TaxTMI 
TaxTMI 
2017 (6) TMI 432
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....d transit declaration form (TDF-I) No. D20161100247018 as is required under the U.P. VAT Rules, 2008. Entry point of vehicle in the State was shown at Mohan Nagar, Ghaziabad on 21.11.2016, whereas exit point of vehicle was shown as Bindomganj at Sonebhadra on 25.11.2016. On 21.11.2016, just after the vehicle entered U.P., it was checked by mobile squad and the driver of the vehicle produced TDR-1, challan dated 18.11.2016 for 484 boxes valued at Rs. 11,41,766/-; invoices; 52 GR's and weighment receipts. According to the revisionist, certain discrepancy was noticed and vehicle was detained. The driver left the vehicle and apparently returned to Delhi. A show cause notice was issued on 24.11.2016, fixing 29.11.2016 as the date. Notice also indicated that physical verification of goods is required. The notice was allegedly pasted on the vehicle. None appeared on 29.11.2016. Applicant denies receiving of this notice. A seizure order was passed on 30.12.2016, recording that notices were sent for physical verification of goods and in presence of the applicant's representative goods were physically verified. It was found that 232 items transported were over and above the goods spe....
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....y any other vehicle or conveyance, the onus 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 - For the purposes of this section, the hirer of the vehicle shall also be deemed to be the owner of the vehicle." 7. Rule 58 of the U.P. Value Added Tax Rules, 2008, is the relevant rule for the purpose and provides as under:- "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-in-charge 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 in charge of the vehicle." 8. A circular dated 3.9.2013 has been issued by Commissioner Commercial Tax under Rule 58, which continues to subsist with certain modification and is extracted hereund....
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....ified website and shall produce the proof of entering the particulars in such website, before the officer making search or inspection under this section, in the manner prescribed by the Commissioner. (2)(a) where such goods are imported, brought or otherwise received into the state by registered dealer, he shall carry such declarations or documents as may be prescribed. (b) where the goods are imported, brought or otherwise received into the state by a person otherwise than in connection with business, he may likewise carry such certificates and documents as may be prescribed. (3) The driver or other person-in-charge of any vehicle carrying any goods referred to in the preceding sub-sections shall stop the vehicle when so required by an officer authorized under subsection (I) of section 45 or sub-section (I) of section 48 and keep in stationary for so long as may be considered necessary by the officer authorized under sub-section (I) of section 45 of sub-section (I) of section 48, as the case may be, and allow him to search the vehicle and inspect the goods and all documents referred to in the preceding sub-sections and shall, if so required, give his name and address and the....
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....wer to seize goods. Sub-sections (3), (7), (8), (9) and (10) of section 48 of the Act reads as under:- "48. Power to seize goods.- (1) .... (3) An officer seizing the goods under sub-section (1) shall take all the measures necessary for their safe custody and forward the list, referred to in the proviso to sub-section (1), along with other documents relating to the seizure to the assessing authority concerned. (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 indemni....
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....or incidental to or in connection with the business of a dealer. The transport vehicle crossing the State has to possess a transit declaration form as well as other documents required to be possessed as per the circular issued by the Commissioner in terms of Section 50 of the Act. The authorities are entitled to verify whether such declaration/documents are available with the vehicle and disclosure made is true, and if it be so, no further scrutiny is warranted. The authorities would be entitled to verify correctness of declarations/documents. For such purposes, the authorities can verify as to whether the goods actually transported are as disclosed in the TDF, and physical verification can be made to ascertain that declaration made is true. The object of enquiry is merely to satisfy that goods declared to be transported are coming from outside the State, and is actually bound to a place beyond the State. If for part of the goods no reference is made in TDF or relevant supporting documents are missing, a rebuttable presumption might arise that such goods are not intended to cross the State, and are likely to be offloaded within the State. 13. The scope of such enquiry under the pr....
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....driver or person-in-charge of the vehicle retaining one copy himself. (3) The driver or person-in-charge of the vehicle or vessel shall stop his vehicle at such exit check-post surrender one copy of the trip sheet and allow the officer-in-charge of the check-post to inspect the documents, consignments and goods in order to ensure that the consignments being taken out of the State are the same as mentioned in the trip sheet. The officer-in-charge of the exit check-post shall issue a receipt on the other copy of the trip sheet surrendered by such driver or person-in-charge of the vehicle. (4) The officer-in-charge of the exit check-post shall have the power to detain, unload and search the contents of the vehicle for the purpose mentioned in Sub-rule (3)." Paragraphs 8 and 9 of the judgment in Madhya Bharat Transport Carrier, Gwalior (supra) are relevant and thus reproduced:- "8. On the facts of the present case as stated above, situation to raise presumption of sales of goods inside of the State of U.P. had not arisen. The time for surrender form XXXIV had not expired and inasmuch as, the vehicle was found standing loaded with the goods, the trade tax authority has a jurisdic....
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....onditions prescribed in this behalf being fulfilled. A person who sells goods inside the State of Uttar Pradesh and fulfills the other conditions prescribed in that behalf is a dealer even as per amendments made in 1959, 1961, 1964, 1973 and 1978 to the said definition. There is, therefore, no substance in the contention that a transporter was being made liable for the first time after 1979 with retrospective effect to pay sales tax on a transaction which is not a sale. Tax becomes payable by him only after a finding is recorded that he has sold the goods inside the State though with the help of the presumption which is a rebuttable one." 14. So far as question of physical verification is concerned, this Court in Madhya Bharat Transport Carrier, Gwalior (supra) took note of Form 34 and the GR, which are referred to therein. It was noticed that there was some difference in the actual goods transported vis-a-vis details mentioned in the bill, but the same was not found relevant, as the transporter was found to have received consignment with reference to the GR and not with reference to actual number of pieces being transported. Paragraphs 11 and 12 of the judgment are also reproduce....
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....should be made with reference to the packages, which is mentioned in form XXXIV and not with reference to number of pieces contained inside the packages and if the authority wants to verify the goods with reference to the number of pieces, such verification should also be made at the entry check-post while issuing form XXXIV and if form XXXIV was issued with reference to the packages and not with reference to the pieces, the verification should only be made with reference to the packages and not with reference to the pieces. 12. In my view, since on verification same number of packages and same description of goods were found on physical verification as mentioned in GR's and in form XXXIV, it cannot be said that the goods were not relating to form XXXIV No. 4135/5309 dated November 23, 2002. At the exit check-post, necessary verification should be made only with reference to the details of the goods mentioned in form XXXIV. The details, which are not mentioned in form XXXIV should not be considered at the exit check-post. If in form XXXIV, number of pieces are not mentioned and only number of packages are mentioned, the verification of number of packages should be made at the....
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....ubstantial by sel ling the goods inside the State of U.P. and nonsurrendering the transit pass at the exit check post. The driver of the transport company can only adopt such a situation when he has hope to get the such transit pass endorsed at the exit check post by col lusion/manipulation in the absence of goods. Thus, need is to tighten the departmental machinery at the level of the check post to avoid the col lusion/manipulation at the check post. It came to the notice of the Court in some of the cases where penalty under Section 15-A(1) (o) of the Act has been levied and the tax has been assessed on the ground that the transit pass/Form 34 have been got passed by col lusion and manipulation with the check post officers and staff and despite the enquiry being ordered, no serious action has been taken. I f the officer sitting at the top would not be able to take proper step to check the manipulation and in case of detection of such manipulation, serious action would not be taken the process of evasion would continue and for the departmental officers are only be held responsible and nonelse." 17. In New Indore Delhi Road Lines Vs. Commissioner of Commercial Tax, U.P. Lucknow, re....
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....n respect of an earlier transaction would not be relevant, in following words:- "Section 48 of the Act gives power to the officer to seize the goods found in the vehicle in case if the goods are not traceable to bonafide dealer and is doubtful that they are accounted for in books of account, register or documents. In my view each and every transaction has to be examined independently on its own merit and past conduct is wholly irrelevant." 19. After taking note of the earlier judgments, the enquiry system contemplated under the VAT Act was noticed in following words:- "Now under Section 52 of the Act read with Rule 48 of the Rules and circular there is a provision for obtaining the Transit Declaration Form by downloading the details of the goods in the departmental website but no mechanism is provides for the surrender of the said transit declaration form. It is very ridiculous. The check posts have been abolished and now the officials sitting in the mobile squad checks the vehicles in route. Everything has been left open on the discretion and the whims of the commercial tax officers of the mobile squad. They have been allowed to act as uncrowned king to operate in any manne....
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....y. The provisions of the Act and Rules were noticed, and following questions were framed for consideration:- "(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? (ii) Whether Delhi - U.P. Border area of District Ghaziabad is "no-man's land"? (iii) Whether transporters are strangers to the transaction of sale and purchase and totally ignorant about the consignors and consignees? (iv) Whether fraudulent transportation of goods and colourable devices used to give impression of transportation of goods from outside the State of U.P. to outside the State of U.P. shall fall under Section 52 or would be a case falling under Section 48 of the U.P. VAT Act, 2008?" Facts of the case were noticed in para-13 of the judgment in following words:- "13. Thus, these facts clearly indicate conscious indulgence of the respondents in clandestine and fraudulent transportation of the goods in question from Ghaziabad (U.P.), suppressing and misrepresenting the identity of real owner of the goods and place of origination for transportation. When in truth, invoices are bogu....
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....ed for transportation from Ghaziabad (U.P.), C.S.T. or VAT shown in the invoices is not real but a deceitful act of undisclosed non-bonafide dealer and identity of real owners of the goods (consignors/ consignees) have been suppressed by the respondents with the only motive to evade tax under the Act or to help undisclosed persons/ non-bonafide dealers to evade tax. It is a clear case of fraud, misrepresentation and suppression of facts by the respondents. This court cannot act to protect perpetuation of legal fraud. The courts are obliged to do justice. Fraud and justice never dwell together (Frans Et Jus Nunquam Cohabitant). This maxim has never lost its temper over all the centuries. The courts are not meant to permit dishonesty even on technical pleas. Dishonesty cannot be permitted to bear the fruit and benefit to the persons who played fraud or misrepresented or suppressed facts and in such circumstances, the court should not allow perpetuation of fraud by entertaining the technical pleas. The very foundation of the case of the respondent is based on falsehood and fraud. The respondents have suppressed material facts and did not disclose it despite being repeatedly asked by t....
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.... the State of U.P., Section 52 apparently would have no applicability, and the defense of possessing TDF would otherwise not be available. 24. In Bihar Carrying Corporation (supra), while dealing with question no.3 i.e. ignorance about consignor and consignee, reliance was placed upon a decision of the Apex Court in A.B.C. (India) Ltd. Vs. State of Assam and another (2005) 6 SCC 424. Para 22 of the judgment has been relied upon, which reads 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." Reliance is also placed upon a Division Bench in Gill Sandhu Haryana Transport Co. Vs. State of Rajasthan, (1991) 10 RT JS 335. Learned counsel submits that Division Bench judgment of Rajasthan Hi....
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....ed on the basis of information furnished by the consignor, and while transporting goods, it is not expected to investigate identity of consignor or consignee beyond what is disclosed to it. The only safeguard expected of transporter would be to check that the consignment is booked with bill/bilty/invoice and are correctly filled in the TDF. The circular also specifies particulars to be possessed with the vehicle and the transporter can be expected to verify such details. The vehicle carrying goods from outside the State to a location beyond the State would, therefore, ordinarily not be detained, merely due to alleged error in specifying details of consignor or consignee, if TDF is otherwise possessed alongwith documents required as per circular. It is only when details mentioned in TDF with reference to goods transported, route specification or time etc. are found incorrect or documents required to be possessed are either not available or bogus/wrong that the authorities may incidentally examine particulars of consignor and consignee to form an opinion that goods were intended to be sold within the State of U.P. The circular issued by the State otherwise takes notice of transport o....