Mohan Iron Depot vs Assistant Commercial Taxes Officer, Ward-1

J.K. Ranka, J.—This instant sales tax revision petition is directed against the order of the Rajasthan Tax Board dated April 3, 2006 in Appeal No. 628/2005/Bharatpur by which penalty under section 78(5) was sustained by the Rajasthan Tax Board. The revision petition was admitted on the following questions of law:

"(a) Whether without establishing the violation of requirement of section 78(2) penalty under section 78(5) can be levied or not?

(b) Whether the finding arrived by the learned Rajasthan Tax Board is contrary to the law and facts of the case and is perverse?

(c) Whether the penalty under the provisions of the Rajasthan Sales Tax Act, 1994 as per section 78 can still be upheld if the documents were as required by section 78 of the Act?

(d) Whether on correct interpretation of the provisions of section 78 penalty can be levied where no inquiry has been made?

(e) Whether on the facts and circumstance of the case, the learned Rajasthan Tax Board is justified in upholding the penalty on the fact which is against the record and is totally perverse?"

The brief facts which can be noticed on perusal of the impugned order and arguments of the counsels are that the respondent is carrying on the business of iron goods and other allied business. During the course of its business the assessee had purchased goods from one Rajeev Prakash, Kan-pur against C form and was intended for onward sale in the State of Rajasthan to one Udairam AS Bheru Bazar, Balotra. When the goods were being carried the officers of the Revenue Department intercepted the vehicle bearing No. RK 14G-7324 near Nimaj, at Samokhi near Pali where it was noticed by the officers on perusal of the bill that Sariya T.O.R. was being carried and along with the vehicle, the officers found one GR No. 1419 dated August 18, 1997 issued by one SK Transport (Bharatpur), bill bearing No. 418/dated August 18, 1997 wherein Sariya 15.460 tonne with a value of Rs. 2,16,440 as ST paid was issued by the petitioner Mohan Iron Depot. On further verification the officer of the Revenue Department was prima facie of the view that the bill is not proper as some discrepancies were noticed. On further interrogation by the officers, the driver conveyed that the goods (TOR Sariya) were loaded, 50/60 kms. near Kanpur (UP) on Kolkata Road, on August 17, 1997 and the said goods were directly dispatched without any unloading at Bharatpur towards Balotra. The driver produced soma details/visiting card of Assam Rajasthan Road Lines, 133/248 T.P. Nagar Kanpur and conveyed that the goods were filled in through the said transporter and he was instructed that he will get some documents from a concern in Bharatpur and proceed towards Balotra. He conveyed that the bill/bilty was provided to him by someone at the Bharatpur, Chungi Naka but he did not remember the name and address of the person who gave the envelope and he further conveyed that the documents relating to the party of Kanpur was handed over by him to the person who came to deliver the said papers. He further conveyed that the goods were loaded from the factory near Kanpur on August 17, 1997 in the evening between 6 to 7 pm, it was weighed on weighing scale in the factory itself and that the said vehicle reached Bharatpur on August 19, 1997 where he got made Behti (T.P.) at Chungi Naka of Bharatpur Nagar Parishad.

On the above facts, the officers came to the conclusion that the goods were being transported with the intention of evasion of tax therefore a notice under section 78(4)(a) of the R.S.T. Act 1994, was given to the vehicle owner/driver. The owner of the firm also appeared and produced some documents contending that the firm is registered under RST and CST and also produced photocopy of bill/bilty and declaration form ST 18A, of the Kanpur party. It was submitted that on the instruction of Balotra party the goods were not unloaded at Bharatpur and were directly being sent to Balotra after issuing bills. He further submitted that though RST was charged at Rs. 14 per kg. at Rs. 8,325 but in the bill the tax was apparently not shown by mistake and it was inclusive of RST, however in the books of accounts this factum was clearly recorded.

On account of the circumstances noted above and dissatisfied with the explanation the officer imposed penalty under section 78(5) at Rs. 44,772 being 20 per cent of the estimated market value of the goods.

The matter was carried in appeal by the petitioner before the Deputy Commissioner (Appeals) who being satisfied with the explanation offered deleted the penalty.

Dissatisfied with the deletion of the penalty the Revenue carried the matter in appeal before the Rajasthan Tax Board who after analysing the evidence on record reversed the finding of the Deputy Commissioner (Appeals) and upheld the penalty imposed by the assessing officer.

Shri Vivek Singhal, learned counsel for the petitioner submitted that the Tax Board has erred in sustaining the penalty which was rightly deleted by the Deputy Commissioner (Appeals), merely on the basis of assumption and presumptions. He further contended that on assumption and presumptions penalty cannot be sustained. He further contended that the Tax Board has placed heavy reliance on the fact that in the TP receipt No. 21425/46 issued by Nagar Parishad, Bharatpur, where date is mentioned as August 19, 1997 and time 12 whereas the fact is that when vehicle reached late at 12 o''clock then certainly date would be August 19, 1997 but for all practical purposes the vehicle had reached on August 18, 1997 only. He further contended that the vehicle contained all proper bills and vouchers along with supported material and therefore merely because some minor errors or on conjectures and surmises penalty cannot be imposed, and relied upon the following authorities:

"(1) Assistant Commissioner, Anti Evasion Commercial Taxes, Bharatpur v. Amtek India Ltd., Bhiwadi (S.B. Sales Tax Revision Petition No. 12 of 2006 dated May 3, 2006).

(2) Assistant Commercial Tax Officer, Anti-Evasion-II Vs. Sikhar Chand Kailash Chand Jain and Another, .

(3) Balaji Enterprises v. Assistant Commissioner, Commercial Taxes Department, Gangapur City [2010] 27 VST 376 (Raj.) (S.B. Sales Tax Revision Petition No. 29 of 2004 dated August 1, 2007).

(4) A.C.T.O. (Flying Squad), Sri Ganganagar v. C.D. Motors, Sri Ganganagar (S.B. Sales Tax Revision Petition No. 246 of 2008 dated January 18, 2010)."

Per contra learned counsel for the Revenue Ms. Tanvi Sahai contended that the Tax Board has rightly sustained the penalty which was imposed by the assessing officer. She further contended that there were many discrepancies noticed by the assessing officer and it is a clear cut case of evasion of tax. She further contended that even though the goods reached Bharatpur on August 19, 1997, the bill ought to have been issued on or after reaching at least Bharatpur i.e., on August 19, 1997. She further contended that this is sufficient to justify imposition of penalty as even without reaching goods at Bharatpur, without unloading or without proper weighment or a bill could not have been made of a date prior to reaching of the goods. She further contended that the bill found by the assessing officer shows vital discrepancies as the goods have been shown as ST paid whereas at that particular point of time, no tax was paid, rather it was an after-thought that it was claimed that the goods are inclusive of tax and in the books of accounts it was separately shown. She contended that books of accounts cannot be relied upon on the face of clear-cut discrepancies noticed in the statements of the driver, and on perusal of the statements of the owner of the firm. She submitted that judgments relied by the counsel for the petitioner are distinguishable and order of the Tax Board is just and proper and the revision petition deserves to be dismissed.

I have considered the arguments advanced by the learned counsel for the parties and have perused the impugned order so also the judgments relied by the counsel for the petitioner. It would be appropriate to quote section 78(4) and 78(5) which reads ad infra:

"78. (4) Where any goods in movement, other than exempted goods, are without documents, or are not supported by documents as referred to in sub-section (2), or documents produced appear false or forged, the incharge of the check-post or the officer empowered under sub-section (3), may--

(a) direct the driver or the person in-charge of the vehicle or carrier of the goods not to part with the goods in any manner including by transporting or rebooking, till a verification is done or an inquiry is made, which shall not take more than seven days:

(b) seize the goods for reasons to be recorded in writing and shall give a receipt of the goods to the person from whose possession or control they are seized:

(c) release the goods seized in clause (b) to the owner of the goods or to anybody else duly authorized by such owner, during the course of the proceedings if the adequate security of the amount equal to the estimated value of the goods is furnished.

(5) The incharge of the check-post or the officer empowered under sub-section (3), after having given the owner of the goods or a person authorised in writing by such owner or the person incharge of the goods a reasonable opportunity of being heard and after having held such inquiry as he may deem fit, shall impose on him for possession or movement of goods, whether seized or not, in violation of the provisions of clause (a) of sub-section (2) or for submission of false or forged documents or declaration (a penalty equal to thirty per cent of the value of such goods)."

On perusal of the above it provides that if the goods in movement other than exempted goods are without documents or are not supported by documents as referred to in sub-section (2) or documents produced appears false or forged then in that eventuality the assessing officer is empowered to impose penalty under section 78(5).

On perusal of facts, noted earlier, in my view on the basis of evidence on record, the penalty has been rightly sustained by the Rajasthan Tax Board, inasmuch as when the goods did not reach even Bharatpur by the late evening of August 18, 1997 or early morning of August 19, 1997 then no occasion arose for the assessee to have issued bill on August 18, 1997 at Bharatpur. Even prima facie this fact is sufficient to hold that the documents were not correct or full proof, the fact remains that the driver as per his version had been got delivered the bills at the (toll tax) by someone from the assessee''s side and even the driver was not aware as to who handed over the bills/bilty relating to Balotra party.

Though it is true as contended by the counsel for the petitioner that penalty under section 78(5) or for that matter any penalty cannot be imposed on mere conjunctures or surmises or assumption and presumption but the present case appears to be not one by which the penalty was imposed by the assessing officer on conjunctures or surmises or assumption and presumption and sustained by the Tax Board.

On perusal of the facts, noticed earlier it has also come on record admittedly that the bill clearly states the goods to be sales tax paid (STP) whereas at the time when the goods were dispatched, it was not tax paid and even the bill does not clarify that the value was inclusive of sales tax. In my view these vital discrepancies noticed by the Tax Board and the assessing officer that the bills were not proper, is sufficient to hold that there was violation of section 78(5) of the Act so as to impose penalty under section 78(5) of the RST Act. During the course of arguments the court inquired from the counsel for the petitioner to provide copy of the said T.P. receipt for perusal but he was unable to produce the same.

In my view, the judgments relied upon by the counsel for the petitioner, certainly lay down that penalty under section 78(5) cannot be imposed on conjunctures or surmises but the facts which have come on record and noticed earlier I come to the conclusion that the penalty has been imposed on account of vital discrepancies noticed by the assessing officer on investigation not only from the driver of the vehicle but also from the owner who appeared in person before the assessing officer as well as the documents produced in my view, the order of the Tax Board is well reasoned and the penalty was rightly upheld by the Tax Board. Consequently, the petition being devoid on merits is hereby, dismissed with no order as to costs.