TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 1381
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....ed. After considering the facts and circumstances and the evidences on record, the Mobile Squad Authority came to the conclusion that the goods have been loaded from Ghaziabad and accordingly passed the seizure order dated 20.10.2016 demanding cash security of Rs. 10,90,250/- for release of the seized goods, which were valued at Rs. 27,25,624/-. Against the aforesaid order, the respondent preferred an application under proviso to Section 48(7) of the Act before the Joint Commissioner (SIB), Commercial Tax, Range Barellie in which he took the stand that the goods were being transported from transshipment area at Delhi-U.P. Border. The same were accompanied with TDF-1, bills, bilties and weighment slip. The respondent also took the stand that transporter has no right to collect information about the consignor and whosoever books the goods, the same is transported by him for the given destination where the goods are delivered to the person who produces the bilty. The Joint Commissioner (SIB) found that the applicant is not registered under the Act. He considered the facts and evidences on record, and rejected the application of the respondent by order dated 02.11.2016. Aggrieved with ....
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....s transshipment area. From there goods are loaded in trucks for transportation to its destination after weighment. He submits that in the present case, the respondent has booked the goods of various dealers for transportation from Delhi to Siliguri (West Bengal). He submits that as per circular of the Commissioner dated 07.10.2013, copy of which has been filed as Annexure-20 to the revision, search and seizure may be made in the transshipment area with regard to the goods being loaded and transported from the transshipment area (Delhi Ghaziabad Border) but it cannot be treated to have been loaded for transportation from Ghaziabad within the State of U.P. He submits that transshipment area is a no-man's land and, therefore, transportation of goods from this area cannot be treated to be a transportation originating from the State of U.P. He relied upon a decision of Single Bench of this court in the case of Commissioner, Commercial Tax, U.P. Lucknow Vs. Panch Kanya Road Carriers, Ghaziabad, 2012 NTN (Vol.49)-22 (at 25). He submits that the respondent has not committed breach of any of the provisions of the Act. No action can be initiated against him for the reason that the goods ....
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....dealer: (i) broker or canvassing agent who acts as mediator between purchaser and seller of goods; or (ii) transporter or any other carrier or a forwarding agent of goods; or (iii) person who fabricates or manufactures any goods for a dealer; or (iv) person who takes delivery of goods or who dispatches goods on behalf of a dealer; or (v) person who holds in custody any goods belonging to a dealer; or (vi) person who handles goods of a dealer in any other capacity. Section 48. Power to seize goods.- (1) An officer authorised under sub-section (1) of section 45 shall have the powers to seize any goods - (i) which are found in a dealer's place of business, vehicle, vessel or any other building or place; or (ii) which, such officer has reason to believe to belong to the dealer and which are found in any place of business, vehicle, vessel or any other building or place, but are not account for by the dealer in his accounts, registers or other documents maintained in the ordinary course of his business. (iii) which are found in any place of business, vehicle, vessel or any other building or place, and such goods are accompanied by any tax invoice or sale invoice or ....
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....x, it shall pass an order imposing a penalty not exceeding forty per cent of the value of such goods, as he deems fit. (6) A copy of the order imposing penalty under sub-section (5) shall be served on the dealer or, as the case may be, the person in charge. (7) The officer seizing the goods shall serve on the dealer or, as the case may be, the person in charge an order in writing mentioning the fact of such seizure and indicating the amount, not exceeding such amount as would be sufficient to cover the penalty likely to be imposed, on deposit whereof in cash, the goods so seized may be released in favour of the dealer or, as the case may be, the person in charge: PROVIDED that the Commissioner or such other officer, not below the rank of a Deputy Commissioner, as may be authorised in this behalf by the Commissioner, may, for sufficient reasons to be recorded in writing, direct that the goods be released without any deposit or on depositing such lesser amount, or furnishing security in such form other than cash or indemnity bond, as he may deem fit: PROVIDED FURTHER that in case of a person, who is not a registered dealer and against whom penalty order referred to in sub-sec....
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....f the vehicle. U.P. VAT RULES, 2008: "Rule 58. The transit of goods by road through the State.-- The driver or person-in-charge of a vehicle carrying goods referred to in sub-section (1) of section 50, coming from a place outside the State and destined for a place outside the State, passes through the State, the driver or person-incharge of a vehicle shall carry such documents and follow such procedures as may be determined by general or special order issued by the Commissioner from time to time, failing which it shall be presumed that the goods carried thereby are meant for sale within the State by the owner or person-in-charge of the vehicle. Rule 59. Import or receipt of goods by rail, river or air and matters incidental thereto. (1) A registered dealer or a person other than a registered dealer desirous of importing or receiving into the State (from any place outside the State) by post, rail, river or air, any goods, notified under sub-section (1) of section 50, in excess of quantity, measure or value specified thereunder, shall submit for endorsement the original and duplicate portions of the declaration or certificate as the case may be duly filled in and signed by hi....
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....witness would be entitled to refuse to answer or produce under sections 121 to 131, both inclusive, if the questions were asked or the documents were called for by the adverse party; nor shall the Judge ask any question which it would be improper for any other person to ask under section 148 or 149; nor shall he dispense with primary evidence of any document, except in the cases herein- before excepted." Discussion and Findings:- Question No. (i) Whether under the facts and circumstances of the case, seizure of goods and demand of cash security for its release under Section 48 of the U.P. VAT Act, 2008 is valid? 6. Perusal of the record shows that on 27.09.2016, a truck bearing Registration No.UP22T/4924 was intercepted by the Assistant Commissioner, Commercial Tax, Mobile Squad Pilibhit. The driver of the truck was required to produce the documents. The authorities also intended to make physical verification of the goods and for that, time was fixed at 10.30 A.M. on the next day i.e. 28.09.2016. On 28.09.2016, the driver of the truck Sri Saddam Hussain moved an application that the respondents have instructed on telephone that the goods be verified physically in their presenc....
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....g of the goods. Thus, the respondents and actual owner of goods did not deliberately turn up for 12 days for physical verification of the goods loaded in the truck in question. On 09.10.2016, the driver as well as the helper, namely Sri Saddam Hussain and Sri Kayyum appeared for physical verification of the goods. They produced weighment slip bearing Serial No.1950 dated 25.09.2016 of M/s Mahabir Dharm Kanta G.T. Road, Delhi-U.P. Border, Ghaziabad, a transit declaration form No.D20160900424805 and certain other documents. On checking, the following discrepancies were found: (i) On physical verification, goods of G.R. Nos.18982, 61162, 18973, 61618, 61613, 15930 and 15886 were found different than the goods declared. (ii) Kachcha parchas of goods of estimated value covered by G.R. Nos.61694 and 61613 were found. (iii) On physical verification, 19 bags iron pended rack and 11 bags artificial jewellery gilt (payal) and one bag leather washer were found undisclosed. (iv) On examination of bills/invoices and as per TIN numbers, the consignors were not found in existence and TIN numbers were fictitious. (v) On inquiry, the consignors were also not found in existence. (vi) For....
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....d on 22.10.2016 before the Mobile Squad Authority by one Sri Rana Pratap Singh, authorised representative along with an authorisation of the respondents showing him to be resident of District Chapra while as per Voter ID Card, the aforesaid person is resident of District Saran. Even in this reply, the respondents have not mentioned even a word about the queries made in the show cause notice for seizure of goods but instead simply stated that the goods are covered by invoices and bilties and they have no right to collect information about the consignors and whosoever books the goods, they deliver it at the destination on presentation of bilti. It was also stated that the goods do not relate to the Uttar Pradesh. 11. After the seizure order, the respondents moved an application under proviso to Section 48(7) of the Act before the Joint Commissioner (SIB), Commercial Tax, Bareilly, Zone-B, Bareilly, who passed a detailed order dated 02.11.2016. He examined each and every paper, the inquiry report etc. and noted details of 62 alleged consignors who were not found in existence and their TIN numbers as mentioned in the invoices were found to be forged. The goods mentioned in the bilties....
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....on record which could neither be disputed or denied by the respondents nor the Tribunal has set aside the findings recorded in this regard by the Mobile Squad Authority and the Joint Commissioner (SIB). Three questions were put by the court to the respondents as recorded in the order of this court dated 09.12.2016 which were answered as under: "(a) Question (i): Whether there is any branch or office or contact address of the respondent at Ghaziabad (U.P.) and Siliguri (West Bengal)? Answer (i):- It is not relevant for transportation and delivery of the goods. (b) Question (ii):- When goods of 76 invoices relating to different alleged purchasers showing their address merely as 'Siliguri' are being transported by the respondent then how the goods shall be delivered to alleged purchasers whose address are not known? Answer (ii):- In view of the provisions of Section 52 read with provisions of Rule 58 of the Rules, the jurisdiction of the authorities under the Act is confined only within the State of U.P. (c) Question (iii):- Since the entire case of the department is that the consignors are bogus and invoices are fake and the goods have been loaded within State of U.....
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....F-1 by submitting false information, suppressing material information, identity and particulars of real owners of the goods, so as to give it colour of transportation of the goods from outside the State of Uttar Pradesh to outside the State of Uttar Pradesh under Section 52 of the Act, with intent to evade tax under the Act. Under the circumstances, seizure of the goods under Section 48 of the Act and demand of cash security by the Mobil Squad Authority as modified by the Joint Commissioner (SIB) for release of the goods, does not suffer from any illegality. Question No.(ii) Whether Delhi - U.P. Border area of District Ghaziabad is "no-man's land"? 16. The stand taken by the respondents that certain border area of District Ghaziabad is a "no man's land", has no substance. Article 1(2) of the Constitution of India, provides that the States and the territories thereof shall be specified in the First Schedule. It is undisputed that District Ghaziabad is within the territory of State of U.P. Neither the Constitution of India nor any Statute provides for Delhi-U.P. Border area of District Ghaziabad to be "no man's land". The circular of the Commissioner Sales Tax dated 31.....
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.... whether the consignors and consignees are in existence or not. The stand so taken has no substance in view of the observations of Hon'ble Supreme Court in the case of A.B.C. (India) Ltd. Vs. State of Assam and another (2005) 6 SCC 424 (para-22) as under: "22. In our view, transporters are not strangers to the sale or purchase of goods, to the contrary are part and parcel and are directly involved in storing the goods purchased or sold by dealers, and in many cases such transactions are fictitiously carried on in false names and addresses besides false classifications vis-a-vis transportation of such goods in and outside the State making themselves party to the episode of such fictitious transactions for the sole purpose of evasion of tax by the dealers purchasing and selling such goods." 20. The activity of transporter or any other carrier, forwarding agent, person who holds any goods belonging to a dealer and person who handles goods of a dealer in any other capacity; have also been statutorily recognised under section 46 of the Act to be an activity ancillary or incidental to or in connection with business of a dealer. 21. In the case of Gill Sandhu Haryana Transport Co.....
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....lal Lallubhai (1973) 3 SCC 17 and the views expressed by Viscount Simon in Latilla v. IRC, (1943) AC 377 : 25 TC 107 (HL) stated as follows: (McDowell and Co. Ltd. V. CTO, (1985) 3 SCC 230, SCC pp.254-55, para 45) "45. Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges." 331. Reddy, J., we have already indicated, himself has stated that he is entirely agreeing with Mishra, J. and has only supplemented what Mishra, J. has stated on tax avoidance, therefore, we have to go by what Mishra, J. has spoken on tax avoidance. Reddy, J. has depreciated (sic deprecated) the practice of setting up of tax avoidance projects, in our view, rightly because the same is/was the situation in England and Ramsay (W.T.) Ltd. v. IRC, 1982 AC 300 and other judgments had depreciated the tax avoidance schemes. In our view, the ratio of the judgment is what is spoken by Mishra, J. for himself and on beha....
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.... 26. In the case of S.P. ChengalVaraya Naidu (dead) by L.Rs Vs. Jagannath (dead) by L.Rs and others, AIR 1994 SC 853, the Hon'ble Supreme Court held in para 7 as under : "7. The High Court, in our view, fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case, Jagannath obtained the preliminary decree by playing fraud on the court. The High Court, however, went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the illegal-g....
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....ding a vital information can be seriously viewed and the ultimate decision of the appointing authority cannot be faulted. 29.8 An employee on probation can be discharged from service or may be refused employment on the ground of suppression of material information or making false statement relating to his involvement in the criminal case, conviction or detention, even if ultimately he was acquitted of the said case, inasmuch as such a situation would make a person undesirable or unsuitable for the post. 29.9 An employee in the uniformed service pre-supposes a higher level of integrity as such a person is expected to uphold the law and on the contrary such a service born in deceit and subterfuge cannot be tolerated. 29.10The authorities entrusted with the responsibility of appointing Constables, are under duty to verify the antecedents of a candidate to find out whether he is suitable for the post of a Constable and so long as the candidate has not been acquitted in the criminal case, he cannot be held to be suitable for appointment to the post of Constable." (Emphasis supplied by me) 28. Similar principles with regard to fraud have been laid down by Hon'ble Supreme Cou....