S.V. Maruthi, J.@mdashThis writ petition is filed by Amar Traders, Bidar, seeking a writ of mandamus declaring the action of the first respondent
in detaining the goods as illegal and arbitrary and to direct him to release the balance of consignment of 58 bags of Sagar brand gutka.
2. The facts in brief are :
The petitioner is a registered dealer under the Karnataka Sales Tax Act, 1957 (for short, ""KST Act"") and under the Central Sales Tax Act, 1956.
It is engaged in the business of gutka, pan masala, zarda, supari and cigarettes. For the purpose of its business, it has purchased Sagar brand gutka
from R.K. Products, Kanpur on credit basis in September, 1997 and received consignment at Bidar. The goods were sold during October, 1997
and he is paying tax under the KST Act which is due by November 20, 1997. He purchased further 116 bags from the said seller at Kanpur which
were despatched vide sale bills and LRs. dated September 26, 1997, September 27, 1997, September 29, 1997 and September 30, 1997 to the
petitioner. The goods were transported along with other goods meant for dealers in Hyderabad as per transporters separate challan. The
consignment was being transported by South Golden Transport Company from Kanpur to Bidar via Hyderabad where the transporter appears to
have arrangement for transhipment. The consignment reached Adilabad check-post on October 7, 1997. u/s 29-B of the Andhra Pradesh General
Sales Tax Act, 1957 a transit pass is necessary whenever the goods are required to pass through Andhra Pradesh. It is issued at entry check-post
and has to be surrendered at the exit check-post when leaving the border. At the check-post the authority after examining the documents
accompanying the consignment should prepare the transit pass as per Rule 46-A of the Andhra Pradesh General Sales Tax Rules, 1957. The
Assistant Commercial Tax Officer made out a transit pass mentioning Kodikonda (Anantapur) as exit check-post. After preparing the transit pass
respondent No. 2 did not allow the driver to proceed further, but referred the matter to the first respondent. Thereafter first respondent issued
detention order dated October 10, 1997 on the ground that he obtained transit pass with Kodikonda as exit check-post and brought the lorry
carrying the goods to the headquarter at Hyderabad for enquiry. The petitioner filed a representation to the first respondent on October 20, 1997
explaining that the consignment belongs to it and is under transport from Kanpur to Bidar. He produced all the relevant documents, however, the
first respondent refused to release the goods. Aggrieved by the same the present writ petition is filed.
3. In the counter filed by first respondent it is stated that when the goods reached the check-post on enquiry and inspection of Amar Traders,
Bidar, by Assistant Commissioner, II Circle, Bidar, on October 15, 1997 it was found that Amar Traders, Bidar, started purchase of Sagar brand
gutka from R.K. Products, Kanpur, with effect from September 24, 1997 and that the first invoice was bearing No. 281, dated September 24,
1997 from Kanpur. But, the goods were said to have been received from South Golden Transport, Hyderabad, through New Bidar Goods
Transport, Hyderabad, on October 14, 1997 and October 5, 1997 for which the dealer purportedly paid freight charges. The dealers stated that
they sent the demand drafts to R.K. Products, Kanpur, after receiving the goods and after sales are effected, through Punjab and Sind Bank,
Bidar. The dealer also stated that, they deposited Rs. 50,000 on October 13, 1997, Rs. 1,04,000 on October 14, 1997 and Rs. 30,000 on
October 15, 1997 into their bank account No. 800. All these deposits into bank at Bidar, ostensibly for payment to R.K. Products, Kanpur, to
obtain demand drafts, started after detention of goods by Assistant Commissioner (C.T.), Intelligence II, Enforcement, Hyderabad, on October
10, 1997. The first despatch of goods itself, in the name of Amar Traders, Bidar, from Kanpur started from September 24, 1997, after Sagar
branch gutka relating to Amar General Store, Hyderabad, was detained on September 20, 1997, at South Golden Transport Company,
Hyderabad. Under these circumstances, 116 bags of Sagar brand gutka of noted value as per L.Rs. and invoices, covered by 21 L.Rs. of South
Golden Transport Company being transported by Lorry No. UP-78-B-2255, entered the State of A.P. through Integrated check-post, Bhoraj,
Adilabad on October 7, 1997. It is also stated that on enquiry by the Commercial Tax Officer V of Enforcement Wing the Assistant Commercial
Tax Officer, Integrated check-post, Bhoraj, Adilabad, on October 15, 1997 stated that he enquired with the driver of the vehicle orally, as to his
destination, who was reported to have stated as Hyderabad and Bidar, and accordingly after satisfying with the driver''s reply, the Assistant
Commercial Tax Officer, Integrated check-post, Bhoraj, Adilabad said to have issued transit pass mentioning Kodikonda as exit check-post. This
indicates that transit pass was obtained by misrepresenting the facts deliberately by the driver of the vehicle. The transit pass No. 20651, dated
October 7, 1997 was taken for the consignment ostensibly destined for Bidar, but strangely indicating exit check-post as ""Kodikonda"" in
Anantapur district. Kodikonda is neither in the way nor remotely connected to Bidar from any reasonably pliable route. Part of the consignment of
gutka in the vehicle No. UP-78-B-2255 was meant to Amar General Store, Hyderabad, and part of gutka was in the name of Amar Traders,
Bidar, hence the consignment which was sent to Bidar was suspicious.
4. The argument of the learned counsel for the petitioner is that the goods meant for Bidar were booked at Kanpur and the route is via Hyderabad
at Adilabad and a transit pass is to be issued by the Adilabad check-post and hence the driver applied for the transit pass and Kodikonda was
mentioned as exit place. It was also argued that the goods were not meant for sale in Hyderabad but they were meant for sale at Bidar and that the
first and second respondents do not have any power to detain the goods on suspicion that the goods are meant for sale in Hyderabad in the
absence of material to that effect. It is argued that the driver produced all the necessary documents at the time when the lorry entered the check-
post and on satisfaction of the documents produced the transit pass was issued, but strangely the exit point was mentioned as Kadikonda. u/s 29-
B a transit pass is to be issued by the authority and while issuing the transit pass there is no power to detain the goods. Therefore, the detention of
the goods is without any basis.
5. The learned counsel for the respondents contended that under the guise of transporting goods from Kanpur to Bidar they were actually planning
to sell the goods at Hyderabad and therefore in exercise of the power conferred u/s 29 of the Act, the goods were detained and therefore the writ
should be dismissed.
6. Before considering the arguments of both sides it is necessary to extract the detention order. The relevant portion of the detention order is as
follows :
Information was received that the following consignment of ''Sagar brand gutka'' consigned from Kanpur, partly to Hyderabad and partly to Bidar
was checked at Integrated check-post, Bhoraj. The transit pass No. 20651, dated October 7, 1997 was taken for the consignment ostensibly
destined for Bidar in form XXXIII(B) but strangely indicating exit check-post is ''Kodikonda'' in Anantapur district. Kodikonda which is neither in
the way nor remotely connected to Bidar from any reasonably pliable route. Part of the consignment in the vehicle was meant to Amar General
Store, Hyderabad, and part of the consignment was in the name of Amar Traders, Bidar, hence the consignment which was sent to Bidar was
suspicious. The transit pass taken with exit point of Kodikonda check-post, strengthens reasonable suspicion of evasion of tax. The goods also
reached Hyderabad in the lorry No. UP-78-B-2255 along with other consignments of footwear and other dealer''s goods which are not about in
the route of Bidar.
In the circumstances the gutka covered by the following bills and being transported in vehicle No. UP-78-B-2255 of South Golden Transport Co.
(Regd.) is hereby detained pending further probe.
7. A reading of the order of detention makes it clear that the ground for detention is that the exit check-post is mentioned as Kodikonda which is in
Anantapur district and which is neither in any way nor remotely connected to Hyderabad from any reasonable pliable route. A part of the
consignment in the vehicle was meant to Amar General Stores, Hyderabad, and a part of the consignment was in the name of Amar Traders of
Bidar hence the consignment was said to be suspicious. It is clear from the impugned order that the goods were detained on suspicion apart from
the ground that Kodikonda is not a route for Bidar. In the counter it is stated that the transit pass was obtained by misrepresenting the facts
deliberately by the driver. Apart from the fact that the case in the counter is entirely different from the case in the detention order, it is to be seen
whether on suspicion the goods can be detained under any one of the provisions of the Act. In this context, Sections 29 and 29-B are relevant. It
is necessary to point out that in the records we do not find any form 33-A having been filed by the driver for obtaining the transit pass. It is also
stated in the counter that the driver has orally stated that the exit point is Kodikonda. Section 29 provides for the establishment of check-post or
barrier and inspection of goods while in transit. The relevant portion of Section 29 is Section 29(3)(b)(ii). Section 29 envisages the authority
mentioned therein to stop the vehicle at the check-post and examine the contents in the vehicle and inspect all the records relating to the goods
carried which are in the possession of the driver or other person-in-charge for the purpose of ascertaining as to whether there was any sale or
purchase of goods carried and in case there was sale or purchase of goods carried, whether such sale or purchase is liable to be taxed under the
Act. The officer who examines the contents of the vehicle at the entry point has to verify whether the tax has been paid or whether the sale or
purchase of the goods carried is for the purpose of payment of tax has been properly accounted for in the bills of sale or delivery of goods or such
other document as prescribed. On examination if it is found that Section 29(3)(b)(ii) the sale or purchase of the goods carried for the purpose of
payment of tax under the Act has not been properly accounted for in the documents referred to in Section 29(2) with a view to prevent evasion of
tax, if the officer is satisfied he can detain the goods.
8. If the officer is satisfied that the relevant particulars mentioned u/s 29(2) are satisfactory and the goods are accounted for then he will have to
issue a transit pass u/s 29-B in cases where the vehicle carrying goods is coming from a place outside the State and going for any other State
outside the State and pass is to be obtained by the driver from the officer in-charge of the check-post. He has to deliver the transit pass to the
officer in-charge of the last check-post or barrier before his exit from the State failing which it is presumed that the goods carried have been sold
within the State.
9. From a reading of Section 29 it is clear that if the officer is not satisfied on examining the goods at the point of entry carried by the vehicle he is
entitled to detain the goods. If he is satisfied that the goods have been accounted for properly then he has to issue a transit pass. On the facts of the
present case the goods have entered the State of Andhra Pradesh and it is at the stage of obtaining transit pass u/s 29-B of the Act. The detention
order states on suspicion that the goods may be sold inside the State of Andhra Pradesh, the goods are detained. A reference to Section 29(3)(b)
(ii) makes it clear that it does not enable the officer to detain the goods on suspicion that they are likely to be sold inside the State. It is a case of
purchase at Kanpur and the officer is satisfied that the documents relating to purchase of goods are to his satisfaction. Therefore, the ingredients of
Section 29(3)(b)(ii) are not satisfied as the power of detention under the said section can be exercised only in cases where the goods have not
been properly accounted for and that there is an evasion of tax payable in respect of sale or purchase of goods. Since the order of detention does
not say that the goods are not accounted properly or that there is evasion of tax the ingredients of Section 29(3)(b)(ii) are not satisfied and
therefore it is not applicable to the facts of the present case.
10. As pointed out in the earlier para the goods have just entered the State of Andhra Pradesh and at the stage of issuing of the transit pass. At the
stage of issuing the transit pass if the officer is satisfied he has to issue a transit pass and the person in-charge of the vehicle fails to deliver the said
transit pass at the last check-post then there is a presumption that the goods carried by them have been sold within the State. However, Section
29(3)(b)(ii) does not authorise the officer to detain the goods, at the most he can draw a presumption that the goods are sold within the State.
However, that stage has not yet arisen on the facts of the present case.
11. In view of the above, since the ingredients of Section 29(3)(b)(ii) of the Andhra Pradesh General Sales Tax Act, 1957 are not satisfied the
detention order is quashed and the goods are directed to be released at once.
The writ petition is allowed with costs of Rs. 500.