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Judgment
Ramaprasada Rao, J.—Both these writ petitions raise a common question. I intend referring to the facts in W.P. No. 455 of 1970 first and
thereafter refer to the salient features in the other writ petition (W.P. No. 3581 of 1968) for purposes of completion.
The petitioners (Athithan Stores) carry on business in Madras and are registered dealers both under the Central Sales Tax Act and the Madras
General Sales Tax Act. A consignment of 91 bags of buller seeds was sent by their principals, Messrs. Mruthyunjaya Traders, Bangalore, through
a lorry, MDS 4495, belonging to Messrs. Busy Transports, Madras. The goods were despatched by the principals under their pro forma dated
23rd January, 1970, for ""commission sales"" by the petitioners. There were, therefore, no sale documents as popularly understood which
accompanied the transport. But it is not in dispute that the transport was accompanied by the pro forma invoice of the principals, which disclosed
that the consignment was sent to Madras for purpose of being sold by the petitioners as commission agents and that no sale of the goods was
involved. There is ample material in the instant'' case to show that the consignment was sent by the principals to their commission agents and that at
no point of time the principals ever intended to ""sell"" the goods to the petitioners.
These goods were intercepted by the Check Post Officer at Ranipet. According to the Check Post Officer, the defects noticed were as follows:
Not covered by bill or delivery note. Transported for commission sales but not supported by an agreement or purchase voucher of the buying
dealer or commission agent.
The notice was served on Krishna, the driver of the vehicle who was in charge of the same, and the notice said that the driver ""contravened
Section 44 of the Madras General Sales Tax Act, 1959, which has resulted the evasion of tax of Rs. 270"". He was, therefore, charged with the
offence of transporting goods in violation of Section 44; and he was asked to show cause why he should not be prosecuted u/s 45(2)(b) of the
Madras General Sales Tax Act, 1959. He was, however, given an option to have the above offence ""compounded departmentally in a sum of Rs.
540"". This was followed up by another notice of the same date (24th January, 1970), wherein it was stated that the driver has committed the
offence of ""failure to transport 91 bags of buller seeds in the proper delivery note or bill punishable u/s 45(2)(d) of the Madras General Sales Tax
Act, 1959"" ; again he was given an option to compound the offence by paying Rs. 540 within ten days from the date of the said notice; otherwise,
it was made clear that a complaint would be laid before a Magistrate.
The driver of the vehicle is said to have approached the petitioners, who, after information of the happening as above, are said to have
approached the Ranipet Check Post Officer and demanded a release of the goods. In the alternative, the petitioners'' case is that their
representative offered to pay a sum of Rs. 540 provided a receipt was issued in the name of the petitioners. As this was refused, the petitioners
could not take further steps in the matter.
Thereafter, however, the petitioners took the matter with the respondent and contended that the insistence of the Check Post Officer to issue a
receipt in favour of the driver, when actually the persons involved in the entire transaction and the subject-matter are the petitioners, was wrong;
and they brought this to the notice of the authorities through their counsel''s notice. They would also state that the transport of the goods, in the
circumstances as above, was never intended to wilfully avoid tax or the transportation as such contravened any of the provisions of the Act. The
department sent a reply to the counsel stating that if the petitioners were aggrieved, they could take redress before the appellate authority after
paying the compounding fee levied and taking delivery of the goods unloaded voluntarily. The petitioners'' case is that there was no voluntary
unloading of goods, as, according to them, the Check Post Officer compulsorily detained such goods. It is not, however, necessary to go into this
aspect of the case.
After having found that the revenue was insisting upon dealing with the driver, though they were conscious that it was the petitioners'' interests
which were affected in the bargain, the petitioners came up to this court with W.P. No. 455 of 1970 seeking for a writ of certiorari to quash the
notice of the Check Post Officer, dated 24th January, 1970. I have already referred to the fact that there were two notices. Apparently, the
petitioners want to remove the contents of both the notices, as their case is that they are illegal and without jurisdiction.
I may incidentally refer to the special features in W.P. No. 3581 of 1968. Excepting for the fact that the petitioners herein did not send a
consignment to their agent for sale on commission and also that the petitioners here did not approach the Check Post Officer in person for a relief,
the facts of the two cases are almost similar. In W.P. No. 3581 of 1968, Messrs. W.H. Deeth & Co., carrying on business in Madras, secured the
services of a public carrier, known as Messrs. Inter-State Transports (P.) Ltd., and sent four dealwood cases of human hair securely packed, and
of the value of Rs. 22,000 to their head office, Messrs. W.H. Deeth & Co., 210, Dr. Naoroji Road, Bombay-1, for shipment to America. There
was also a letter contemporaneously issued by the petitioners but addressed to the transport company instructing them to deliver the goods to their
head office at Bombay. That this document accompanied the transport is not in dispute. Nevertheless, the driver of the vehicle one Ponnurangam,
who was transporting the goods with the above document, was intercepted and he was charged for having contravened Section 44 of the Act on
the ground that his act ""has resulted in evasion of tax"". The petitioners had to pay the compounding fee demanded since, according to them, they
had no alternative to avoid the same, in the peculiar circumstances set out above and the goods caught in the vortex of the onward journey should
reach Bombay ''for being shipped abroad.
The main objection of the revenue is that the petitioners in each of the writ petitions are not entitled to file the writ petition since action has been
taken as against the driver who was in charge of the goods vehicle, and such action was initiated because he was ""in possession"" of the records
specified u/s 44 and in consequence he should be deemed to have wilfully contravened the said provision. As the driver is the addressee of the
notice impugned and as the petitioners are nowhere in the picture, the petitioners cannot be said to be ""persons aggrieved"" to invoke the
extraordinary jurisdiction of this court.
The main intent of Section 44 read with Section 45 is one of avoiding transport of goods illicitly with the avowed object of avoiding or evading
tax under the provisions of the Madras General Sales Tax Act. It cannot be expected that every consignment of goods passing through a cheek
post can be deemed or assumed to be a transport of goods wherein a sale or a contemplated sale is involved. There may be cases where a
principal is transporting such goods to his commission agent for sale on commission. There may equally be cases where a firm is consigning goods
to its branch office in another State for being dealt with in accordance with its instructions, may be onward export to foreign countries. It is easy to
multiply instances where goods can pass check posts without being the subject-matter of a ""sale"" or a ""purchase"", and not within the pale of the
taxing provisions of the Act. Therefore, it is necessary to see, whenever goods pass a check post, whether the intention of the transporter was to
deliberately or wilfully contravene the provisions of Section 44 of the Act.
Section 44 refers to bills of sale, delivery notes and such other documents as may be prescribed relating to the goods under transport. The
Check Post Officer, as already stated by me, is more concerned with the collection of tax and has to see to no avoidance or evasion of tax taking
place. Therefore, it is for him to establish or, at least, subjectively satisfy himself on material placed before him, that there has been a wilful
contravention of the prescriptions in Section 44 of the Act. Each case has to be decided on its own merits and no exhaustive rule or guidance can
be set, because, circumstances may vary with situations.
In the instant case, the one thing that has happened, and which is common to both the cases, is that the goods passed the check post; that was
sufficient for the Check Post Officer to assume jurisdiction u/s 45(2)(d) read with Section 44, and assume that there has been an evasion of tax,
and serve a charge-sheet on the driver on the foot that there has been a wilful contravention of Section 44 of the Act. I do not find any justification
for the Check Post Officer to find, without a reasonable enquiry, that there has been an evasion of tax. To record a finding that tax has been
evaded is to assume that the goods which were under transport were subject to tax. Unless the record discloses that a reasonable or a just
enquiry, after following the principles of natural justice, has been held, and a reasonable conclusion arrived at that the goods which were the
subject-matter of transport, are liable to tax, and by irregular transportation there was an attempt to evade tax, it is not proper for the officer to
have recorded a finding that there has been an evasion of tax. This assumption is without foundation. Even assuming that the apprehension was
well-founded, the enquiry held by the Check Post Officer, by himself, in conjunction with the driver who had with him certain documents, which
related to the goods under transport, appears to me to be very flippant and unsatisfactory. He has not applied his mind and referred to the
documents in question in each of these cases, to find for himself that there is a reasonable apprehension of evasion and that the goods under
transport were liable to tax and such transportation in an inchoate and incomplete fashion without the requisite documents or records, are indicia of
wilful contravention of Section 44. Though an enquiry at the check post is bound to be very summary in nature, yet, in order to bring home the
offence or charge to a person, for wilful contravention of an act, the record must disclose ex facie that there has been a thought over the subject-
matter by the officer concerned and he was satisfied, at least subjectively, though not by an objective analysis, that there has been a wilful
contravention of Section 44. In a case where, as in the instant cases, documents are produced to show that there was merely transportation of
goods, but not with the intention of selling them, or with the intention of evading tax, the officer should, again, apply his mind, no doubt prima facie,
and come to a conclusion that the documents are not reliable and the attempt was only to evade tax. In the absence of such an application of the
mind, it cannot be said that there has been an evasion of tax as alleged. This, by itself, is an error apparent.
The records produced relating to the goods under transport do give a genuine impression that they were not for sale; in one case and, in
another, they were being transported from the branch office to the head office for onward export. These factual details have not been considered
by the Check Post Officer. In the first writ petition (W.P. No. 455 of 1970), the writ petitioners have taken the precaution of approaching the
Check Post Officer (this fact is, however, denied by the respondent) and sought to explain to him that they were prepared to pay the compounding
fee if the receipt therefore was given in their name. There was correspondence between the petitioners in W.P. No. 455 of 1970 and the
department, and their status as the ""owners"" of the goods and as ""persons interested"" in the transport were undoubtedly recognised by the
department. In the second case (W.P. No. 3581 of 1968), the documents spoke for themselves. There was the letter addressed by the petitioners
at Madras to the motor vehicle operator stating that the goods may be delivered to their head office at Bombay. The particulars, which the driver
carried, were indicative of a bona fide act of a branch office transporting goods to its head office for being dealt with there. It is also not in dispute
that the Check Post Officer was apprised of the real state of affairs in relation to the goods under transport. It cannot, therefore, be said that the
petitioners, in each of these cases, have come to this court without any real interest or without being aggrieved. The reality of the grievance of a
person when he approaches the High Court or the higher court for relief, depends upon the nature of his interest in the subject-matter. Once it is
undeniable that he has a perceivable interest in the subject-matter-undoubtedly both the writ petitioners have such interests in these cases since the
goods belonged to them-then, on a technical ground that the department thought it fit to address a letter only to the driver who was transporting the
goods and that the petitioners'' names do not appear in the proceedings initiated by the department, it cannot be said that such interests are only
general interests and not particular interests or recognisable interests.
Learned Government Pleader relied upon the decision of a Division Bench of this Court, presided over by the learned Chief Justice and
Gokulakrishnan, J., in W.P. Nos. 2938, 2939 and 2940 of 1970. There, the merits were not gone into. The question that arose therein was
whether the petitioner, as owner, can pursue, without anything, a notice issued to his driver and seek relief either before the revenue or before this
court. As a matter of fact, the learned Chief Justice, speaking for the Bench, said:
Apart from that, we do not think that this is the proper stage at which this court need interfere.
The learned Judges, therefore, made a reservation that if there was a need, interference was plausible. The need has arisen in this case, having
regard to the peculiar facts and circumstances thereof.
Again a Division Bench of this Court, to which I was a party, said in Asea Electric (India) P. Ltd. v. Joint Commercial Tax Officer [1969] 23
S.T.C. 160 :
...the question whether a person is aggrieved is closely bound up with the particular facts, and naturally, therefore, no general proposition can be
laid down as a touchstone.
Bearing this in mind, I am of the view that the petitioners, in each of the writ petitions, have real interests in the subject-matter and they are the
persons really affected in the bargain. In my view, they have not come up to this court as vigilance sentinels to preserve law and to maintain law,
but they have come up seeking redress, since, according to them, they could not obtain such relief at the hands of the revenue when they
approached them and when they summarily rejected such a request for relief when it was asked for.
As the petitioners are therefore ""parties aggrieved"", the question is whether the transportation, in these cases, can be said to be in wilful
contravention of the provisions of Section 44. Grover, J., under similar circumstances, issued a rule in exercise of jurisdiction under Article 226 of
the Constitution, in Dr. Diwan Chand Aggarwal v. Commissioner of Sales Tax [1963] 14 S.T.C. 51 after relying upon the decision of the Supreme
Court in Kavalappara Kottarathil Kochunni Moopil Nayar Vs. The State of Madras and Others, . S.R. Das, C.J., in Kavalappara Kottarathil
Kochunni Moopil Nayar Vs. The State of Madras and Others, said that-
It appears to be well established that the Supreme Court''s powers under Article 32 are wide enough to make even a declaratory order where that
is the proper relief to be given to the aggrieved party.
Following this, Grover, J., as he then was, issued a declaratory order in exercise of power under Article 226 of the Constitution. I intend doing
the same.
I am of the view that the challenged notices served on the drivers on the assumption that the transports were irregular or in wilful contravention
of Section 44 of the Act, are without jurisdiction and it should be declared that the said notices (in both the writ petitions) are irregular and hence
illegal. The rules are made absolute. No order as to costs.