A FORTNIGHTLY VAT/GST LAW REPORTER 2012 NTN 49)-208 [ALLAHABAD HIGH COURT]

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1 2012 (Vol. 49)-208 [ALLAHABAD HIGH COURT] Hon'ble Pankaj Mithal, J. Sales/Trade Tax Revision No of 2012 Yuvraj Trading Company vs. Commissioner of Commercial Tax, U. P. Date of Decision : 2 nd April, 2012 For the Petitioner : Sh. Manoj Kumar Singh, Sh. N. C. Gupta, Advs. For the Respondent : C.S.C. Transit of goods through the State of U. P. - Transit Declaration Form - Seizure of Goods For Deviation from the disclosed route in Transit Declaration Form - U. P. Value Added Tax Act, 2008 Section 52, U. P. Value Added Tax Rules, 2008 Rule 58 Deviation from the disclosed route in Transit Declaration Form - There is no column in the aforesaid Transit Declaration Form for specifying the exact road through which the vehicle would pass while crossing a particular city as mentioned in the Form - In the absence such specific column, if the vehicle has been found at Kanpur which is one of the point of route disclosed in the Transit Declaration Form, it cannot be said that the vehicle had deviated from the disclosed route Goods (paper) in transit from Bhiwani (Haryana) to Sasaram (Bihar) were seized at Kanpur on the ground that the vehicle had deviated from the route disclosed in the Transit Declaration Form and was found within the city limits of Kanpur giving rise to the presumption that the goods have been down loaded in Kanpur with the object of sale in U. P. and also that on inquiry from the concerned Tax Officers at Haryana and at Sasaram both the seller and purchaser firms are dealing in plastic goods and the Haryana dealer has disowned the sale of the said goods - Representation under Section 48(7) had been rejected - Tribunal also dismissed the appeal - High Court - In the instant case the vehicle had to pass through Aligarh, Kanpur and Varanasi - So Kanpur was one of the cities through which the vehicle was to pass while in transit in U. P. There is no column in the aforesaid Transit Declaration Form for specifying the exact road through which the vehicle would pass while crossing a particular city as mentioned in the Form - In the absence such specific column, if the vehicle has been found at Kanpur which is one of the point of route disclosed in the Transit Declaration Form, it cannot be said that the vehicle had deviated from the disclosed route giving rise to any presumption as stipulated either under Section 52 of the Act or Rule 58 of the Rules - In view of above, the seizure of goods on the aforesaid ground is not justified - Goods in question were duly accompanied by the relevant documents and there was no defect in following the procedure prescribed, no presumption could have arisen to the effect that the goods were meant for sale within the State of U. P. and as such open to seizure - Submission that the selling dealer at Bhiwani disowned the sale of the goods, the finding in this regard is dependent upon the ex parte information which is said to have been received on telephone from the concerned Tax Officer of the department - The authenticity of the information has not been established by producing the officer or his affidavit - No inquiry was made from the concerned dealer - Impugned seizure order set aside - Revision allowed. Cases referred:

2 Commissioner of Trade Tax, U.P. Lucknow vs. Sagir Khan and Zahir Khan, Rampur 2005 (28) Madhya Bharat Transport Carrier, Agra vs. Commissioner of Trade Tax, U. P. Lucknow 2003 (23) New Mahavir Transport Company of Bharat vs. Commissioner, Commercial Tax, U. P. Lucknow 2009 (41) (Hon'ble Pankaj Mithal, J.) JUDGMENT Heard Sri N.C. Gupta, learned counsel for the revisionist and Sri B.P. Pandey, learned Standing Counsel for the respondents. With their consent the revision is being finally decided at the admission stage itself on the basis of the pleadings on record. A consignment of 18 rolls of paper allegedly being in transit from Bhiwani in Haryana (Loaded in the vehicle in question at Delhi) to Sasaram in Bihar while passing through the State of U.P. was detained at Kanpur and ultimately seized vide order dated on the ground that the vehicle had deviated from the route disclosed in the Transit Declaration Form and was found within the city limits of Kanpur giving rise to the presumption that the goods have been down loaded in Kanpur with the object of sale in U.P. It has further been said that on inquiry from the concerned Tax Officers at Haryana and at Sasaram both the seller and purchaser firms are dealing in plastic goods and the Haryana dealer has disowned the sale of the said goods. Against the order of seizure, a representation of the revisionist under Section 48(7) of the U.P. VAT Act, (hereinafter referred to as the Act) was rejected on and the appeal to the tribunal was dismissed on The aforesaid orders have been assailed in this revision. The basic contention of Shri Gupta, is that the goods were duly accompanied by the prescribed documents and there was no deviation from the route disclosed in the Transit Declaration Form. Therefore, no seizure could have been made in exercise of power under Section 50/52 of the Act. He further submits that the revisionist had appeared before the authorities and therefore it cannot be said to be fake. The inquiry made regarding genuineness of the dealer at Bhiwani in Haryana is one sided and cannot be taken to be correct. There is no authentic material to prove that the said dealer is fake or is otherwise not dealing with the goods in question or that he is disowned the sale of the goods. In defence the submission of Sri Pandey, is that there was no occasion for the vehicle to have entered the city of Kanpur and since it was found in the busy market area the presumption has validly been drawn that the goods were meant for sale within the State of U.P. in view of paragraph 5 of the circular dated 30/31 July, 2009 issued by the Commissioner Commercial Tax in exercise of power under Rule 58 of the Rules under the Act. 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

3 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. In the instant case the vehicle was detained and the goods were seized at Kanpur. There is no dispute that the relevant documents and the Transit Declaration Form were available with the driver/person incharge of the vehicle and were accompanying the goods. The Transit Declaration Form mentions Mohan Nagar as the entry point in U.P. and Naubatpur as the exit point from the State of U.P. On route it had to pass through Aligarh, Kanpur and Varanasi. So Kanpur was one of the cities through which the vehicle was to pass while in transit in U.P. There is no column in the aforesaid Transit Declaration Form for specifying the exact road through which the vehicle would pass while crossing a particular city as mentioned in the Form. In the absence such specific column, if the vehicle has been found at Kanpur which is one of the point of route disclosed in the Transit Declaration Form, it cannot be said that the vehicle had deviated from the disclosed route giving rise to any presumption as stipulated either under Section 52 of the Act or Rule 58 of the Rules. In view of above, the seizure of goods on the aforesaid ground is not justified. Apart from the above the driver of the vehicle had filed his affidavit dated clearly stating that he is carrying goods from Delhi and is taking them to Sasaram in Bihar. The said affidavit of the driver has not been controverted. It has not been considered by any of the authorities. There is no finding that the said affidavit is false.

4 Above all, it is not the case of the department that at the time of detention/seizure the goods in the vehicle were different. The goods which were being transported from Haryana and were destined to Bihar were found in the vehicle. In such a situation it cannot be said that the goods were down loaded at Kanpur (U.P.) for sale within State and that there was any attempt to evade payment of tax. As regards the submission that the selling dealer at Bhiwani disowned the sale of the goods, the finding in this regard is dependent upon the ex parte information which is said to have been received on telephone from the concerned Tax Officer of the department. The authenticity of the information has not been established by producing the officer or his affidavit. No inquiry was made from the concern dealer. It has also been said that the purchasing dealer at Sasaram is doing occasional business and that too in plastic goods. He is not a dealer of paper. This finding is also dependent upon the information received from the Taxing Officer of the place concerned who was not produced. His affidavit has also not been filed. There is no substantive evidence on record to prove that the revisionist is not dealing in paper and his transactions are confined to plastic goods. The said dealer had contested the proceedings at every stage. He was not confronted with such an allegation. In Commissioner of Trade Tax, U.P. Lucknow vs. Sagir Khan and Zahir Khan, Rampur 2005 (28) 129 the learned Single Judge of this court observed as under:- "The provision to issue transit pass at the entry check post and to surrender at the exit check post is to ensure that the goods, which entered inside the State of U.P. had gone outside the State of U.P. and has not been sold inside the State of U.P. The power to seize the goods is only available at the exit check post when it is found that the transporter is trying to import different goods. Under aforesaid provisions there is no power to seize the goods at the entry check post. At the entry check post if driver of the vehicle applied for transit pass, authority has to verify the goods loaded in the vehicle and mention the name and quantity of the goods sought to be transported through the State of U.P. in the transit pass to that at the entry check post, the same may be verified at the time of surrendering the transit pass. In another case reported in 2003 (23) 1009 Madhya Bharat Transport Carrier, Agra vs. Commissioner of Trade Tax, U. P. Lucknow this court was dealing with the question whether the goods can be seized before the expiry of time allowed in transit pass. His Lordship after considering the various provisions came to the conclusion that the stage of seizure arises only at the exit point and the goods cannot be seized before the expiry time allowed in the transit pass. In the case of New Mahavir Transport Company of Bharat vs. Commissioner, Commercial Tax, U.P. Lucknow 2009 (41) 224 which was also a case of seizure under Section 52 of the U.P. Value Added Tax Act, it was held that the goods cannot be seized on minor technical defect and should be allowed to be released without security.

5 The object of providing for a Transit Declaration Form and for seizure of goods is to ensure that the goods entering the State of U.P. goes out of U.P. and are not sold within the State. The said object would only be defeated, if the goods on entering or not taken out of the State. The goods upto the stage they reached Kanpur were intact in the vehicle and the time of their exit from U.P. had not expired and in the absence of any material to substantively demonstrate that they were likely to be sold in U.P. it cannot be said that they were likely to be sold within the State in attempt to evade tax. In view of the aforesaid facts and circumstances and the legal position as narrated above, I am of the opinion that as the goods in question were duly accompanied by the relevant documents and there was no defect in following the procedure prescribed, no presumption could have arisen to the effect that the goods were meant for sale within the State of U.P. and as such open to seizure. In view of above, the impugned seizure order dated is set aside and the goods are directed to be released for. Revision allowed.