TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 120
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....ufacturing automobiles spring leaf, tractor trolly, etc. The petitioner purchased 16 ton scrap spring pati from one M/s. Lokenath Traders, 150/A, South Sinthee Road, Kolkata, who is a registered dealer under the VAT Act and CST Act in the State of West Bengal. The goods were booked through M/s. Gupta Roadways, Jakarta Street, Kolkata, vide goods receipt No. GR/4224/11 dated August 20, 2011. The truck bearing Registration No. OR-14-U-8398 was carrying the goods supported with the required statutory documents, namely, goods receipt note, tax invoice issued by Lokenath Traders, Challan of Lokenath Traders and statutory way-bill No. AAA 3391612 along with manifest No. GR 4224/11 dated August 20, 2011 issued by Gupta Traders. When the truck carrying the goods accompanied by required documents reached Jamsolaghat checkgate on August 22, 2011, the Sales Tax Officer, unified checkgate, Jamsola (for short, "the STO") verified the goods along with the documents. Upon verification, he was of the opinion that the spring patti loaded in the vehicle were in good condition readily usable in heavy vehicles and it could not be treated as scrap materials (scrap spring patti). On the basis of the sai....
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....tion and opposite party No. 2 constituted a technical committee as directed by this court to ascertain the status of the goods, i.e., whether the goods in question were old one or new. Basing on the facts and circumstances of the case and taking into account the report of the technical committee constituted by him, opposite-party No. 2 disposed of the revision petition vide order dated September 15, 2011 by deleting the demand levied under the OET Act and directing the STO to proceed further under the OET Act by issuing proper notice. However, the order dated August 27, 2011 passed by the STO levying tax and penalty under the OVAT Act was confirmed. 3. Being aggrieved by the said order of the revisional authority under annexure 1, the petitioner has filed this writ petition. 4. Mr. D. Pati, learned counsel appearing for the petitioner, submitted that on the oral direction of opposite party No. 2, the petitioner along with his Advocate went to Jamasola check-post and appeared before opposite-party No. 3 on September 10, 2011 for the purpose of joint verification of the goods. No joint verification was conducted in presence of the petitioner. The technical committee ref....
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....ary evidence establishes the name of the purchaser and seller, and the petitioner is a registered dealer and accordingly, opposite- party No. 3 is not vested with the jurisdiction to make assessment. In support of the contention, learned counsel for the petitioner has placed strong reliance on the judgment of this court in the case of Sri Vinayak Store v. Sales Tax Officer [1992] 86 STC 423 (Orissa). Further, relying on the provisions of section 74 of the OVAT Act and rules 79 and 80 of the OVAT Rules, Mr. Pati, contended that the present demand has been raised illegally and initiation of the proceeding against the petitioner is also invalid, illegal, arbitrary and contrary to the aforesaid provisions. It is further stated that the observation of opposite-party No. 3 is without any basis and the imposition of tax and penalty is liable to be quashed. The entries made in the very documents produced before opposite-party No. 3 show that the goods carried were absolutely old goods. Opposite-party No. 3 is vested with jurisdiction to levy tax and penalty in the event he finds that the goods are not supported with the statutory documents required under section 74(2) of the OVAT Act. The ....
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.... consideration by this court:- (i) Whether, in the facts and the circumstances of the case, the STO, Unified Checkgate, Jamsola, is justified in taking action under sub-section (5) of section 74 of the OVAT Act and in passing order dated August 27, 2011 under annexure 5? (ii) Whether the opinion of the technical committee constituted pursuant to the order of this court in W. P. (C) No. 23516 of 2011 is binding on the petitioner as well as opposite-party-Commercial Tax Department Authorities in the facts and circumstances of the case? (iii) Whether the order dated September 15, 2011 (annexure 1) passed by opposite-party No. 2-revisional authority is sustainable in law? 7. Question No. (i) is as to whether the STO is justified in taking action under sub-section (5) of section 74 of the OVAT Act and in passing the order dated August 27, 2011 under annexure 5. 8. To deal with this question, it is necessary to know what is contemplated under sub-section (5) of section 74 of the OVAT Act, which is extracted below:- "74. Establishment of check-posts and inspection of goods while in transit:- &nb....
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....r-dealer intimating him that on inspection of goods, he noticed that the goods covered by way-bill were found to be incorrect ; those goods are found to be auto parts (spring) leaf in sets ; but the way-bill in support of the consignment discloses the goods to be scrap spring pati. In the said show-cause notice against column "Scheduled goods inspected", the following entries have been made:- "Scheduled of goods inspection:- 216 (two hundred sixteen) nos. of spring leafs sets are found loaded in the truck bearing No.-OR-14-U-8393 in good condition and each set is consisting of different no. of leafs. The consignment is not scrap spring leafs but spring leafs set in good conditions to be used in different heavy vehicles." 12. In the order dated August 27, 2011 (annexure 5), the STO observed/held as follows:- "The way-bill and the invoice in support of the consignment discloses the goods to be 16 MT of scrap spring patti purchased from M/s. Lokenath Traders, 150A, South Sinthee Road, Kolkata vide tax invoice No. 05/AUG/2011-12 dated August 20, 2011 and the value of the goods disclosed amounting to Rs. 3,26,400. The ASTO on duty verified ....
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.... Textiles (I) P. Ltd. [2010] 1 GSTR 453 (SC), held that fraud vitiates every solemn act. It is fraud in law if a party makes a representation which he knows to be false and injury ensures therefrom although the motive from which the representation proceeded might not have been bad. 15. The honourable Supreme Court in Smt. Shrisht Dhawan v. Shaw Brothers [1992] 1 SCC 534, held as under:- "Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, 'wing me into the easy-hearted man and trap him into snares'. It has been defined as an act of trickery or deceit. In Webster's Third New International Dictionary fraud in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Legal Dictionary, "fraud" is defined as an intentional perversion of truth for the purpose of inducing another in reliance u....
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....vested in sub-section (5) of section 74 has imposed penalty and the petitioner is required to pay penalty imposed under section 74(5) in addition to tax as contemplated in sub-section (7) of section 74 of the OVAT Act. 17. In view of the above, the STO, Unified Checkgate, Jamsola, is justified in taking action under section 74(5) of the OVAT Act and in passing order dated August 27, 2011 under annexure 5. 18. Question No. (ii) is as to whether the opinion of the technical committee constituted pursuant to the order of this court in W. P. (C) No. 23516 of 2011 is binding on the petitioner as well as opposite-party-Commercial Tax Department authorities in the facts and circumstances of the case. 19. As stated above, the order under annexure 5 passed by opposite-party No. 3 was challenged in W. P. (C) No. 23516 of 2011. After considering the rival legal contentions of the parties, the said writ petition was disposed of with liberty to the petitioner to approach the revisional authority and the revisional authority was also directed to constitute a technical committee to find out the status of the goods, i.e., whether the goods in question are old one or new. Such ....
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....ice of M/s. Lokenath Traders, Kolkata sent through M/s. Gupta Roadways loaded in vehicle bearing registration No. OR-14-U-8398 are old one or new. The constituted technical committee submitted its report dated September 12, 2011, wherein it is stated that all the members of the technical committee checked the vehicle in question by opening the cover and verified the alleged goods after rotating both the sides of the sets and found that the alleged goods are new spring leafs set. 20. After hearing learned counsel for the petitioner, the revisional authority passed the impugned order under annexure 1 with the following observations and findings:- "Heard the learned advocate appearing on behalf of the petitioner, gone through the orders of STO, Unified Checkgate, Jamsolaghat visa-vis the grounds of revision and the material available in the record along with the report of the constituted technical committee and have come to the conclusion that the STO, Unified Checkgate, Jamsolaghat, is fully justified in raising the demand under section 74(5) of the OVAT Act, detaining the vehicle bearing No. OR-14-U-8398. First of all I would like to point out here that in....
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....ing authority, taking into consideration the report of the technical committee constituted pursuant to direction of this court, came to the conclusion that the documents furnished by the petitioner before the STO contain false declaration of the description of commodity/goods. The goods in question were found to be new one whereas it is described as scrap spring patti and this has been done with obvious mala fide intention of not paying tax due to the State exchequer. It was further contended that unless the goods are put to test through mechanical means, it is not possible to find out the status of the goods. The goods do not have the required strength and hardness which is essentially required for use in heavy automobile vehicles. Such contentions of the petitioner are not acceptable in view of the unanimous opinion of all the members of the technical committee having expertise in the automobile field. Moreover, it is unheard that when such goods are sold in the market, the consumers before purchasing such goods would put to test through mechanical means to find out the status of the goods, its strength and hardness. If a consumer of the goods can satisfy himself without any test....
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....s compelling reasons exist. If, however, the officer in-charge of the check-post is of the considered view that a departure is warranted, he must record reasons therefor and indicate those to the prescribed person. Adoption of such procedure will be in tune with principles of natural justice. 25. In the instant case, the STO has indicated valid reasons for holding that the goods in question loaded in the vehicle were new spring leaf sets and the value mentioned in the documents like way-bill and tax invoice has been understated and the actual value is much higher for the reasons stated in the impugned order. 26. In view of the above, the decision of this court in the case of Sri Vinayak Store [1992] 86 STC 423 (Orissa) is of no help to the petitioner. 27. Question No. (iii) is as to whether the order dated September 15, 2011 (annexure 1) passed by opposite-party No. 2 is sustainable in law. 28. For the reasons stated in the preceding paragraphs, opposite-party No. 2-revisional authority is fully justified in confirming the levy of penalty under section 74(5) of the OVAT Act made by the STO under annexure 5 and also in deleting the imposition of penalty u....