1989 (5) TMI 305 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of detention of timber.
2. Method of measurement for timber.
3. Requirement of permits for excess timber.
4. Disclosure of secret information.
5. Jurisdiction of the Inspector of Commercial Taxes.
6. Standard trade practices and ISI methods for timber measurement.
7. Release of detained timber.

Detailed Analysis:

1. Validity of Detention of Timber:
The primary issue was whether the detention of the impugned notified goods, namely timber, was valid. The applicant, a registered partnership firm and dealer, had obtained permits for clearing timber but faced detention due to an alleged excess quantity. The Inspector of Commercial Taxes at Ultadanga check-post did not clear the goods, asserting that the consignment exceeded the declared quantity by 336 cft. The applicant argued that timber should be measured cubic feet-wise as per trade practice and ISI standards, not by weight. The Tribunal held that the Inspector was within his jurisdiction to detain the goods for verification under section 14A of the Bengal Finance (Sales Tax) Act, 1941, and no illegality or invalidity was involved in such detention.

2. Method of Measurement for Timber:
A significant controversy arose regarding the method of measurement. Initially, measurements were taken by weight conversion, which the applicant contested. Upon the Assistant Commissioner's intervention, measurements were taken both end to end and excluding defects like saps, knots, and cracks. The Tribunal noted that the first method had an objective standard, while the second was subjective. The Tribunal did not express an opinion on the weight-based measurement but acknowledged the applicant's acceptance of railway booking by weight. The Tribunal highlighted the absence of a standardized procedure in the 1941 Act for timber measurement.

3. Requirement of Permits for Excess Timber:
The applicant was asked to obtain a permit for the excess quantity of 235.19 cft. The Tribunal directed that the applicant should produce a permit for the disputed quantity within two weeks, mentioning it as defective. Failure to do so would allow the authorities to take steps against the applicant, treating the excess as not covered by the permits. The Tribunal clarified that the question of charging tax would arise only if the disputed quantity was sold.

4. Disclosure of Secret Information:
The applicant's advocate contended that the secret information received by the Inspector should be disclosed to the Tribunal. The Tribunal opined that there was no need for such disclosure in this case, as the goods were detained, not seized. The Tribunal referenced the Supreme Court case [1970] 25 STC 211 (SC) (Hindustan Steel Ltd. v. State of Orissa) but found it irrelevant to the present case.

5. Jurisdiction of the Inspector of Commercial Taxes:
The Tribunal affirmed that the Inspector had the jurisdiction to detain the goods under sub-section (1) of section 14A of the Bengal Finance (Sales Tax) Act, 1941, to verify if the notified goods were transported in contravention of section 4B. The Tribunal found no fault in the Inspector's actions.

6. Standard Trade Practices and ISI Methods for Timber Measurement:
The applicant relied on trade practices and ISI methods for measurement, presenting various documents to support their stance. The Tribunal noted the absence of a codified or standardized procedure for timber measurement in commercial circles. The Tribunal observed that the applicant did not follow the ISI method, despite relying on it. The Tribunal refrained from laying down a standard method for measurement, acknowledging the complexity and lack of uniform practices.

7. Release of Detained Timber:
The Tribunal had previously ordered the conditional release of the detained timber. Since the goods were already released, the Tribunal directed the applicant to produce a permit for the disputed quantity within two weeks. If the permit was produced, the Commercial Tax authorities were to refund the Rs. 10,000 deposited by the applicant. The application was disposed of with no order for costs.

Conclusion:
The Tribunal upheld the validity of the timber detention, acknowledged the jurisdiction of the Inspector, and addressed the measurement controversy by directing the applicant to obtain a permit for the excess quantity. The Tribunal emphasized the lack of a standardized measurement procedure and disposed of the application without costs.

← Previous Next →