2013 (6) TMI 386 - HC - VAT and Sales Tax

Consignment was not accompanied with down loaded transit declaration form as prescribed by the Commissioner, Commercial Tax, U.P. vide its circular No.552 dated 30th of July, 2009 - assessee transporting a consignment of steel casting machines - seizure order with a direction to release of the goods on furnishing the security to the extent of 15% of the value of the goods in cash and 25% - U.P. Value Added Tax Act - as per assessee any such form prescribed by the the Commissioner, Commercial Tax, U.P. is illegal as the the Commissioner, Commercial Tax, U.P. is not authorized under the said Act or Rules to prescribe any such form - Held that - Rule 58 itself empowers the Commissioner to determine the documents which a driver of a vehicle should carry with while passing through the State of U.P. carrying the taxable goods. The State Government had also prescribed similar form being form no.43 as per unamended section 52 of the Act. The power of Commissioner in the case on hand prescribing the document is referable to Rule 58 read with section 52. Therefore, unable to agree with the aforesaid submission of the petitioner. On the merits of the case, as petitioner submitted that except the down loaded form prescribed by the Commissioner the goods were moving along with all necessary documents. The department has neither raised nor doubted the genuineness of other documents which were being carried by the driver of the vehicle at the time of interception of the goods. The goods were booked at Ballabhgarh, Faridabad (State of Haryana) to BHEL, a Government of India Enterprizes. The details of the consignor and consignee were not found to be incorrect. The goods were not meant for consumption, use or sale by the public at large. The submission is that there was no intention to evade the payment of tax in the State of U.P. A perusal of the impugned order would show that the goods were intercepted and security for their release was demanded only on the ground that it did not accompany with the down loaded transit pass. Except the above default everything was found in order. Even in the case of Sodhi Transport (1986 (3) TMI 303 - SUPREME COURT OF INDIA) as also in the circular issued by the Commissioner it has been laid down that a rebuttable presumption in absence of necessary documents to be drawn against a person & examined this issue in depth and laid down that the presumption is rebuttable presumption. This Court in the case of the above M/S Balaji Timbers & Paints Versus The Commissioner, Commercial Tax, U. P. Lucknow 2010 (5) TMI 707 - ALLAHABAD HIGH COURT has gone to the extent that if the transit form is furnished subsequently, after the interception of the vehicle, the seizure order becomes bad. The Appellate Authority fixed 15 per cent cash security and bank guarantee to be given for 25 per cent of the value of the goods as a condition for releasing the goods. This order was modified by this Court while passing an interim order by providing that if the petitioner gives the bank guarantee for remaining 15 per cent of the amount also, the goods shall be released in its favour. In absence of any finding by any of the authorities below, that there was an intention to evade the payment of tax, the irresistible conclusion is that the seizure order is bad. On merits, therefore, the seizure order cannot be allowed to stand and is hereby set aside.

Summary

Issues Involved:
1. Whether the Commissioner, Commercial Tax, U.P. exceeded its power by prescribing a transit declaration form.
2. Whether the principle that a task required to be done in a particular manner must be done in that manner applies.
3. Whether the impugned orders passed by the authorities below, including the Commercial Tax Tribunal, on merits are sustainable.

Detailed Analysis:

Issue 1: Authority of the Commissioner, Commercial Tax, U.P. to Prescribe Forms
The petitioner argued that the Commissioner, Commercial Tax, U.P., exceeded its authority by prescribing a transit declaration form, asserting that such power is vested solely in the State Government under Section 79 of the U.P. Value Added Tax Act. The Court examined the relevant sections and rules, including Section 52 and Rule 58, which empower the Commissioner to determine the necessary documents for goods in transit. The Court noted that the term "document" is broadly defined under Section 2(j) and includes electronic forms. The Court found that the Commissioner acted within the scope of Rule 58, which allows the Commissioner to prescribe documents and procedures for goods in transit. The Court also referenced the principle of "Delegatus Non Potest Delegare" but concluded that the Commissioner's actions were justified under the legislative framework and aimed at preventing tax evasion. The maxim "Delegatus Non Potest Delegare" does not embody a strict rule of law but rather a rule of construction that can be overridden by the statute's language, scope, or object.

Issue 2: Manner of Performing Required Acts
The petitioner relied on the principle that if an act is required to be done in a particular manner, it must be done in that manner alone. The Court referred to a previous judgment in M/s. Technical Construction Company Vs. Trade Tax Officer, where it was held that the form prescribed by the Commissioner was invalid as it was not prescribed under the U.P. Act or Rules. However, the Court distinguished this case, noting that Rule 58 explicitly empowers the Commissioner to determine the necessary documents, making the Commissioner's prescribed form valid. Therefore, the principle did not apply in this context.

Issue 3: Merits of the Impugned Orders
On the merits, the petitioner argued that all necessary documents, except the downloaded transit pass, were in order and that there was no intention to evade tax. The Court noted that the goods were intercepted solely due to the absence of the downloaded transit pass and that all other documents were found to be genuine. The Court referenced multiple decisions indicating that the presumption of sale can be rebutted if the required documents are subsequently provided. The Court found no evidence of intent to evade tax and concluded that the seizure order was unjustified. Consequently, the Court set aside the seizure order and directed the refund of any cash security deposited by the petitioner.

Conclusion:
The Court found no merit in the petitioner's arguments on points 1 and 2 but held that the seizure order was invalid. The writ petition was allowed, and the impugned orders were quashed. The Court ordered the release of the bank guarantee and the refund of any cash security deposited by the petitioner. No costs were awarded.