TaxTMI 
TaxTMI 
2014 (9) TMI 139
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....CT), Kakinada, as well as the two confiscation orders passed by the Commercial Tax Officer (Intelligence), Vijayawada and Commercial Tax Officer, Kasibugga. The writ petition is filed by consignor for direction to pay the value of the goods confiscated. Background facts (i) The Special Assistant Commercial Tax Officer, Vijayawada (the Special ACTO) intercepted the lorry No. AP 16T 6489 on May 7, 1993. It was found transporting cloves allegedly sold and sent by the consignor to a purchaser at Delhi. Having found interpolations in the way-bills, the Special ACTO issued notices, in response to which the transporter sent reply admitting that the transit pass is not available. Therefore the stock was seized on May 21, 1993. On the same date, the CTO (Intelligence), Vijayawada inspected godowns of the BARL and seized 2,250 bags of cloves (each bag weighing 40 kgs). The documents revealed that goods were on transport from Dimapur to Delhi to M/s. Ram Niwas and Co., (hereafter, "first consignee"). They were consigned by a person who is not a registered dealer. Hence, the CTO (Intelligence) proposed to confiscate the goods under section 28(6) of the Act. He issued a show-cause notice ....
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....ation orders. (iv) Against orders of the Appellate Deputy Commissioner, the consignor filed Tax Appeal Nos. 916 and 918 of 1993 before the Tribunal. The transporter filed Tax Appeal Nos. 915 and 917 of 1993. The four appeals were heard together and by common order were allowed. (v) The writ petition is filed by the consignor seeking a writ of mandamus to give effect to the orders of the STAT and pay the amount of sale proceeds of Rs. 70,07,000 relating to 2,250 bags of cloves sold in public auction on July 13, 1993 and Rs. 49,63,000 relating to 1,894 bags of cloves sold on July 16, 1993. When the tax appeals were pending before the STAT, the Commercial Tax Department confiscated goods. The consignor would contend that in the absence of any order under section 33C of the Act, for withholding the refund of the amount of sale proceeds, the Department has no authority in law to retain the amount. We may mention that the grant of relief in this case would depend on the result in the tax revision cases. Submissions Special counsel for Commercial Taxes would submit that STAT was in error in holding that the confiscation of the goods is illegal on the ground that section 28(....
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....ugh number of checkposts; the transporter was carrying necessary documents to establish this and the Revenue failed to establish by cogent and satisfactory evidence that out of 45 lorries which entered the State, only four lorries crossed the border and 41 others remained in Andhra Pradesh. It is also urged that the CTO did not give opportunity before passing the confiscation order to the consignor and consignee. The counsel relied on Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Travancore Rubber and Tea Co. [1967] 20 STC 520 (SC), Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Midland Rubber and Produce Co. Ltd. [1970] 25 STC 57, Bandamidi Rajaiah & Sons v. Board of Revenue, Commercial Taxes [1978] 42 STC 145 (AP), Seetharamanjaneya Rice Mill v. State of A. P. [1989] 8 APSTJ 50, Shaik Basha v. State of Andhra Pradesh [1992] 14 APSTJ 121 (AP), State of Andhra Pradesh v. Andhra Pradesh Paper Mills Limited [1992] 14 APSTJ 272 (AP), State of Andhra Pradesh v. Sri Laxmi Srinivasa Groundnut Traders [1999] 29 APSTJ 235 (AP), Ramaswamy Kalingaryar v. Mathayan Padayachi AIR 1992 SC 115, Hamida v. Mohd. Khalil [2001] 5 SCC 30; AIR 2001 SC 2282 and Tallam ....
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....ue is as follows. A lorry coming from Dimapur with 250 bags of cloves was checked by Special ACTO at VijayawadaHyderabad route check-post No. 9, Vijayawada. As per the documents produced by the driver, the goods were being transported for delivery to the consignees. The driver made a statement that goods would be transferred to another lorry for onward journey from the godowns of BARL. The officer entertained a suspicion because it was not necessary for the lorries going from Dimapur to New Delhi or Bombay to touch Vijayawada. He also found interpolations in the way-bill with regard to the date thereon. Therefore, he detained the goods and the vehicle. This was followed by an order detaining fifty five bags, the value of which is equal to tax due on the total value of the goods and three times of the amount of tax pending enquiry as security. The balance quantity of goods was released. In response to the notice, BARL submitted representation stating that the goods were not intended for sale in Andhra Pradesh but admitted that the transit passes were not available. He explained that as transit passes were not available at Ichchapuram, the check-post officials allowed the vehicles af....
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....e 3, 1993 seeking release of the goods and her husband as well as GPA holder filed a representation objecting to seizure and proposed confiscation, inter alia, on the ground that section 28(6) of the Act has no application. She also submitted that transportation of the goods via Bihar and Uttar Pradesh State borders is fraught with a lot of difficulties, i.e., attacks by dacoits/unknown persons on the way. The allegation of clandestine business in the State of Andhra Pradesh was denied and the transit passes under section 29B allegedly obtained at the border checkpost for eleven lorries were also offered as evidence. The branch manager of BARL, Vijayawada also filed an affidavit on the same lines. He denied allegation of tax evading clandestine sale in the State. He further stated that the BARL has to deliver the goods to the consignee on receipt of freight charges; the lorries were engaged up to Vijayawada where goods were unloaded in the godowns for the purpose of transshipment by engaging other lorries; it is BARL which is required to engage lorries and pay freight charges noted in the LR; and that freight charges were already paid from Nagaland to Vijayawada. The consignor a....
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....iven; (vii) the goods had taken a circuitous route that was three times longer than the nearest national high way between Nagaland and Delhi or Bombay; (viii) the consignor failed to produce any evidence to show that they were capable of carrying business in several lakhs of rupees. The consignor also did not show any evidence that the transactions were made through bank; (ix) no evidence about the proper order, agreement for, sale, advance payment, freight arrangement, bank accounts were filed before the CTO, Vijayawada and the CTO, Kasibugga; and no evidence of insurance of the goods was produced before the authorities; and (x) at the time of seizure the goods were found stocked at the godowns of Bikaneer Assam Road Lines, Vijayawada and Ichchapuram on the plea that they were waiting for transshipment; and the stocked cloves were not supported by proper documents. Both the original authorities also found that the goods kept in godowns at Ichchapuram and Vijayawada were not supported by proper documents and the consignees did not even appear and claim the goods. The authorities also considered various grounds urged on behalf of the consignee to which a reference is made supra a....
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....se notice of confiscation was duly served. After confiscation order, the goods were auctioned after giving notice to the advocate which was held to be sufficient compliance of principles of natural justice. By order dated March 10, 1993, two appeals filed by the consignor and the other two filed by BARL, were dismissed. The order of the STAT After analyzing the factual background, the learned Tribunal framed sole point for consideration; whether the confiscation orders separately passed by the CTO, Vijayawada and CTO, Kasibugga are liable to be set aside for any of the reasons urged by the appellants. We may mention that the arguments which are raised before the Tribunal were similar to those pleaded before the Appellate Deputy Commissioner. The Tribunal dealt with two main aspects. The first one was whether the goods originated from Dimapur and reached Ichchapuram and Vijayawada under valid documents, allegedly intended to be transported to the first consignee at Delhi and the second consignee at Bombay. The second aspect was whether the goods seized at two places by the respective competent authorities were actually and factually intended to be sold to the consignees or wer....
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....counts registers and other documents maintained in the course of his business. The two ingredients of section 28(6) are not at all satisfied in the present batch of appeals. The first ingredient is that the goods must be found in the place of business, shop or godown, etc., of the dealer. In the present case the consignor is to be treated as a dealer. The goods were admittedly found while in transit in the godowns of the transporter and not that of the consignor. Further the transported goods are supported by valid documents. The second ground is that the goods did not find place in the accounts maintained by the dealer. There is no question of the consignor maintaining the accounts in A.P., as she is not a dealer in A.P. If one could sum up the findings of the learned Tribunal which prompted it to allow the appeals of the consignor and transporter, they are as follows: (i) the goods were being transported from Dimapur to New Delhi and Bombay through Andhra Pradesh. They were supported by valid permits, passes and travel documents. BARL engaged the lorries only up to Vijayawada and it was to make arrangements for further transport of the goods from Vijayawada to New Delhi and....
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...."the APGST Rules"). They deal with measures to prevent tax evasion and the manner and method of dealing with tax evasion and attempted tax evasion. These provisions contemplate four actions, namely, (i) search of the place of business and godowns and seizure of accounts, registers and documents; (ii) seizure of goods not properly accounted for; (iii) confiscation of goods not satisfactorily accounted for; and (iv) conviction and sentence with fine. In addition to this, section 30C authorises the designated jurisdictional officers to levy penalty if there is any default in payment of the tax, with which we are not concerned in these revisions. The provisions dealing with prevention of tax evasion have considerable bearing on the controversy raised before this court. Hence, it is necessary to briefly refer to them. Every person licenced or registered, and every dealer who is required to get registration under the Act shall keep and maintain true and correct account (section 24). Section 27 requires the owner or other person in charge of the goods vehicle to carry with him a bill of sale or delivery note, goods vehicle record or trip sheet and other documents with all the particula....
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....ernment to authorize different classes of officers for the purpose of taking action under sub-sections (1), (2) and (3)." In Transport Corporation of India Ltd. v. State of Andhra Pradesh [1985] 60 STC 14 (AP), the honourable Sri Justice Jeevan Reddy considered the scope of section 28(6) as under (pages 48 and 49 in 60 STC): ". . . The power under sub-section (6) of section 28 is not a power to be exercised at the check-post or the barrier. The said power is to be exercised only with respect to, or in the case of dealers alone, but not other persons. Every dealer is expected to maintain accounts, registers and other documents relating to the goods in his possession; sub-section (6) says that, if any goods are found in possession of the dealer which are not so accounted for, they may be seized and confiscated if it is found, after holding an enquiry, as prescribed by rule 48, that 'there is an evasion or an attempt to evade the tax thereon'. As rightly pointed out in the two earlier Bench decisions of this court in K.S. Papanna v. Deputy Commercial Tax Officer, Guntakal [1967] 19 STC 506 (AP) and Kalangi Krishna Murty & Co. v. Commercial Tax Officer, Guntur [1968] 22 S....
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....o be furnished as long as may reasonably be necessary. If the goods are to be detained for more than three days, the permission of the next higher authority shall be obtained. If the goods are subject to speedy and natural decay, the goods can be sold in open auction. If any application is made to prescribed authority, the sale proceeds can be paid to the person entitled after deducting the expenses of sale and other incidental charges as well as the amount of sales tax and the penalty due under the Act. If it is found that the goods carried are without paying tax under the Act or not properly accounted for, the check-post officer shall collect the tax payable on the goods so carried and in addition levy penalty not exceeding five times amount of tax payable on such goods (Ambica Lamp House v. Commercial Tax Officer [2005] 142 STC 551 (AP); [2005] 2 ALD 704; [2005] 3 ALT 190. As it existed during 1993-94, section 29 did not contain a provision for confiscation of the seized goods. By A. P. Act No. 30 of 2001, sub-section (6B) of section 29 was inserted empowering the check-post officer, "to seize and confiscate any goods where such goods are carried in the goods vehicle without ....
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....rough the State. Section 29A has two sub-sections. Sub-section (2) which was inserted by A.P. Act No. 30 of 2001 with effect from April 1, 2001 empowers an officer to seize and confiscate any goods found in office when such goods are not covered or covered by fictitious documents. As this provision was not in existence during 1993-94, this has no application to this case. Section 29A(1) empowers an officer empowered by the Government to enter into and search office, shop, godown, vessel, receptacle, vehicle or any other place where the goods are kept by a carrier or bailee to whom goods are delivered for transmission and before transmission, such carrier or bailee keeps them in a place or places. During the search, the carrier or bailee or person in-charge of the goods shall produce bill of sale or delivery note or other prescribed documents regarding the goods and give the name and address and of the carrier or the bailee and the consignee. Whether failure to do so would again attract section 28(6)? This is the issue, which we may have to deal with a little while later. Next, relevant provision, deals with transit pass to be obtained by the driver of the vehicle and the consequ....
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.... of sections 28, 29, 29A and 29B and the corresponding rules, namely, rules 46, 46A, 47 and 48 may be summed up as follows: These provisions indisputably are intended to check tax evasion or attempted tax evasion. Such tax evasion or attempted tax evasion could occur in respect of sales transactions within the tax territory and/or at the check-post or even while the goods are in transmission to other tax territory. The tax evasion in the tax territory may be at the instance of a dealer, an agent, a transporter involved in the sale of goods. The basic difference between sections 28 and 29 of the Act is that the former is concerned with the power of seizure and confiscation of goods at the premises of the dealer or at any other place of the dealer carrying the goods, whereas the latter is concerned with inspection of goods at checkpost while in transit. Indisputably after April 1, 2001 by reason of section 29A(2) when the goods in transit are kept in godown, shop, office or vessel by the carrier or bailee, and they are not covered by the documents or covered by fictitious documents even those goods can be confiscated. Of course, under section 29(3)(b)(ii), at the check-post, if the g....
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....classes of officers for the purpose of taking action under sub-sections (1), (2) and (3). 48. (4) Any such officer, making such enquiry as he deems fit and after giving the owner of the goods, if he is ascertained, an opportunity of being heard, may confiscate the whole or any part of the goods seized, if he is satisfied that there is evasion or an attempt to evade tax thereon in any manner whatsoever, if the owner is not ascertained even after the enquiry, the officer shall order confiscation of the goods. A copy of the order of confiscation shall be served on the owner of the goods if he is ascertainable." The learned Tribunal came to the conclusion that confiscation cannot be ordered as section 28(6) has no application. According to the Tribunal, section 28(6) will be attracted only if the goods found in any office, establishment, etc., of the dealer were not found accounted for by the dealer in his accounts and other documents maintained in the course of business and that the Revenue failed to establish that as an agent of the consignor, the transporter was doing business in Andhra Pradesh. This conclusion in our considered view, suffers from misdirection in law. The lear....
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....sell the goods if necessary, however are not applicable. The two provisions which immediately spring into action are sections 29A and 29B. As already noticed, section 29A deals with the power of the empowered officer to inspect goods delivered to a carrier or a bailee, which are kept in the godown, vessel, receptacle, vehicle or any other place. In such a case it shall be the obligation of the carrier or bailee or the person in-charge of the goods, to produce the records and accounts as well as the documents supporting the claim that the goods inspected were for the purpose of transmission. If the goods are alleged to be in transit and only kept in the godown for further transshipment, section 29B has to be satisfied. This section provides that any vehicle carrying the goods coming from any place outside the State shall obtain transit pass from the check-post officer and deliver it to the check-post officer at the exit/last check-post while passing through the State of Andhra Pradesh. The proviso to section 29B casts burden of proving that the goods have actually moved out of the State shall be on the owner or person in charge of the vehicle. If the burden is not discharged by p....
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....fied period) in the course of business to any other person; (iv) A commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal or principals; Explanation I.-Every person who acts as an 'agent of a nonresident dealer', that is, as an agent on behalf of a dealer residing outside the State, and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as,- (i) a mercantile agent as defined in the Indian Sale of Goods Act, 1930 (Central Act III of 1930); or (ii) an agent for handling goods or documents of title relating to goods; or (iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment and every local branch of a firm or company situated outside the State, shall be deemed to be a dealer for the purpose of this Act." Whether a person be it a consignor or agent of consignor or consignee, who is not registered under the Act, as a dealer can also be subjected to the extreme action of confiscation of g....
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....the Supreme Court observing as follows (pages 647 and 648 in 15 STC): ". . . A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression 'business' though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profit-motive, will not make a person "dealer" within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer. The Legislature has not made sale of the very article bought by a person a condition for treating him as a dealer: the definition merely requires that the buying of the c....
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.... from a review of the circumstances attendant upon the transaction. . . . To infer from a course of transactions that it is intended thereby to carry on business ordinarily the characteristics of volume, frequency, continuity and regularity indicating an intention to continue the activity of carrying on the transactions must exist. But no test is decisive of the intention to carry on the business: in the light of all the circumstances an inference that a person desires to carry on the business of selling goods may be raised." Giving plain meaning of section 2(e), it becomes clear that irrespective of the fact that whether a person is a registered dealer or not as defined under section 2(m) of the Act, any person who carries on the business of buying and selling of goods shall be "dealer" as defined in section 2(e) for the purpose of section 28(6) of the Act. The charging section, i.e., section 5 of the Act mandates that, ". . . every dealer shall pay a tax under this Act for each year on every rupee of his turnover of sales or purchases of goods in each year irrespective of the quantum of his turnover at the rate of tax and at the points of levy specified in the Schedules". The ....
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....te, failing which it shall be presumed that the goods carried thereby have been sold within the State by the owner or person in-charge of the vehicle and accordingly the tax is assessed and penalty, if any levied in accordance with the provisions of this Act: Provided that where the goods carried by such vehicle are, after their entry into the State, transported outside the State by any other vehicle or conveyance, the burden of proving that the goods have actually moved out of the State shall be on the owner or person in-charge of the vehicle. Explanation.-If a vehicle is hired for transportation of goods by any person, the hirer of that vehicle shall, for the purposes of this section, be deemed to be the owner of the vehicle." The driver or any person in-charge of the vehicle carrying goods coming from any place outside the State shall have to obtain a transit pass from the check-post officer. The driver or the person in-charge of the vehicle shall have to carry the transit pass while passing through the State and shall have to deliver it to the check-post officer at the exit check-post, i.e., the last check-post of barrier before exit from the State of Andhra Pradesh. I....
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....y in error when it considered the law of burden of proof and went wrong in observing that the Revenue failed to establish by cogent and satisfactory evidence, that the goods have not crossed the borders of Andhra Pradesh. Having noticed that even according to the consignor and transporter, sections 29, 29A and 29B of the Act would be attracted to the facts of the case, casting burden of proof on the Department would amount to erroneous decision on a question of law and as held by this court in Jayaram Reddy [2009] 2 SCC 681 is misdirection in law, warranting interference. Validity of confiscation orders The confiscation order was passed by the jurisdictional CTOs drawing inferences and applying the presumption of sale in the State from the following undisputed facts. The consignor is not registered under the Nagaland sales tax-the consignor was not available at the address given in the travel documents; the transport vehicles took a circuitous route avoiding nearest route to the place of consignees; the first consignee was indulging in doubtful activities without carrying any business from the registered premises at Delhi; the second consignee was not even registered with the....
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....ement given by the first consignee, one cannot doubt the same. Further, burden of proof was shifted to the Department which is not proper. It may be reiterated that when the goods are in transit from any other State, the burden of proving that those goods were not sold in Andhra Pradesh but actually moved out of tax territory is always on the person-be it owner or person in-charge of the vehicle carrying the goods or else the presumption would spring into action. It shall have to be concluded that the goods brought to Andhra Pradesh ostensibly for the purpose of moving out were actually sold within the State without payment of tax. When the credibility of the consignor and the consignees is doubtful and when no written contract of sale is produced with regard to the payment, delivery, etc., and based on the statement made by the consignor and the transporter, the presumption under section 29B does not get dislodged. The finding that there was no proper notice or opportunity prior to seizure and confiscation are belied by the very fact that during the seizure, the manager or concerned person employed by BARL was present, notices were issued, consignor sent three representations a....