1997 (7) TMI 634 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of Rajasthan Sales Tax Authorities under Section 22A(7) of the Rajasthan Sales Tax Act, 1954.
2. Applicability of Section 22A in cases of inter-state transit of goods.
3. Requirement of proper inquiry before imposing penalty.
4. Constitutionality of checking trucks merely passing through Rajasthan under Article 301 of the Constitution.
5. Requirement for the State Government to issue transit passes under Section 22B of the Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of Rajasthan Sales Tax Authorities under Section 22A(7):
The department contended that the authorities had jurisdiction under Section 22A(2) to inspect the vehicle and goods on suspicion of tax evasion and rightly imposed a penalty under Section 22A(7) as the driver failed to prove the goods were being transported from Delhi to Coimbatore. The authorities cited several precedents to support their jurisdiction and the imposition of penalty.

2. Applicability of Section 22A in cases of inter-state transit of goods:
The respondent argued that Section 22A was not applicable to goods merely transiting through Rajasthan from one state to another. Instead, Section 22B, which was not in force during the relevant period, was applicable. The Tribunal agreed, stating that the Act could not apply to evasion of tax in other states and that the goods were in transit, not for sale in Rajasthan.

3. Requirement of proper inquiry before imposing penalty:
The respondent argued that no proper inquiry was held, and the penalty findings were quasi-criminal, requiring greater proof. The Tribunal noted that the Deputy Commissioner and Tax Board found that the truck entered and left Rajasthan within a reasonable time, and there was no attempt to unload goods in Rajasthan, thus no tax evasion under the Act occurred.

4. Constitutionality of checking trucks merely passing through Rajasthan under Article 301 of the Constitution:
The Tribunal held that the provisions of Section 22A did not restrict the free flow of trade, commerce, and intercourse under Article 301. The checking of goods was a regulatory measure to prevent tax evasion and not a restriction on trade. The Tribunal cited several Supreme Court decisions to support this view.

5. Requirement for the State Government to issue transit passes under Section 22B:
The Tribunal noted that Section 22B, which required the issuance of transit passes for vehicles passing through Rajasthan, was not in force. The Tribunal could not issue a directive to the State Government to implement this provision, as it was a matter of legislative and executive discretion.

Conclusion:
The Tribunal dismissed the revision application, upholding the concurrent findings of the Deputy Commissioner (Appeals) and the Tax Board that no penalty was leviable under Section 22A(7) as the goods were in transit and not intended for sale in Rajasthan. The Tribunal emphasized the importance of proper inquiry and the constitutional validity of regulatory measures under Section 22A. The dissenting opinion by the Judicial Member, however, argued for the imposition of penalty, highlighting the need for transporters to carry requisite documents and the applicability of Section 22A to goods transiting through Rajasthan.