes. With the help of these writ petitions made under article 226 of the Constitution of India, the petitioner has put to challenge the impugned orders aforementioned, which have been passed by the Superintendent of Taxes and also the notices of demands raised in these cases as orders passed, and notices issued, without authority of law. Respondents' case: The petitioner has delivered taxable consignments without requisite permit as is required under the TST Act, 1976, and th....
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....im, compounded in order to avoid his prosecution, no authority is derived by the authorities concerned to compound the offence. In other words, according to Mr. Deb, the petitioner's representative had not opted for composition and, in such circumstances, no order, such as the impugned ones, could have been passed compounding the offences allegedly committed by the petitioner. It is the submission of Mr. Deb that the liability to pay tax is on a "dealer" and unless a person falls within the definition of "dealer", as given in section 2(b) of the TST Act, he does not become amenable to section 3, which is the charging section, and unless a person falls within the ambit of section 3 (which is the charging section), no tax liability can be imposed on him and he cannot be made to pay, directly or indirectly, anyone else's tax liability. Drawing attention of this court to the definition of "dealer", as given in section 2(b), Mr. Deb submits that a "transporter" does not fall within the definition of "dealer" inasmuch as he does not sell or purchase any goods, taxable or non-taxable, and unless a person sells or purchases taxable goods, he cannot be treated as a "dealer". ....
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.... could have been imposed on a "transporter". It was in order to remove this difficulty or deficiency in the scheme of the statute, in question, that section 13A was, contends Mr. Deb, introduced so that the State can realize the tax evaded by a "dealer" by recovering not only the tax, but also penalty from the "transporter", who had transported such taxable goods and helped thereby evasion of tax by a "dealer". Thus, the purpose of introducing section 13A, according to Mr. Deb, was aimed at enabling the State to realize, from the "transporter", not only penalty for helping the "dealer" in evading tax, but also recovering, from the "transporter", such sum, which was not the taxable liability of the "transporter", but of the "dealer". In other words, Mr. Deb's contention is that the provisions, as contained in section 13A, had to be introduced in order to enable the State to impose tax liability and penalty on a "transporter" if he helps in evasion of tax. Heydon's rule, as propounded in Heydon's case [1584] 3 Co. Rep 7a, is, according to Mr. Deb, squarely applicable to the case at hand inasmuch as it was the defect, shortcoming or mischief with which section 13 suf....
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....axing authority and, hence, the order may be maintained. Controverting the submissions, made on behalf of the State, Mr. Deb further submits that even after section 13A has been introduced, the State cannot impose payment of liability of tax on the "transporter" inasmuch as the liability to pay tax, under section 3, still remains on the "dealer" alone and the "transporter", not being a "dealer", cannot be saddled with the liability to pay tax and, it is for this reason, that the vires of section 13A has been put to challenge in a number of other writ petitions, which are pending in this court. Notwithstanding the challenge to the constitutionality of section 13A made in some writ petitions, Mr. Deb concedes that in the case at hand, there is no impediment in deciding the question as to whether section 32 could have been resorted to in the case of a "transporter" as have been done in the present cases. Analysis: The controversy, raised in this set of writ petitions, calls for a careful analysis of the relevant provisions of the TST Act and the Rules framed hereunder and also the scheme of legal obligations cast on a "transporter" and consequences flowing from the contravent....
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..... False statement in declaration.-Whoever makes a statement in verification or declaration in connection with any proceedings under this Act which is false, and which he either knows or believes to be false, or does not believes to be true, shall, on conviction before a Judicial Magistrate, be punishable with simple imprisonment which may extend to six months or with fine which may extend to one thousand rupees, or with both." From a bare reading of the provisions embodied in section 30, it becomes clear that while making any statement in a proceeding under the TST Act, "whoever" makes a statement, which is false and which he either knows or believes to be false, or does not believe to be true, shall be punishable, on conviction before a Judicial Magistrate, with simple imprisonment, which may extend to six months or with fine, which may extend to one thousand rupees, or with both. In short, while verifying or declaring a fact, in any proceeding, under the TST Act, "whoever" makes a statement, which is false and which he either knows or believes to be false, or does not believe to be true, commits an offence under section 30 and is liable to be punished accordingly. Th....
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....ncorrect accounts, register or documents or the act of knowingly furnishing any incorrect information has been made an offence under section 29(1)(6), the act of aiding or abetting any of these offences are punishable under section 29(1)(12). For the purpose of finding out a correct answer to the question as to whether clauses (4), (5), (6) and (12) of sub-section (1) of section 29 or whether section 30 could have been applied to a "transporter" before section 13A came to be introduced, let me refer to some of those provisions of the TST Act and the Rules thereunder which had imposed legal obligations on the "transporters", even before section 13A was introduced. My search for some of the prominent provisions, contained in the TST Act and the TST Rules, which impose certain obligations on the "transporters", bring me, first, to section 36A, which was introduced by the Tripura Sales Tax (Third Amendment) Act, 1984. Section 36A reads as under: "36A. Maintenance of account by carrier.-Notwithstanding anything contained in any other Act, any 'transporter', carrier or transporting agent, operating its transport business in Tripura, shall maintain proper account of goods tr....
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....to challenge in Tripura Goods Transport Association v. Commissioner of Taxes reported in [1999] 112 STC 609 (SC); [1999] 2 SCC 253, on the ground that the tax liability under the TST Act being of the "dealer", no obligation to maintain accounts and/or furnish particulars, as required under section 36A, could have been imposed on a "transporter". These provisions, it was contended in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, were ultra vires the constitutional provisions. Similarly, and on the same reasoning, provisions of sections 29 and 32 as well as Rules 46A(3), 63A and 63A(2) were also challenged, in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, for, the resultant effect of such amendments was that those, who were working as "transporters" in Tripura, were required to obtain a certificate of registration and also to comply with various other formalities prescribed under the TST Act and the TST Rules with regard to, mainly, maintaining accounts, as prescribed, for carrying on transportation business. The apex court, however, in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, held t....
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....d in the transaction of sale or purchase of taxable goods, escapes attention of the taxing authority, the result would be that tax on such goods would not be paid or recovered causing thereby loss to the Revenue. To oversee such possible escape, pointed out the apex court, in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, a mechanism is invariably drawn in a statute to deal with such loopholes by casting obligations on some persons to perform certain acts so as to ensure that no tax liability of dealer escapes notice of the taxing authority. Thus, according to the apex court in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, the provisions as regards maintenance of accounts in prescribed form in respect of goods transported into, or outside, Tripura, and the provisions as regard furnishing of, in the prescribed manner, such information, as the Commissioner requires, including filing of form No. XXIV, have been made in the TST Act and the TST Rules. The sole object of all these provisions is to ensure that no tax evasion takes place. The obligations on the transporters, which the provisions contained in the TST Act and the TST ....
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....is to ascertain a consignor or consignee of taxable goods, which the transporter may have carried. Such a requirement has no co-relation with the sale and/ or purchase of goods nor is the discharge of such obligation by a transporter would make him a dealer. Similarly, section 30, points out the apex court, in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, creates offence only when a false declaration is made in connection with any proceedings under the Act, and the person ("whoever" such person may be), making such a statement, either knows or believes the statement to be false or does not believe the statement to be true. Again, the conviction under section 30, is only for making false declaration, which is within the knowledge of the person, who makes declaration. How can such a provision constitute a ground for challenge to legislative competence, querried the apex court and answered by saying that these provisions are only aimed at ensuring that the correct statement of facts are brought out and one is punished only if he knows or believes a statement to be false, yet gives the statement as true or when a person does not believe to be true and yet....
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....ter or any other person helps such evasion of tax, such a person can be an abettor of evasion of tax, but cannot be brought within the scope of clause (a); whereas clause (b) applies to all other persons, who may help a dealer in evasion of tax. Considered thus, it becomes clear that to the case of a transporter, who may help in evading tax by a dealer by not discharging the obligations, which the TST Act and the Rules framed thereunder have imposed on him, clause (b) of sub-section (1) of section 32 would be attracted. Sub-section (2) of section 32 makes it clear that when an offence is compounded either in terms of clause (a) or clause (b) of sub-section 32 no further proceeding can be initiated against the offender in respect of the offence, which has been compounded. What emerges from an analytical study of the provisions contained in section 32, is that a transporter is not made liable to pay tax as a dealer inasmuch as section 32 does not impose any tax liability on a transporter as a dealer; rather, what section 32 does is that it gives an escape route to a transporter, when he has committed an offence, by offering to compound the offence on payment of a sum of money not ....
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....mmitted an offence under section 30 if the information, given by the transporter, turns out to be incorrect. The apex court pointed out that section 30 did not, in fact, make an incorrect information, given by a transporter, an offence. What, rather, section 30 makes an offence is when a transporter gives an information or declaration, which is false and which he either knows or believes to be false, or does not believe to be true. The fear, therefore, which had been expressed by the transporters in Tripura Goods Transport Association's case [1999] 112 STC 609 (SC); [1999] 2 SCC 253, was allayed by the apex court as unfounded and meaningless. Turning to rule 63A, one may note that rule 63A empowers the Officerin-Charge of a check-post or Superintendent of Taxes or any other officer empowered in this behalf, to search the vehicles, which pass a check barrier, and sub-rule (1A) of rule 63 empowers such an officer to seize such goods if such goods are found being carried without requisite documents, which are required to be produced at the check-post or barrier. Sub-rule (3) of rule 63A provides, "On search, as aforesaid, if it is found that the goods are being carried in co....
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....tion, therefore, that without the aid of section 13A, which has been introduced in the statute as late as on February 28, 2000, a "transporter" could not have been, by way of composition of offence, saddled with the liability to pay such sum, as may be payable by the "dealer" in respect of the taxable consignment, which the "transporter" has transported, is wholly misplaced. Haydon's rule will apply only when the question of applying section 13A to the facts of a given case arises and not when sections 29, 30 and 32 are sought to be applied. As to when section 13A can be resorted to, or be applied, is an aspect, which I would deal with a little later. In the light of what has been discussed above, the mechanism, which the TST Act and the TST Rules conceive, is correct maintenance of accounts by the transporters so that the taxing authorities, with the help of the provisions of the statute and the Rules framed thereunder, can trace the "dealer" and fix tax liability on him. There is, reiterates the apex court, in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, no provision, which fixes any such liability on the transporter or carrier which is on a "d....
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....ted out that the power to levy a tax includes all incidental powers to prevent evasion of such tax. The powers, such as, the power to seize and confiscate goods in the event of evasion of tax and the power to levy penalty are, according to the apex court, in Swastik Roadways [2004] 135 STC 1; [2004] 3 SCC 640, meant to check tax evasion and is intended to operate as a deterrent against taxevaders and are, therefore, ancillary or incidental to the power to levy tax on the sale of goods and, thus, fall within the ambit and scope of entry 54 of List II of the Seventh Schedule to the Constitution of India. The information sought under section 57 Reported as swastik Roadways v. Commercial Tax Officer [1996] 103 STC 106. and the maintenance of register under section 58, will, therefore, help according to the Supreme Court in Swastik Roadways [2004] 135 STC 1; [2004] 3 SCC 640, the Revenue tax authorities to identify the nature of the transaction, to verify the claims of the dealer and to trace the taxable transactions so that a person or a transaction liable to payment of sales tax under the Act, does not escape. Under various sections of the Act, pointed out the Supreme Court in Swastik....
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....n A.B.C. (India) Ltd. v. State of Assam reported in [2005] 142 STC 88 (SC); [2005] 6 SCC 424, premises of the appellant-company, who carried on the business of transportation on behalf of his customers throughout the country, were searched by the officers of the Sales Tax Department, Government of Assam. Following the search, notice was issued to the appellant to produce documents so as to satisfy the taxing authorities about proper accounting of the goods seized. The appellant filed a writ petition, in this High Court, challenging the legality of one of such notices and also challenging the constitutionality of sections 42 and 44 of the Assam General Sales Tax Act, 1993 (in short, "the AGST Act"). A learned single judge allowed the writ petition and held the provisions, made in sections 42 and 44, ultra vires. A Division Bench reversed the decision. The company, then, filed an appeal by special leave. Under section 42, obligation was cast on every clearing, booking or forwarding agent or any other person transporting goods, who, during the course of his business, handles documents of title to goods for or on behalf of any dalal or a person holding certificate under section 14, to ....
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....an obligation on every clearing, booking or forwarding agent or any other person transporting goods who during the course of its business handles documents of titles to the goods for or on behalf of any dealer or person holding certificates under section 14 of the said Act to furnish to the prescribed authority true and complete accounts, register, documents, etc. The said section also provides for levy of penalty at the rate of three times of tax calculated on the value of the goods in respect of which no particulars or information have been furnished under section 42(1) of the Act or no cash memo or challan has been produced before the competent authority under section 42(3) or Rs. 1,000 whichever is greater. The said section empowers the appointed authority to enter and search any place of business of any 'dealer' if he has reason to believe that any 'dealer' is attempting to evade tax or that any person transporting goods for any other person who has kept his accounts in such a manner as is likely to cause evasion of tax. As per the accepted norms of taxation the jurisdiction whatever is ancillary or subsidiary provision necessary for achieving the object of a t....
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..... 26.. Thus it is seen that sections 42 and 44 of the Act do not impose any liability upon the transporter, carriers, etc., to pay any sales tax under the Act. The said sections are basically meant to check the tax evasion. Thus the requirement of maintenance of document and the certificate of registration by a transporter or any such agent is only for similar purpose as incorporated under sections 36A and 38B of the Tripura Sales Tax Act, 1976 which has been held to be a valid piece of legislation by this court in the case of Tripura Goods Transport Association v. Commissioner of Taxes [1999] 112 STC 609 (SC); [1999] 2 SCC 253. In our view, the present case is fully covered by the said judgment of this court." Situated thus, what becomes crucial to remember is that section 32 does not impose any liability to pay tax; what it does is that if a "transporter" or carrier or transporting agent commits an offence, he becomes liable for conviction under section 29. If he opts for composition of the offence as provided in section 32, he would become liable to pay sum(s) of money to the extent as section 32 imposes on such a "transporter", carrier or transporting agent. A careful ....
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....ection 13A, impose the liability, on the "transporter", to pay tax, which was liable to be paid on the consignment in question, by the "dealer" and also impose, in addition to such liability to pay tax, penalty, which may extend to one hundred and fifty per cent of the tax involved and the question of applying Heydon's rule would arise only when the provisions made in section 13A are sought to be taken recourse to by the Commissioner in order to make a "transporter" pay tax, which was, otherwise, payable on the consignment, in question, by the "dealer". To the penal provision of sections 29, 30 and 32, section 13A has, therefore, no relevance. While the choice is with the "transporter" to opt or not to opt for composition of offence, when the "transporter" is sought to be prosecuted or may be prosecuted under section 29 or section 30, the fact remains that the quantum of amount, payable on such composition, is for the Commissioner to decide. Section 32 cannot be resorted to unless the person, who can be prosecuted or is being prosecuted, opts for composition. What crystallizes from the above discussion is that when the State is vested with the power to impose ta....