A. Kabir, J.@mdashThe petitioner ts the proprietor of a transport business being carried on by him from 34/1, Ratu Sarkar Lane, Calcutta-700 072, under the name and style of Bombay City Transport Company.
2. According to the petitioner, on 12th July, 1999, his vehicle No. WB-25-6101 started from Howrah for Nanded in the State of Maharashtra with a consignment of 123 sets of C.I. Valves packed in 174 boxes under lorry challan No. 4/093 dated 12th July, 1999. The said consignment had been purchased by M/s. Prashant Enterprise, Mumbai, from various dealers in West Bengal, namely, Khanra Engineering Works, Howrah; Samanta Brothers, Howrah; Sree BalaJI Enterprises, Howrah and the Calcutta Iron and Steel Company Pvt. Ltd., after paying 4% Central Sales Tax, as would be evident from the Bills and Invoices raised by the sellers who are all registered dealers. Under the instruction of M/s. Prashant Enterprise, the said Bills and Invoices were endorsed by the sellers in favour of M/s. J.R. Trading Company and Naresh Engineering and Hardware Stores, Mumbai, so that the consignment on reaching Nanded could be delivered without any inconvenience to the said parties in whose favour the Bills and Invoices were endorsed. According to the petitioner the goods were transported under the instruction of M/s. Prashant Enterprise and the petitioner acted as the agent of the said consignee.
3. When the vehicle had reached Kharagpur on 13th July, 1999, it was intercepted on National Highway No. 6 near Kharagpur by the Commercial Tax Officer, Kharagpur Range, who asked the driver of the vehicle to produce the way bills and documents of title in respect of the consignment of goods loaded on the vehicle. The driver of the vehicle was, however, unable to produce the said documents and produced the lorry challan No. 4/093, which contained substantial details of the goods, and delivery challans wherein M/s. J.R. Trading Co. and M/s. Naresh Engineering and Hardware Co. of Narayan Dharu Street. Bombay, were shown as the dispatchers and M/s. Jaiwant Rao Patil S.S.K. Ltd. of Nanded, as the consignee. The driver tried to explain to the Commercial Tax Officer that through negligence he had forgotten to carry the documents asked for.
4. The Commercial Tax Officer thereupon detained the vehicle under Rule 214C of the West Bengal Sales Tax Rules, 1995, for production of the way bills and the documents of title within the next 48 hours.
5. On being informed of such detention by the driver of the vehicle, the petitioner contacted his advocate, who requested the Commercial Tax Officer over the telephone on 16th July, 1999, for a day''s time for production of the relevant document in order to prove that sale of the consignment of goods had been effected on realisation of Sales Tax and there had never been any intention on the part of the seller or purchaser to evade payment of Sales Tax.
6. In the meantime, however, the Commercial Tax Officer seized the consignment of goods from the petitioner''s vehicle on 15th July, 1999, u/s 70 of the aforesaid Act for non-production of the way bill in Form 48 or of the sale invoices and genuine delivery challans in respect of the said goods. On 16th July, 1999, the Commercial Tax Officer issued a notice to the petitioner u/s 70 of the said Act to show cause as to why penalty should not be imposed in respect of the seized goods u/s 68 of the Act.
7. Aggrieved by the action taken by the Commercial Tax Officer, the petitioner moved a Revisional Application, being Revision Case No. 9/99-2000, before the Assistant Commissioner of Commercial Taxes, which was heard on 19th July, 1999. At the said hearing the petitioner''s learned advocate produced the bills issued by the manufacturers of the goods in question which had been sold to M/s. Prashant Enterprise, Mumbai, and submitted that the same would show that there had been no intention to evade payment of Sales Tax.
8. According to the petitioner, the Assistant Commissioner of Commercial Taxes did not consider the documents produced before him by the petitioner''s learned advocate and on the basis of the documents which had been produced by the driver of the vehicle before the Commercial Tax Officer, came to the conclusion that the said documents produced by the driver were fabricated and that the delivery challans were fake and that the consignees shown therein were also fake and that the goods were being transported outside from West Bengal and that the driver had, therefore, contravened Rule 214C of the West Bengal Sales Tax Rules, 1995, as also the provisions of sections 68 and 73 of the West Bengal Sales Tax Act 1994. Upon such finding, the said respondent rejected the petitioner''s Revision petition and by his order dated 19th July, 1999, held that the seizure dated 15th July, 1999, was valid and justified. An appeal preferred against the order of the Assistant Commissioner of Commercial Taxes, Kharagpur Range, was dismissed by the Deputy Commissioner of Commercial Taxes Kharagpur Range, by his order dated 20th July, 1999, confirming the order passed by the Assistant Commissioner of Commercial Taxes and upholding the seizure made by the Commercial Tax Officer.
9. Subsequently, on 16th August, 1999, the Commercial Tax Officer imposed a penalty pursuant to the show cause notice and issued a notice demanding payment of such penalty quantified at Rs. 1,17,485/-. According to the petitioner, he had no other alternative but to have the goods released on payment of such penalty and the goods were thereafter transported to Nanded in Maharashtra and Central Sales Tax at the rate of 4% was duly realised on the said consignment of goods.
10. Being aggrieved by the seizure of the goods on 15th July, 1999, and the order passed by the Assistant Commissioner of Commercial Taxes, Kharagpur Range, and the Deputy Commissioner of Commercial Taxes, Kharagpur Range, on 19th July, 1999 and 20th July, 1999, respectively, confirming the said seizure and the subsequent order dated 16th August, 1999, passed by the Commercial Tax Officer Imposing penalty of Rs. 1,17,485/- together with the notice of demand for payment of such penalty, the petitioner moved the West Bengal Taxation Tribunal in Revision, being R.N. Case No. 387 of 1999. The submissions as made before the concerned, respondents, were repeated before the learned Tribunal before whom also the relevant Bills and Invoices issued by the manufacturers of the goods in question were produced, showing not only title to the goods, but also that Central Sales Tax at the rate of 4% had been charged by the registered dealers for the sale of such goods.
11. It was also submitted on behalf of the petitioner that in view of the Trade Circular dated 25th August, 1998, issued by the Directorate of the Commercial Taxes, Government of West Bengal, no way bill in Form No. 48 was mandatorily required to be produced by the driver for carrying goods and that production of the bills and invoices issued by the manufacturers would have been sufficient for the purpose of satisfying the provisions of sections 68 and 73 of the West Bengal Sales Tax Act, 1994. It was also urged that since the said Bills and Invoices has subsequently been produced before the Assistant Commissioner of Commercial Taxes and Deputy Commissioner of Commercial Taxes, Kharagpur Range, during the hearing of the Revision petitions challenging the seizure, the said respondents ought to have released the seized goods and no penalty should have been imposed in respect thereof.
12. By its judgment and order dated 12th April, 2000, the learned Tribunal disposed of the Revision Case by confirming the seizure made by the Commercial Tax Officer and the penalty imposed in respect of the seizure.
13. This present writ application is directed against the said order of the learned Tribunal.
14. Appearing in support of the writ petition, Mr. Mihir Bhattacharjee submitted that none of the authorities nor the learned Tribunal had taken proper note of the documents produced on behalf of the petitioner after the goods had been seized, namely, the Bills and Invoices issued by the manufacturers of the seized goods showing realisation of Central Sales Tax at the rate of 4% on account of sale of the said goods, Mr. Bhattacharjee urged that all the said forums below merely acted on the basis of the documents produced by the driver of the vehicle at the time of seizure in arriving at the finding that the said goods were being carried under fake and fabricated documents. Referring to the provisions of Section 68 of the aforesaid Act, Mr. Bhattacharjee submitted that the same dealt with the restriction of movement of goods in order to ensure that there is no evasion of tax. He also referred to section 73 which provides for measures to prevent evasion of tax on sales within West Bengal. Mr. Bhattacharjee submitted that the provisions of section 73 required a transporter carrying goods from any place in West Bengal outside West Bengal, to carry in addition to a document of title to the goods carried by him, where carriage is caused by sale of such goods, two copies of the bill or cash memorandum issued by the seller of such goods, and a way bill in the prescribed Form containing such particulars as may be prescribed. Reference was also made to Rule 214C of the West Bengal Sales Tax Rules, 1995, framed for the purpose of giving effect to the provisions of Sections 68 and 73 of the aforesaid Act. Mr. Bhattacharjee urged that the said Rule provided for restrictions on and conditions for transport of any consignment of goods by any person, casual trader or dealer from any place in West Bengal referred to in Sub-section (1) of Section 68, to any place outside West Bengal. It was urged that by virtue of an amendment which came into effect from 1st July, 1998, an option was given to the transporter to produce either the way bill or a copy of the challans in duplicate in respect of the consignment of the goods referred to in Section 73 of the said Act.
15. Mr. Bhattacharjee urged that by virtue of such amendment it was no longer mandatory on the part of the transporter to produce the way bill along with copies of the challans in duplicate in respect of the consignment in question and that he could produce either of the two documents to meet the requirements of Section 73 of the aforesaid Act.
16. Mr. Bhattacharjee submitted that since the seizure had been effected and penalty had been imposed for alleged violation of the provisions of Rule 214C, the forums below ought to have been satisfied with the production of challans in respect of the consignment of goods, without insisting for a way bill also to be submitted.
17. Mr. Bhattacharjee submitted that seizure of goods for purported violation of the provisions of Section 73 of the aforesaid Act and Rule 214C of the aforesaid Rules was not necessarily required to be followed by imposition of penalty. It was urged that only when there was an intention to evade the payment of Sales Tax, that the question of imposition of penalty could arise. Mr. Bhattacharjee submitted that even if the goods in question had been seized in keeping with the provisions of Section 73 of the aforesaid Act for non-production of the required documents, imposition of penalty did not follow as a matter of course and upon production of the relevant documents even after the seizure, the concerned authorities were required to release the goods and not to impose penalty thereupon.
18. Mr. Bhattacharjee submitted that apart from the lorry challan where all the details of the consignment of goods were indicated, the other documents which had been produced by the driver of the vehicle was for the purpose of facilitating delivery of the goods once the vehicle reached Mumbai. All the forums below misinterpretated the said documents as having been fabricated in respect of the goods being carried in the vehicle in question. Mr. Bhattacharjee urged that the said documents could not be a ground for the forums below to come to a conclusion that the petitioner had made an attempt to evade payment of Sales Tax under the West Bengal Sales Tax Act, 1994, and could not have been the basis for imposition of penalty as has been done in the instant case.
19. In support of his submissions Mr. Bhattacharjee firstly referred to and relied on a decision of the Hon''ble Supreme Court in the case of the Check Post Officer, Coimbatore and Ors. v. K.P. Abdulla & Brothers, reported in 1971 XXVII STC 1 SC wherein the power to impose Sales Tax under the Madras General Sales Tax Act, 1959 was under consideration. In the said decision reference was made to Entry 54 of List II of the 7th Schedule to the Constitution, which authorises the State Legislature to legislate in respect of taxes on the sale or purchase of goods. It was observed that a taxing Entry confers power upon the Legislature to legislate for matters ancillary or incidental including provisions for preventing evasion of tax, but the provisions of Sub-section (1) and (2) of Section 42 of the said Act which confers power to confiscate goods carried in a vehicle which are not covered by the documents specified therein, could not be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods.
20. Mr. Bhattacharjee also referred to another decision of the Hon''ble Supreme Court in the case of Hindusthan Steel Ltd. v. State of Orissa, reported in 1970 XXV STC 211 SC wherein Section 9(1) read with Section 25(1)(e) of the Orissa Sales Tax Act, 1974, which provides for imposition of penalty for failure to register as dealer, was under consideration. The Hon''ble Supreme Court observed that the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out the statutory obligation is the result of quasi-criminal proceedings and penalty could not ordinarily be imposed unless the party concerned either acted deliberately in defiance of law or was guilty of conduct which was contumacious or dishonest or that the dealer in question had acted in conscious disregard of his obligation. It was also observed that penalty could not also be imposed merely because it ts lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation was a matter of discretion of the authority to be exercised judicially and on a consideration of all relevant circumstances.
21. Mr. Bhattacharjee urged that the facts of the aforesaid case applied squarely to the facts of the present case where even if the seizure had been effected for non-production of the relevant documents within 48 hours from the date of the seizure, the imposition of penalty ought not to have followed merely because of such seizure and it was the incumbent duty of all the forums below, including the learned Tribunal, to consider whether penalty should have at all been imposed once the relevant documents as contemplated under Rule 214C of the aforesaid Rules were produced on behalf of the petitioner.
22. Mr. Bhattacharjee lastly referred to a Bench decision of the Delhi High Court in the case of Calcom Electronics Ltd., v. Sales Tax Officer and Ors., reported in 2001 121 STC 600 Delhi wherein it was held that the delay of 4 days in payment of tax was not sufficient for the purpose of imposition of penalty and that such payment was not justified.
23. Mr. Bhattacharjee submitted that it was settled law that in a fiscal statute where two views were possible, the one beneficial to the assessee was to be adopted.
24. Mr. Bhattacharjee further submitted that the most important aspect of the matter, as to whether the petitioner had any intention to evade payment of Sales Tax had hardly been gone into by any of the forums below or even by the learned Tribunal and the orders were passed mechanically on extraneous considerations.
25. Mr. Bhattacharjee submitted that the imposition of penalty was unwarranted in the facts of the case and the order imposing such penalty was liable to be quashed with a direction upon the concerned respondents to return the amount of penalty paid by the petitioner pursuant to the demand notice dated 16th August, 1998, since there was no intention on the part of the petitioner to evade payment of Sales Tax and in any event Central Sales Tax at the rate of 4% on the consignment of goods have been recovered by the seller from the consignee M/s. Prashant Enterprise, Mumbai.
26. Appearing for the Revenue, Mrs. Seba Roy urged that even after the goods were detained on 13th July, 1999, no proper documents of title in respect of the goods in question or the way bill, as required to be produced u/s 73 of the Act, were produced by the petitioner either before the Commercial Tax Officer or the other authorities. In such circumstances, the Commercial Tax Officer was fully justified, not only in detaining and seizing the said goods, but also in imposing penalty in respect thereof.
27. Mrs. Roy pointed out that the delivery challans produced by the, driver of the vehicle was in respect of alleged consigners and consignee in Mumbai and Nanded in Maharashtra and the same had been held to be fake and fabricated. It was urged that such documents had been manufactured with the intention of evading payment of Sates Tax.
28. Mrs. Roy urged that the decisions cited by Mr. Bhattacharjee did not help the petitioner''s case, as the Commercial Tax Officer had exercised the jurisdiction vested in him by the statute in seizing the goods and imposing penalty thereupon.
29. Mrs. Roy submitted further that in view of the clear violation by the petitioner in respect of the provisions of sections 68 and 73 of the Act and Rule 214C of the Rules, no interference was called for with the judgment and order of the learned Tribunal and the writ petition was liable to be dismissed.
30. On a careful consideration of the submissions made on behalf of the respective parties and the materials on record it appears to us that while correctly indicating the law relating to seizure and penalty, in the ultimate analysis the learned Tribunal seems to have lost sight of the main issue as to the evasion of payment of tax by the petitioner or his intention to do so.
31. Since the petitioner had failed to produce the documents referred to in section 73 of the Act and Rule 214C of the Rules within the stipulated period of 48 hours from the time of detention, the seizure of goods by the Commercial Tax Officer was justified, but the question is whether penalty could have been imposed merely on account of such seizure. Whether penalty could be imposed depended on the facts and circumstances of the case and proper satisfaction being arrived at by the authorities that the petitioner had intended to evade payment of tax, Paradoxically, while the Commercial Tax Officer and the revisional forums relied heavily on the delivery challans produced by the driver of the vehicle in imposing penalty and confirming the same, the learned Tribunal, while choosing not to interfere with the imposition of penalty observed that the said delivery challans were extraneous and irrelevant to the carriage or transportation of goods from West Bengal to a place outside the State.
32. While considering the scope of Rule 214C of the West Bengal Sales Tax Rules, 1995, the learned Tribunal once again observed that the delivery challans produce by the driver of the vehicle at the time of detention did not relate to the transportation of the goods from West Bengal to Nanded or any other place outside West Bengal, but to certain other situations. On its said observations the learned Tribunal was of the view that it was not necessary to enter into the question whether the delivery challans were fabricated or not.
33. Yet inspite of coming to the above conclusion, the learned Tribunal, without considering the impact of the bills and invoices produced on behalf of the petitioner subsequent to the seizure and without coming to any finding that the petitioner had intended to evade payment of tax, erroneously held that once the seizure was valid no extenuating circumstances could be established before the authority imposing penalty, imposition of penalty was Inevitable.
34. Having regard to the amendment of Rule 214C of the West Bengal Sales Tax Rules, 1995, with effect from 1st July, 1998. If any consignment of goods is transported from any place in West Bengal to any place outside West Bengal, the transporter is required to carry with him a Way Bill in Form 48 in duplicate or a copy of challan in duplicate along with two copies of sale bill or cash memo and the same are to be produced before the appropriate authority at the last check-post before leaving West Bengal for verification and endorsement. As pointed out by Mr. Bhattacharjee it was no longer mandatory after 1st July, 1998, for a transporter to carry both a Way Bill in Form 48 and a copy of challan in duplicate along with two copies of sale bill or cash memos, despite the provisions of section 73 of the Act. As has been urged by Mr. Bhattacharjee if in a fiscal statute two views are possible, the one favourable to the assessee is to be adopted.
35. When the petitioner produced bills and Invoices purported to have been issued by the manufacturers of the goods to prove the ownership of the goods in terms of Rule 214C of the Rules and when the Tribunal came to the conclusion that the delivery challans produced by the driver of the vehicle were extraneous and irrelevant to the carriage or transportation of goods from West Bengal to a place outside the State, it was incumbent on its part to consider the documents subsequently produced by the petitioner and to come to finding as to whether the petitioner had evaded payment of Sales Tax or had intended to do so for the purpose of imposition of penalty. The decision of the Hon''ble Supreme Court in the case of Hindusthan Steel Ltd. (supra) and the observations made therein makes it clear that whether penalty should be imposed is within the discretion of the authority, but such discretion is to be exercised judicially and on a consideration of all the relevant circumstances and penalty should not be imposed merely because it was lawful to do so.
36. The learned Tribunal unfortunately has neither considered the relevance and/or evidentiary value of the said documents nor has it come to a finding that the petitioner had evaded payment of tax or had intended to do so. We are, therefore, unable to sustain the judgment and order of the Tribunal impugned in this writ petition. We, therefore, set aside the judgment of the learned Tribunal and remand the matter back to the learned Tribunal to consider the said documents in the light of Rule 214C of the Rules and to arrive at a finding as to whether the petitioner had evaded payment of the tax or had intended to do so and to pass fresh orders on the basis of such finding.
The writ petition is disposed of with the aforesaid directions. There will be no order as to costs.
If an urgent xerox certified copy of this order is applied for, let it be supplied to the applicant expeditiously, subject to compliance with all the required formalities.
A.K. Basu, J.
37. I agree.
38. Petition disposed of
