2011 (3) TMI 1503 - GAUHATI HIGH COURT

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 realization of tax from a "transporter" under section 13A of the Tripura Sales Tax Act, 1976, and section 77 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?

Whether the subsequent insertion of section 13A in the Tripura Sales Tax Act, 1976, vide the 8th Amendment, can be sustained?

Held that:- Penalty can be imposed on a transporter, who facilitates and/or abetes 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 TST Act, 1976, and section 77 of the TVAT Act, 2004, are, so far as the same permit imposition of tax on transporters, are ultra vires entry 54 of List II of the Seventh Schedule to the Constitution of India.

The provisions of section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, are, 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 TST Act, 1976, and section 77 of the Act of the TVAT Act, 2004, do not have the effect of rendering the decision of the Supreme Court in Tripura Goods Transport Association v. Commissioner of Taxes [1998 (12) TMI 500 - SUPREME COURT OF INDIA] ineffective and the said provisions have not been enacted to override the decision in Tripura Goods Transport Association [abaove]. 6. 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 position 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 transporter(s), who may have violated the law.