A FORTNIGHTLY VAT/GST LAW REPORTER 2012 NTN 49)-46 [ALLAHABAD HIGH COURT]

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1 2012 (Vol. 49)-46 [ALLAHABAD HIGH COURT] Hon'ble Pankaj Mithal, J. Sales/Trade Tax Revision No. 293, 294 of 2012 Yuvraj Trading Company vs. Commissioner, Commercial Tax Date of Decision : 4 th May, 2012 For the Petitioner : N.C. Gupta For the Respondent : C.S.C. Transit of goods through the State of U. P. - Transit Declaration Form Seizure of Goods - Genuineness of consigner and consignee Whether relevant or not U. P. Value Added Tax Act, 2008 Section 52, U. P. Value Added Tax Rules, 2008 Rule 58 - In transit of goods genuineness of consigner and consignee and their registration under the taxing statute are not relevant for the purposes of seizing the goods - Seizure of the goods on the ground that it had taken a different route, other than one disclosed in the Transit Declaration From is illegal and cannot be sustained - There is no power of seizure provided under Section 52 of the Act - Goods were seized on the ground that the goods were being carried through a different route than the one disclosed in transit declaration form and further that the documents accompanying the goods were fake and that the goods were to be unloaded at Kanpur with the intention of sale in U.P. The dealers were not genuine and import declaration form i.e. Form D XI of the State of Bihar was not accompanying the goods. Representation under Section 48(7) against the order of seizure has been rejected and so is the appeal by the tribunal. High Court- There is no power of seizure provided under Section 52 of the Act and it only stipulates that if the goods are not accompanied by the Transit Declaration From it shall be presumed that the goods are being carried for sale within the State of U.P. A perusal of the Transit Declaration From reveals that Kanpur was one of the important places through which the vehicle was supposed to pass while in U.P. before its exit from the State. Therefore, if the vehicle was found in Kanpur it cannot be said that it had deviated from the disclosed route. It is not necessary for the driver or the person in-charge of the vehicle or even the dealer to mention in the Transit Declaration Form the exact road from which the vehicle would pass while crossing Kanpur.Seizure of the goods on the ground that it had taken a different route, other than one disclosed in the Transit Declaration From is illegal and cannot be sustained. As far as the selling dealer is concerned, a finding has been returned that on being contacted the said dealer had disowned the sale but there is no material on record in this regard. Ratio laid down by High Court in the matter of M/s Saiya Transport Pvt. Limited vs. State of U.P. (2006 UPTC 967) and M/s New Mahavir Transport and Company vs. CCT (2009 (Vol.41)-224), followed, wherein, it was held that in transit genuineness of consigner and consignee and their registration under the taxing statute are not relevant for the purposes of seizing the goods. Cases referred:

2 Saiya Transport Pvt. Limited vs. State of U.P. and Others 2006 UPTC New Mahavir Transport and Company vs. The Commissioner, Commercial Tax, U.P. Lucknow 2009 (Vol. 41) (Hon'ble Pankaj Mithal, J.) JUDGMENT Heard Sri N.C.Gupta, counsel for the assessee-revisionist and Sri B.K.Pandey, learned counsel appearing for the department. In both the revisions the assessee-revisionist is the same. It is said to be a registered dealer under the Bihar Value Added Tax Act, 2005 and is dealing in goods of Plastic, Paper etc. and its place of business is at Sasaram, Bihar. The assessee-revisionist in its normal course of business purchases goods from Bhiwani in Haryana and carries it to Sasaram, Bihar and while in transit the goods passes from State of U.P. The consignment of goods during transit from Haryana to Bihar, while passing from U.P., was checked on and was seized on on the ground that the goods were being carried through a different route than the one disclosed in transit declaration form and further that the documents accompanying the goods were fake and that the goods were to be unloaded at Kanpur with the intention of sale in U.P. The dealers were not genuine and import declaration form i.e. Form D XI of the State of Bihar was not accompanying the goods. The representation of the assessee-revisionist under Section 48(7) of the U.P. Value Added Tax Act (in short the Act )against the order of seizure has been rejected and so is the appeal by the tribunal. Section 48 of the Act prescribes the circumstances under which the officer authorised shall have the power to seize the goods. The goods which are found in dealers place of business, vehicle, vessel or any other building or place are liable to seizure by the officer authorized provided the officer has reason to believe: 1. that they are not accounted for by the dealer in his accounts, registers or documents maintained in the ordinary course of business; 2. that the goods are undervalued to the extent of more than 50% of the value of the goods prevalent at the relevant time at the local market; 3. that the goods are not traced to any bonafide dealer; and 4. that the documents accompanying the goods contain wrong particulars. A part from the above, the goods imported into the State of U.P. by road, if they are not accompanied by the prescribed declaration, they are liable to be detained under Section 50 of the Act.

3 Similarly, the goods imported within the State of U.P. by rail, air, post, river or rope way, if not accompanied by necessary authority or a declaration in the prescribed form, the officer authorised, if satisfied of there being an attempt to evade payment of tax under the Act, may detain the goods. Section 52 of the U.P. Value Added Tax Act provides that when a vehicle coming from out side the State of U.P. and going to any place outside the State carrying goods as specified in Section 50(1) passes through the State of U.P., it shall be accompanied by such documents as may be prescribed failing which it will be presumed that the goods carried were meant for sale within the State of U.P. by owner and person-in-charge of the Vehicle. According to the plain reading of the aforesaid provision the presumption that the goods carried by such a vehicle passing through the State of U.P. are meant for sale within the State of U.P. can only be drawn when the said goods are not being accompanied by the prescribed documents. Rules 58 of the Rules provide that such a vehicle while coming from outside the State of U.P. and bound for a destination outside the U.P. while passing through the State of U.P. shall carry such documents and follow such procedures as may be prescribed by general or special order issued by the Commissioner from time to time. It further provides that in case such documents are not available with the goods, the presumption would be that the goods are meant for sale within the State of U.P. The documents which have been prescribed by the Commissioner from time to time are contained in the circular notification dated July, It provides that apart from the bill and bilty relating to the goods, the owner or person incharge of the vehicle while entering the State of U.P. shall obtain/down load a Transit Declaration Form from the official website of the department and shall mention therein the entry point and the exit point from the State of U.P. It shall also disclose the two other points through which the vehicle would pass while in U.P. In other words the route which has to be followed by the vehicle while passing through U.P. has to be disclosed. It should also contain the date of entry in the State and the possible date of exit which has to be within a period of 4 days from the date of entry. A conjoined reading of all the above provisions demonstrates that the power of seizure of goods in transit is provided under Section 48 of the Act alone and where the goods are being imported within the State either by road, rail, air, post, river or rope-way they can be ordered to be detained under Sections 50 and 51 of the Act provided the authorized officer is satisfied that they are being brought inside the State with an attempt to evade payment of tax under the Act. There is no power of seizure provided under Section 52 of the Act and it only stipulates that if the goods are not accompanied by the Transit Declaration From it shall be presumed that the goods are being carried for sale within the State of U.P. In the instant case, the goods were in transit through the State of U.P. and were accompanied by the necessary documents including the Transit Declaration From. No infirmity was found in the Transit Declaration From.

4 One of the ground for seizure is that the vehicles carrying the goods had deviated from the route. The vehicles were found within the market area of Kanpur. A perusal of the Transit Declaration From reveals that Kanpur was one of the important places through which the vehicle was supposed to pass while in U.P. before its exit from the State. Therefore, if the vehicle was found in Kanpur it cannot be said that it had deviated from the disclosed route. It is not necessary for the driver or the person in-charge of the vehicle or even the dealer to mention in the Transit Declaration From the exact road from which the vehicle would pass while crossing Kanpur. There is no such column in the Transit Declaration From. The authorities cannot insist that the vehicle carrying goods should pass through a particular road of the city. This is not practically possible. There may be several reasons compelling the driver or the vehicle incharge to go by a particular road while crossing the city mentioned in the Transit Declaration Form. Therefore, in such circumstances, there is no breach of the declaration made. Thus, the presumption that the goods were for sale in U.P. does not arise. In similar facts and circumstances, concerning the same assesseerevisionist in Sales/Trade Tax Revision No.219 of 2012 decided on , I have already taken a view that if the vehicle is found in the city which has been disclosed in the Transit Declaration From, it would not mean it had deviated from the route disclosed in the Transit Declaration From. In view of the above, the seizure of the goods on the ground that it had taken a different route, other than one disclosed in the Transit Declaration From is illegal and cannot be sustained. The purchasing dealer all through had appeared before the authorities and had claimed the goods seized. The purchasing dealer also produced import declaration i.e. Form D IX of the Bihar State before the mobile squad to establish his bona fide. The authorities, specially the tribunal, has not returned any finding on this aspect and instead affirmed the view taken by the seizing authority that the purchasing dealer does not appear to be genuine without considering the impact of the production of the above document. As far as the selling dealer is concerned, a finding has been returned that on being contacted the said dealer had disowned the sale but there is no material on record in this regard. No affidavit of the officer who made the enquiry or talked with the selling dealer has been brought on record. The information collected on telephone is not sufficient unless it is proved by the officer who collected the same by filing his affidavit. In the absence of such material, simply on the verbal information that the said dealer has disowned the sale, the conclusion drawn that the actual selling dealer is not available cannot be sustained. Moreover, a Division Bench of this Court M/s Saiya Transport Pvt. Limited vs. State of U.P. and Others 2006 UPTC 967 while considering a similar provision of Section 28-B of the U.P. Trade Tax Act, 1948 concerning seizure of goods in transit held that genuineness of consigner

5 and consignee and their registration under the taxing statute are not relevant for the purposes of seizing the goods. A similar view was taken by this Court in the case of M/s New Mahavir Transport and Company vs. The Commissioner, Commercial Tax, U.P. Lucknow 2009 (Vol. 41)-224; 2009 Tax Law Diary 338. Thus, applying the above principle, I am of the opinion that the seizure of the goods in the case at hand on the ground that the dealers are non existing is bad in law. In view of the above, I am of the opinion that the authorities were not justified in ordering the seizure of the goods. Accordingly, the impugned orders dated passed by the Commercial Tax Tribunal, dated passed by the Joint Commissioner (SIB) Commercial Tax, Kanpur and dated passed by the Assistant Commissioner (Commercial Tax), Mobile Squad Kanpur are set aside and the goods are directed to be released forthwith without any security. The revisions are allowed..