M.S. Freight Carriers (India) Private Limited and Others vs State of Tripura and Others

Deepak Gupta, C.J.�All these matters are being disposed of by a common judgment since identical law and facts are involved. The petitioners are transporters and transport goods of various dealers. The allegation of the State is that the transporter has helped or actively connived with the dealer in facilitating the evasion of taxes. The question raised is whether a transporter can be held liable to pay tax and penalty in terms of section 13A of the Tripura Sales Tax Act, 1976 and section 77 of the Tripura Value Added Tax Act, 2004. The constitutional validity of these two provisions is also challenged in these writ petitions.

The issues are no longer res integra. A Division Bench of the Gauhau" High Court (Agartala Bench) decided W.P. (C) 42 of 2005 and various other matters T.R. Freight Movers Vs. The State of Tripura, in which the following questions were decided (page 522 in 41 VST):

"1. Whether penalty can be imposed on a ''transporter'', who facilitates and/or abets evasion of tax by a ''dealer'' and because of whose such default, evasion of tax takes place?

Whether tax, which is, otherwise, chargeable on, and recoverable from, a ''dealer'', can be charged on, and/or recovered from, a ''transporter''?

Whether realisation of tax from a ''transporter'' under section 13A of the Tripura Sales Tax Act, 1976, and section 11 of the Tripura Value Added Tax Act, 2004, is constitutionally valid?

Whether the provisions contained in section 13A of the Tripura Sales Tax Act, 1976, and section 77 of the Tripura Value Added Tax Act, 2004, imposing penalty to the extent of 150 per cent of the ''tax involved'' is constitutionally valid?

On a conspectus of all the statutory provisions, contained in the Tripura Sales Tax Act, 1976, prior to its 8th Amendment, when the Supreme Court, in Tripura Goods Transport Association and Another Vs. Commissioner of Taxes and Others, , had already held that there is no liability on a ''transporter'' to pay tax and/or penalty, whether the subsequent insertion of section 13A in the Tripura Sales Tax Act, 1976, vide the 8th Amendment, can be sustained?"

The Division Bench decided these questions as follows (pages 577 and 578 in 41 VST):

"147. In the result and for the reasons discussed above, the writ petitions partly succeed to the extent as indicated hereinbelow:

Penalty can be imposed on a transporter, who facilitates and/or abets evasion of tax and because of whose default, evasion of tax takes place.

Tax can be imposed on transporters by treating a transporter as a dealer by creating legal fiction so as to treat, in the prescribed circumstances, a transporter, as a dealer, and/or by raising a legal presumption that the taxable goods, handled by a transporter, have been delivered to a dealer without any valid permit or by raising a legal presumption that the transporter has concealed the actual particulars of the goods transported by him and the goods have been sold, within the State, by the dealer without making payment of tax for such sale.

The provisions of section 13A of the Tripura Sales Tax Act, 1976, and section 11 of the Tripura Value Added Tax Act, 2004, are, so far as the same permit imposition of tax on transporters, are ultra vires entry 54 of the List II of the Seventh Schedule to the Constitution of India.

The provisions of section 13A of the Tripura Sales Tax Act, 1976, and section 77 of the Tripura Value Added Tax Act, 2004, or, in so far as the same relate to levy of penalty to the extent of 150 per cent of the tax involved, intra vires entry 54 of List II of the Seventh Schedule to the Constitution of India.

The provisions of the Tripura Sales Tax Act, 1976, and section 77 of the Tripura Value Added Tax Act, 2004, do not have the effect of rendering the decision of the Supreme Court in Tripura Goods Transport Association and Another Vs. Commissioner of Taxes and Others, ineffective and the said provisions have not been enacted to override the decision Tripura Goods Transport Association and Another Vs. Commissioner of Taxes and Others, .

The orders of assessment as well as the notices of demand, which stand impugned in this set of writ petitions, are, in the light of the conclusions reached above, set aside and the same are remanded to the respondents/authorities concerned with direction to examine the question of imposition of penalty for default, if any, of the petitioners in the light of the positron of law as indicated above and if the petitioners and/or any of them are found to have violated the legal obligations cast by the statutes concerned, necessary penalty, in accordance with law, may be imposed, in accordance with law, on that transporters), who may have violated the law."

It has been pointed out to us that the State of Tripura has challenged the validity of this judgment before the apex court. We had given various adjournments and the State was directed to produce stay order, if any, granted by the apex court. No such order has been produced. We, therefore, dispose of the present writ petitions in terms of the operative portion of the aforesaid judgment passed in W.P. (C) 42 of 2005 and other matters (T.R. Freight Movers v. State of Tripura [2011] 41 VST 513 (Gau.)) quoted hereinabove. We have not decided other points raised by the petitioners in these writ petitions.

We may make it clear that we have not expressed any opinion on the merits, since we feel that we should follow the judgment delivered by the Agartala Bench of the Gauhati High Court which then had jurisdiction over Tripura. We are also leaving the question open as to whether this court is bound by the judgments delivered by the Gauhati High Court or not. With these observations the writ petitions are disposed of.