State of Punjab and Another vs Sham Lal Vijay Kumar

Ajay Kumar Mittal, J.—C.M. NO. 12587-CII of 2012

Allowed as prayed for.

C.M. No. 12588-CII of 2012

This is an application u/s 151 of the CPC for placing on record documents, annexures R1 to R10.

The documents filed along with the application are taken on record subject to all just exceptions.

CM stands disposed of accordingly.

VATAP No. 72 of 2012

This appeal has been filed by the Revenue u/s 68 of the Punjab Value Added Tax Act, 2005 (in short, "the Act") against the order dated May 31, 2010 (annexure A5) passed by the Value Added Tax Tribunal, Punjab (hereinafter referred to as "the Tribunal") claiming the following substantial questions of law:

(i) Whether the order of the Tribunal accepting the appeal on the ground of non-issuing of a notice to consignee u/s 14B(7)(iii) of the Punjab General Sales Tax Act, 1948 without granting an opportunity to the Assistant Excise and Taxation Commissioner to decide the case afresh after affording an opportunity to the appellant for proving the genuineness of the documents is sustainable in law under the facts and circumstances of the case?

(ii) Whether it was mandatory to issue notice to the appellant u/s 14B(7)(iii) of the Punjab General Sales Tax Act, 1948 when the transport company who appeared as the owner of the goods had not raised any objection before the Assistant Excise and Taxation Commissioner when penalty order was passed under the said provision?

(iii) Whether notice issued to the transport company should have been treated as a valid service upon the consignee in view of Explanation II of section 14B(11) of the Punjab General Sales Tax Act, 1948?

(iv) Whether the appellant has any locus standi to file this appeal when penalty was imposed upon the transport company who had failed to prove the genuineness of the documents and assigned any reason for not reporting the transaction at any ICC of Punjab State as required u/s 14B(4) of the Punjab General Sales Tax Act, 1948?

(v) Whether the order of Tribunal is sustainable in law under the facts and circumstances of the case?

The primary issue that arises for consideration in this appeal is whether after the Tribunal held that the proceedings were bad for want of proper notice to the consignee-respondent, the matter was required to be remanded to the appropriate authority for fresh proceedings after complying with the legal requirements under the statute.

Briefly, the facts as narrated in the appeal may be noticed. On May 5, 2001 during the course of checking, vehicle No. HR-37-1597 carrying pulses and vegetables was intercepted at village Joggewala by the Excise and Taxation Officer, Mobile Wing, Chandigarh. On demand, the driver of the vehicle produced three GRs dated May 4, 2001 of M/s. Chaudhary Road Carrier Delhi along with various bills. When the driver of the said vehicle failed to produce form ST-XXIV-A issued by any ICC of Punjab State which was required while entering in the State of Punjab with goods loaded from Delhi, the checking officer made enquiry from the driver who stated that he had come through an escape route and had bypassed ICC on the directions of his owner. Accordingly, the vehicle along with the goods was ordered to be detained and a notice (annexure A1/T) was issued to the transport company for appearance on May 6, 2001. On the said date, i.e., May 6, 2001 none had appeared. However, on May 9, 2001, Shri Gian Chand, the manager of the transport company appeared and while admitting the value of the goods to be Rs. 2,77,469, stated that the goods were to be unloaded at Raikot in District Ludhiana. The statement of the Manager of the transport company was recorded and the goods were released against cash security. Thereafter, the case was sent to the Assistant Excise and Taxation Commissioner, Mobile Wing, Punjab, Chandigarh, for taking action u/s 14B of the Punjab General Sales Tax Act, 1948 (in short, "the 1948 Act") who issued a notice for affording an opportunity to prove the genuineness of the documents by appearing on May 11, 2001. The manager of the transport company appeared and failed to produce any account books or any other evidence to prove the genuineness of the transaction. The assessing authority vide order dated May 11, 2001 (annexure A2) imposed a penalty of Rs. 1,38,732 u/s 14B(7)(iii) of the 1948 Act holding that the goods were meant for trade and not covered with proper and genuine documents. Feeling aggrieved, the respondent-assessee filed an appeal before the appellate authority who vide order dated September 22, 2009 (annexure A3) dismissed the appeal. Against the order dated September 22, 2009 (annexure A3), the assessee filed further appeal before the Tribunal. The Tribunal vide order dated May 31, 2010 (annexure A5) allowed the appeal and set aside the penalty order. Hence, the present appeal by the Revenue.

The learned counsel for the appellant-State submitted that the Tribunal had held that the penalty was imposed on the transport carrier and not on the consignee. Further, no notice was served upon the respondent whereas a prior notice was required to be served upon it. According to the learned counsel, in such circumstances, the appropriate course for the Tribunal was to remand the matter to the assessing authority to proceed in accordance with law. The Tribunal having failed to do so, the matter is required to be remitted to the assessing authority.

The learned counsel for the respondent submitted that it was mandatory to issue notice to the consignee of goods u/s 14B(7)(iii) of the Act and failure to do so, would vitiate the proceedings.

No doubt, it is essential to issue notice to the consignee and failure to do so would vitiate the proceedings as held by the Division Bench of this court in State of Punjab and Another Vs. Khalsa Pulp and Paper Industries Pvt. Ltd., It has come on record that Shri Gian Chand Manager of M/s. Chaudhary Road Carrier had sought release of the goods by furnishing cash security. The penalty imposed by the Department had been paid by the consignee and thereafter the appeal had also been filed by the respondent-consignee. Once that was so, we are of the opinion that the issuance of notice to the respondent was mandatory. The failure to issue notice rendered the order imposing penalty unsustainable. In such circumstances, it was appropriate for the Tribunal to have remanded the matter to the assessing authority and has erred in not remitting the same to the assessing authority. However, learned counsel for the respondent made a statement that no evidence is required to be led and, therefore, instead of remitting the matter back to the assessing authority, the same may be sent to the first appellate authority who had dismissed the appeal only on the ground of non-maintainability on behalf of the respondent. Learned State counsel has no objection to the matter being remitted to the first appellate authority.

The substantial questions are answered accordingly and it is held that the Tribunal ought to have remitted the matter to the appropriate authority for fresh decision in accordance with law. In view of the above, the matter is remanded to the Deputy Excise and Taxation Commissioner-cum-Joint Director (Investigation), Patiala Division, Patiala for proceeding fresh in accordance with law and to adjudicate the appeal on merits expeditiously preferably within six months from the date of receipt of certified copy of this order.