TaxTMI 
TaxTMI 
2015 (9) TMI 360
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....overed. The petitioners have also challenged the constitutional validity of Section 60(4) of the 2005 Act and of the Notification dated 4th July 2012 issued in exercise of power conferred by Section 93(1) of the 2005 Act and of Notifications dated 12th July 2012 and 30th October 2012 issued by the Commissioner of Commercial Taxes in exercise of power conferred by Rule 40(2) of the Bihar Value Added Tax Rules, 2005 as amended by Government Notification dated 4th July 2012. The facts common to these writ petitions are that the petitioners are the transporters and the owners of the vehicle (truck)/the goods concerned. On the fateful day, the petitioners were transporting the goods of the consigners in one State to the consignees in the other State. While carrying the goods from one State to the other, the concerned truck had to travel through the territory of the State of Bihar. While entering the State of Bihar the truck driver or the person in-charge of the goods was required to furnish particulars of the consignment, the consigner/s and the consignee/s, and the places from where and to which the goods were carried. Such information is required to be filed in a statutory format. I....
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....r recovery of the sum of Rs. 2,80,662/- has been issued on 2nd December 2012 by the Commercial Taxes Officer, Dobhi Check Post, Gaya. The F.I.R. was lodged for the alleged offence punishable under the 2005 Act and under Sections 415, 420, 406, 407, 409 and 120B IPC. In CWJC No. 1630 of 2013, the vehicle involved is the truck bearing registration no. HR 38H-9238. It is the case of the petitioner-transporter that on the fateful day the petitioner was carrying the goods of the consigner in Delhi to Chas and Jharia in the State of Jharkhand. On the way to Jharkhand, the truck had to pass through the State of Bihar. On 23rd November 2012, while entering the State of Bihar at the Integrated Check Post, Karmanasha, Bhabua, Kaimur on the border between the State of Uttar Pradesh and the State of Bihar, the truck driver was required to submit „Suvidha‟, the computer generated declaration. The particulars entered in the „Suvidha‟ produced by the driver were not true and complete. For incorrect/incomplete information provided to the authorities the truck and the goods were seized by the authority at the check post on 26th November 2012. The F.I.R. was lodged for th....
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....as required to produce „Suvidha‟, the computer generated declaration. The particulars entered in the „Suvidha‟ produced by the driver were not true and complete. For incorrect/incomplete information provided to the authorities, on 26th November 2012 the truck and the goods were seized by the authority at the check post. The F.I.R. was lodged for the alleged offence punishable under the 2005 Act and under Sections 415, 420, 406, 407, 409 and 120B, IPC. Under order dated 1st December 2012, the tax on the goods was assessed at Rs. 61,618.55 and the penalty of Rs. 1,84,856/-, three times the amount of tax assessed, has been imposed. Pursuant to the said order a demand notice in the sum of Rs. 1,84,856/- has been issued on 1st December 2012. In CWJC No. 8427 of 2013, the petitioner-transporter M/s Naresh Roadlines Private Limited claims to be the owner of the truck bearing registration no. HR 6QA-1938. In February 2013 the petitioner was transporting the goods of the consigner in Kolkata for delivery to the consignee in the State of Gujarat. On the way, the truck had to pass through the State of Bihar. While entering the territory of the State of Bihar at Dobhi....
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....e truck had to pass through the State of Bihar. On 26th November 2012, the truck reached the Integrated Check Post, Dobhi, Gaya, on the border of the State of Bihar. At the Check Post, the truck driver was required to produce „Suvidha‟, the computer generated declaration. The particulars entered in the „Suvidha‟ produced by the driver were not true and complete. For incorrect/incomplete information provided to the authorities the truck and the goods were seized by the authority at the check post. The F.I.R. was lodged for the alleged offence punishable under the 2005 Act and under Sections 415, 420, 406, 407, 409 and 120B, IPC. Under his order dated 30th November 2012, the Commercial taxes Officer imposed the penalty in the sum of Rs. 91,150/-, three times the assessed tax. Pursuant to the said order, demand notice in the sum of Rs. 91,150/- was issued by the Commercial Taxes Officer, Integrated Check Post, Dobhi on 30th November 2012. On payment of penalty the truck and the goods were released on 11th January 2013. In CWJC No. 14167 of 2013, the petitioner M/s Shiva Transport Company claims to be the owner of the truck bearing registration no. PB 10 CZ-65....
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....e authority, inter alia, to seize the goods not properly accounted for. Clause (b) of sub-Section (4) thereof empowers the concerned authority to impose penalty in the following words:- "(b) The authority referred to in clause (a) shall, in a case where the dealer or the person-in-charge of goods as mentioned in clause (a) fails to produce any evidence or fails to satisfy the said authority regarding the proper accounting of goods, impose a penalty, after allowing an opportunity of hearing in the prescribed manner to the dealer or such person, which shall be equal to three times the amount of tax calculated on the value of such goods and the goods shall be released as soon as the penalty is paid." Sub-section (5) of Section 56 thereof empowers the concerned authority, inter alia, to break open the lock or to seal any box or receptacle, godown or building etc. Chapter IX of the 2005 Act comprising Sections 60, 61 and 62 provides for "Check-Posts and Restrictions on Movement". Sub-section (1) of Section 60 of the 2005 Act empowers the State Government to set up check-posts and barriers at any place in the State. Sub-section (2) thereof enjoins every person transporting the goods ....
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....zure penalty, security, release and confiscation of goods." Section 61 of the 2005 Act imposes restriction on movement of goods. Section 62 of the 2005 Act makes provision in respect of "Transportation of goods through State of Bihar". Sub-section (1) thereof provides for transit permission to be obtained by the driver or the person in-charge of the vehicle at the point of entry and the surrender of such transit permission at the point of exit within seventy-two hours of the entry. In case of failure to surrender the transit permission, the goods would be deemed to have been sold within the State of Bihar entailing the penalty. Section 93 of the 2005 Act empowers the State Government to make rules to carry out the purposes of the 2005 Act. In exercise of the power to make rules conferred by Section 93 of the 2005 Act, the State Government has framed the Bihar Value Added Tax Rules, 2005. Rule 40 of the Rules provides for „check posts‟ and prior to its amendment by Notification dated 4th July 2012 read as under:- "40. Check Posts.- (1) Where the State Government decides to set up a check-post, under section 60 at any place in this State, the location of such check-....
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....demand, communicate the electronic transaction identification number granted in respect of the goods to the monitoring authority for verification who shall deal with the same in such manner as may be specified in the notification issued under clause (b). (e) The manner in which the electronic transaction identification number is to be communicated for verification to the monitoring authority and the period for which the said number shall be valid may be specified in the notification issued under clause (b). Explanation.1 - For the purposes of this sub-rule the expression "monitoring authority" shall mean - (i) The Deputy Commissioner of Commercial Taxes, the Assistant Commissioner of Commercial Taxes, the Commercial Taxes Officer or the Assistant Commercial Taxes Officer exercising jurisdiction in respect of the concerned checkposts or any checkposts en route; or (ii) The Deputy Commissioner or Commercial Taxes, the Assistant Commissioner of Commercial Taxes, the Commercial Taxes Officer or the Assistant Commercial Taxes Officer exercising jurisdiction in respect of any of the Circles en route; or (iii) Any of the authorities exercising jurisdiction under section 86 in re....
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....mercial Taxes is ultra vires Sections 93(1) and 93(2)(zzo) of the 2005 Act. It is further submitted that in exercise of power conferred by rule 40 of the Rules, the Commissioner of Commercial Taxes has issued Notifications dated 11th July 2012, 12th July 2012 and 30th October 2012. The said Notifications having been issued by the Commissioner of Commercial Taxes are violative of Section 93 of the 2005 Act and are null and void. It is also submitted that the Notifications dated 12th July 2012 and 30th October 2012 have not been notified in the Official Gazette as envisaged by Section 2(u) of the 2005 Act. The said two Notifications are, therefore, non est in the eye of law. No action, therefore, could have been taken against the goods and the carriers in question for violation of the said Notifications. In support of his submissions, Mr. R K Agrawal has relied upon the judgments of the Hon‟ble Supreme Court and the High Courts in the matters of Ganpati Singhji vs. State of Ajmer (AIR 1955 SC 188); of Atiabari Tea Co. Ltd. vs. State of Assam (AIR 1961 SC 232); of Deputy Commercial Tax Officer, Madras vs. Sha Sukraj Peerajee (AIR 1968 SC 67); of Sodhi Transport Co. vs. State o....
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....as further submitted that the definition of the word "notification" occurring in Section 2(u) of the 2005 Act will not govern the legislative intention. In support thereof, he has relied upon the judgments in the matters of Harla v. The State of Rajasthan (AIR 1951 SC 467); of Bangalore Woollen, Cotton and Silk Mills Co. v. Bangalore Corporation (AIR 1962 SC 562); and of Rai Vimal Krishna v. State of Bihar [(2003) 6 SCC 401]. Mr. Lalit Kishore has also relied upon the judgments in the matters of Guljag Industries v. Commercial Taxes Officer [(2007) 7 SCC 269] and of Assistant Commercial Taxes Officer v. Bajaj Electricals Limited [(2009) 1 SCC 308]. At the outset, we must record that the impugned orders made in exercise of powers conferred by Section 60(4) of the 2005 Act are appealable under Section 72 of the 2005 Act. If aggrieved, the writ petitioners ought to have challenged the orders of seizure and penalty. The person aggrieved, that is, the owner of the goods or the owner of the vehicle, has an alternative statutory remedy of appeal before the higher forum. It is the appellate authority alone which could have meticulously examined the facts of the case and made the order ke....
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....e must note that with respect to the incident in question the authorities have filed a police complaint. The matters have thus become police case, and the goods and the trucks are in the police custody. The only remedy to the writ petitioners for release of the trucks would be before the concerned Magistrate under Section 451 Cr.P. C. Now we shall examine the constitutional validity of Section 60(4) of the 2005 Act and the Notifications dated 4th July 2012 and 12th July 2012. Article 301 of the Constitution deals with the "freedom of trade, commerce and intercourse" and reads, "subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free". Learned Advocates Mr. R K Agrawal and Mr. Purnendu Singh have vehemently submitted that it is the constitutional mandate that the transport of goods throughout the country shall be free. In other words, no tax or fee is chargeable for transport of goods through the territory of a State. Article 303 of the Constitution imposes bar upon the legislative power of the Union and the States from making any legislation with regard to trade and commerce. Thus the goods carried by the wri....
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....ase of the goods which are believed to have been brought in the State for sale or use in the State, Article 304(b) of the Constitution is not attracted, the question of previous sanction of the President does not arise. We, therefore, reject the challenge to the constitutional validity of Section 60(4) of the 2005 Act. Section 60(4) of the 2005 Act is not ultra vires Articles 301, 303 or 304(b) of the Constitution of India. It is not for the first time that such a provision is made in the 2005 Act. Similar provisions are found in other taxing statutes with a view to counteracting evasion of tax. As early as in 1961, in the matter of Baldeo Singh (AIR 1961 SC 736) a similar issue arose in respect of the Indian Income Tax Act, 1922. The challenge was to the validity of Section 23A of the said Act as it stood on 11th June 1947 on the ground of legislative competence vis-a-vis Entry 54 of List-I in the Seventh Schedule to the Government of India Act, 1935. Under the said Section, the undistributed income of a company was, "deemed to have been distributed as dividend amongst the shareholders as at the date of the general meeting", being the meeting at which the accounts for the year....
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....xit check post. The failure to surrender the transit pass would give rise to the presumption that the goods had been sold within the State of U.P. The said presumption would entail liability to pay tax under the said Act. The constitutional validity of the aforesaid Section 28B and Rule 87 was the subject matter of challenge. The Hon‟ble Court followed the judgments of the Supreme Court in the matters of Baldeo Singh (AIR 1961 SC 736) and of Gursahai Saigal (AIR 1963 SC 1062) to hold the said provisions intra vires. The Hon‟ble Court held that the provisions contained in the aforesaid Section 28B of the Act and Rule 87 of the Rules were the machinery provisions. They were enacted to ensure that a person who had brought the goods inside the State and who had made a declaration that the goods were brought into the State for the purpose of carrying them outside the State should actually take them outside the State. The Hon‟ble Court also held that the words "it shall be presumed" was rebuttable presumption and that the dealer or the person in-charge of the goods may rebut the said presumption by producing the evidence. The Hon‟ble Court held that the law made t....
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....ther acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." This judgment is clearly distinguishable. This decision will apply with all force where the authority has discretion to impose penalty. In the present case, Section 60(4) of the 2005 Act is mandatory and leaves no discretion to the authorities. In the matter of The Check Post Officer, Coimbatore (AIR 1971 SC 792) the Constitution Bench of the Hon‟ble Court was called upon to examine the constitutional validity of power to se....
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....as sent for assent by the President. The Hon‟ble Court held that the impugned rule 21A framed under the rule making power had the effect of enlarging the scope of Section 10 recovering the tax from a person other than dealer and thus was ultra vires the Act. This judgment is in peculiar facts of the case. It is not an authority in the subject matter on our hand. True, in the matter of Atiabari Tea Company Limited (AIR 1961 SC 232) the Hon‟ble Supreme Court has taken a contrary view. The challenge was against the Assam Taxation (on Goods carried by Roads or Inland Waterways) Act on the ground of lack of legislative competence of the State of Assam and being violative of Article 301 and Article 304(b) of the Constitution. The Constitutional Bench of the Hon‟ble Supreme Court held, "when Article 301 provides that trade shall be free throughout the territory of India primarily it is the movement part of the trade that it has in mind and the movement or the transport part of trade must be free subject of course to the limitations and exceptions provided by the other Articles of Part XIII. That we think is the result of Article 301 read with the other Articles in Part....
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.... tax from documentary evidence like invoice, books of accounts, etc. The Hon‟ble Court also rejected the contention that in certain cases of inter-State transaction, the assessees were not liable for being taxed under the Rajasthan Act and, therefore, the penalty for contravention of Section 78(2) could not be imposed. The Hon‟ble Court held, "It is for contravention of Section 78(2) that penalty is attracted under Section 78(5). Whether the goods are put in movement under local sales, imports, exports or inter-State transactions, they are goods in movement, therefore, they have to be supported by the requisite declaration. It is not open to the assessee to contravene and say that the goods were exempt. Without disclosing the nature of transaction it cannot be said that the transaction was exempt. The Hon‟ble Court further held, "we are of the view that mens rea is not an essential element in the matter of imposition of penalty under Section 78(5)." Mr. Purnendu Singh has submitted that this judgment has not noticed the earlier judgment in the matter of Atiabari Tea Company Limited (AIR 1961 SC 232), the judgment is, therefore, per incurium. In the matter of Baj....
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....s valid. However, the similar provision to levy penalty in the Assam Taxation (on Goods carried by Road or Inland Waterways) Act was held to be beyond legislative competence by majority. (Hon‟ble B P Sinha, CJ, dissented). The said judgment has been followed by the Constitution Bench headed by Hon‟ble Mr. Justice J C Shah in the matter of The Check Post Officer, Coimbatore (supra). The power to seize and confiscate the goods and levy penalty under the Madras General Sales Tax Act (1 of 1959) was held to be not ancillary or incidental to "Taxes on sale or purchase of goods." Yet another Constitution Bench of the Supreme Court in the matter of R S Jhaver (AIR 1968 SC 59) headed by the then Chief Justice K N Wanchoo considered similar provisions of search and seizure under Section 41 of the Madras General Sales Tax Act (1 of 1959). The Hon‟ble Bench kept the question "whether a power to confiscate goods which are found on search and which are not entered in account books of the dealer is an ancillary power necessary for the purpose of stopping evasion of tax" open. We may note that apart from the aforesaid two judgments all along prior to 1971 and after 1971 till....
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....he vehicle to submit a copy of the transit permission at the exit check post. The said Rule 40 has now been amended under the Government Notification dated 4th July 2012. Under the amended Rule 40, a revised procedure has been prescribed for disclosure of the particulars and for issue of the transit pass. It is evident that the said amendment is necessitated on account of the modern technology. Instead of manual intervention, now under the revised rule, the required declaration is auto generated by employing the electronic technology. Under the amended Rule 40 the driver or the person in-charge of the goods is required to feed the particulars in the required digital form and the digital data fed to the system automatically generates the declaration required to be filed under Section 60(2) of the 2005 Act. Under the amended Rule 40 the Commissioner of Commercial Taxes has been empowered, inter alia, to notify the date from which the said amendment would become effective; to notify the quantity or the value of the goods that can be transported across a check post without the Transaction, Identification Number (TIN). The Commissioner of Commercial Taxes has been empowered to notify th....
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....icial Gazette is directory and not mandatory. The said sub-rule is specific in so far as it provides, "Commissioner may, by notification". The word "notify" is defined in clause (u) of Section 2 of the 2005 Act to mean "a notification published in the Official Gazette". In our opinion, no Notification would be complete / effective without its publication in the Official Gazette. Section 28 of the Bihar & Orissa General Clauses Act, 1917 also provides for publication of orders or notifications in the Official Gazette. It reads - "28. Publication of orders and notifications in the Official Gazette. - Where in any Bihar and Orissa Act (or Bihar Act) or in any rule made under any such Act, it is directed that any order, notification or other matter shall be notified, or published, such notification or publication shall, unless the Act otherwise provides, be deemed to be duly made if it is published in the Official Gazette." As we have recorded hereinabove, wherever the 2005 Act requires notifying rule or notification, it necessarily means notification in the Official Gazette. Even in absence of a specific provision in the Act or the Rules, the aforesaid Section 28 requires public....
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.... against the principles of natural justice to permit the subjects of a State to be punished or penalized by laws of which they had no knowledge and of which they could not even with the exercise of reasonable diligence have acquired any knowledge. Natural justice requires that before a law can become operative it must be promulgated or published. It must be broadcast in some recognizable way so that all men know what it is; or, at the very least, there must be some special rule or regulation or customary channel by or through which such knowledge can be acquired with the exercise of due and reasonable diligence. The thought that a decision reached in the secret recesses of a chamber to which the public have no access and to which even their accredited representatives have no access and of which they can normally know nothing, can nevertheless affect their lives, liberty and property by the mere passing of a Resolution without anything more is abhorrent to civilized man. It shocks his conscience. In the absence therefore of any law, rule, regulation or custom, we hold that a law cannot come into being in this way. Promulgation or publication of some reasonable sort is essential." I....