2009 (2) TMI 760 - HC - VAT and Sales Tax

Whether, on the facts and circumstances of the case, the officer in-charge of the check barrier was not empowered under section 14B of the Punjab General Sales Tax Act, 1948 read with rule 3A of the Central Sales Tax (Punjab) Rules, 1957, to check and detain the goods and impose penalty on the ground that it was an inter-State sale and not transfer of goods on consignment basis? Held that - The order of penalty passed by the Officer in-charge of the check-post, dated July 11, 1991 and consequential order passed by the Appellate Authority as well as by the Tribunal are not sustainable in the eyes of law because the jurisdiction of classifying the nature of transaction has been assumed by the Officer incharge of the check-post. In the regular assessment, as has been noticed in the preceding para, the transaction has been found to be consignment sale by the Assessing Officer. The aforesaid factual position would be clear from the perusal of order of assessment along with the affidavit, which have been taken on record as mark A . Therefore, the question of law deserves to be answered in favour of the dealer and against the Revenue.

Summary

Issues Involved:
1. Jurisdiction of the check-post officer under section 14B of the Punjab General Sales Tax Act, 1948.
2. Determination of the nature of the transaction (inter-State sale vs. consignment sale).
3. Validity of the penalty imposed by the check-post officer.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Check-post Officer:
The court examined whether the officer in charge of the check barrier had the authority under section 14B of the Punjab General Sales Tax Act, 1948, and rule 3A of the Central Sales Tax (Punjab) Rules, 1957, to check and detain goods and impose a penalty on the ground that it was an inter-State sale and not a consignment sale. The court concluded that the officer at the check-post does not have jurisdiction to determine the nature of the consignment if the requisite documents are submitted and there is no prima facie reason to suspect the authenticity of the information given therein. The court emphasized that the regular assessment authority has the jurisdiction to determine the nature of the transaction.

2. Determination of the Nature of the Transaction:
The court noted that the petitioner was a registered dealer engaged in the business of oil seeds and cotton, and the consignment in question was intercepted and penalized on the grounds of being an inter-State sale. However, the regular assessment for the year in question, completed by the Assessing Authority-cum-Assistant Excise and Taxation Commissioner, Moga, assessed the transfers to branches and agents outside Punjab as consignment sales, not inter-State sales. The court highlighted that the assessment order had attained finality and supported the petitioner's claim that the consignment was indeed a consignment sale.

3. Validity of the Penalty Imposed:
The court found that the officer in charge of the check-post had overstepped his jurisdiction by determining the nature of the transaction and imposing a penalty. The court stated that the officer's role is limited to verifying the authenticity of the documents accompanying the goods. If the documents are found to be proper and genuine, no further steps should be taken by the officer at the check-post. The court referred to the Karnataka High Court's judgment in the case of *Automobile Products of India Limited v. State of Karnataka* [1991] 81 STC 414, which held that the check-post officer does not have the jurisdiction to make an assessment if the documents carried in the vehicle satisfy the requirements.

Conclusion:
The court concluded that the question of law referred for adjudication should be answered in favor of the dealer and against the Revenue. The penalty imposed by the check-post officer was deemed unsustainable as the jurisdiction to classify the nature of the transaction lies with the regular assessing authority. The reference was disposed of, and the question of law was answered in favor of the petitioner-dealer.