2014 (9) TMI 139 - HC - VAT and Sales Tax

Confiscation of goods - Demand of value of the goods confiscated - consignor contend that in the absence of any order under section 33C of the Act, for withholding the refund of the amount of sale proceeds, the Department has no authority in law to retain the amount - whether the goods were intended to be further transported from Vijayawada and Ichchapuram to their destinations where the so-called consignees had business as contended by consignor/transporter or as contended by the Department they were brought to Andhra Pradesh for effecting clandestine sales in the State by evading payment of tax under the Act - Held that - The provisions dealing with prevention of tax evasion have considerable bearing on the controversy raised before this court. Hence, it is necessary to briefly refer to them. Every person licenced or registered, and every dealer who is required to get registration under the Act shall keep and maintain true and correct account (section 24). Section 27 requires the owner or other person in charge of the goods vehicle to carry with him a bill of sale or delivery note, goods vehicle record or trip sheet and other documents with all the particulars relating to the goods under transport. Confiscation of the goods would be necessitated if there is evasion of tax, if there is an attempt to evade the tax, and if the owner of the goods is not ascertainable. In case confiscation is not warranted, as per sub-rule (6), the officer who seized the goods shall return the goods to the owner or any person authorized by him if they had not been sold in public auction. If the goods are already sold in public auction, the proceeds of the sale less expenses incurred on the sale, if any, shall be refunded to the owner of the goods or any person authorized by him. The same procedure would be followed even where the order of confiscation is set aside or modified on appeal or revision. A reference may also be made to sub-rule (7) which provides for an opportunity to the owner of the goods to appear before the officer who ordered confiscation, satisfy him with relevant records regarding the bona fides of the goods in question and regarding the reasons for his non-appearance. If the concerned officer is satisfied that there has been no evasion or attempt to evasion, he may release the goods confiscated or refund the money realized in auction, as the case may be. The driver or any person in-charge of the vehicle carrying goods coming from any place outside the State shall have to obtain a transit pass from the check-post officer. The driver or the person in-charge of the vehicle shall have to carry the transit pass while passing through the State and shall have to deliver it to the check-post officer at the exit check-post, i.e., the last check-post of barrier before exit from the State of Andhra Pradesh. If transit pass is not obtained or the transit pass is not delivered at the exit check-post, the legal consequence is that it shall be presumed that the goods carried by the vehicle have been sold within the State by the owner or the person in-charge of the vehicle. In such a deemed sale, the goods are exigible to tax and penalty can always be levied in accordance with the provisions of the Act. In every case of non-delivery of transit pass, at exit check-post or while passing through the State of Andhra Pradesh, the burden of proving that the goods actually moved out of the State shall be on the owner or person in-charge of the vehicle. In such a situation, it is rather difficult to accept the plea that section 28(6) of the Act has no application. Even where the goods seized from the godown are allegedly in the process of inter-State movement to the place of consignee, if the proof is not offered as required under the proviso to section 29B, the officer can always seize and confiscate the goods allegedly in transit under section 28(6) of the Act. Therefore, we are convinced that the Tribunal decided the question of law erroneously by misdirecting itself. The confiscation order was passed by the jurisdictional CTOs drawing inferences and applying the presumption of sale in the State from the following undisputed facts. The consignor is not registered under the Nagaland sales tax the consignor was not available at the address given in the travel documents; the transport vehicles took a circuitous route avoiding nearest route to the place of consignees; the first consignee was indulging in doubtful activities without carrying any business from the registered premises at Delhi; the second consignee was not even registered with the Maharashtra sales tax authorities and he had given a wrong address. Examining these aspects with reference to the material and records collected and gathered by the Department, the learned Tribunal sought to justify the lacuna pointed out by the confiscating authorities in invalidating the confiscation proceedings. The finding that there was no proper notice or opportunity prior to seizure and confiscation are belied by the very fact that during the seizure, the manager or concerned person employed by BARL was present, notices were issued, consignor sent three representations and all were considered by the confiscating authorities. It is very curious that during the proceedings either before the CTO, Vijayawada or CTO, Kasibugga, consignees never appeared claiming the goods. The Tribunal in our considered opinion also lost sight of the provisions of sections 29A, 29B and rules 46, 47 and 48 and failed to see that admittedly the transporter did not produce all the duplicate copies of the transit passes when all the 45 lorries entered via the border check-post at Kasibugga passed through Vijayawada and allegedly moved out of Andhra Pradesh. Even the conduct of the consignor militates against her. Initially having taken a plea that the goods were sold to the consignees at Delhi and Bombay, subsequently she came forward offering to pay the tax component on the goods seized. The respondent thus failed to discharge the burden which lies on them under section 7A and the proviso to section 29B in which event it shall be presumed that the goods have been sold in the State which attracts section 28(6) when there is a tax evasion. In our considered opinion, the Tribunal ignored the relevant provisions regarding the burden of proof and proceeded in a manner which is not appropriate to the facts and circumstances of the case. The Tribunal also decided the questions of law erroneously requiring interference in these revisions - Decided in favour of assessee.

Summary

Issues Involved:

1. Legality of confiscation orders under Section 28(6) of the Andhra Pradesh General Sales Tax Act, 1957.
2. Applicability of Section 28(6) to goods in transit.
3. Burden of proof regarding the movement of goods out of the state.
4. Validity of the Sales Tax Appellate Tribunal's (STAT) decision.

Detailed Analysis:

1. Legality of Confiscation Orders under Section 28(6):

The court examined the confiscation orders issued by the Commercial Tax Officers (CTOs) at Vijayawada and Kasibugga. The CTOs had seized and confiscated cloves on the grounds that the consignor was not registered under the Nagaland Sales Tax Act and that the goods were being clandestinely brought into Andhra Pradesh for sale without paying sales tax. The appellate authority confirmed these orders, citing irregularities such as the consignor's non-registration, the circuitous route taken by the transporters, and the dubious nature of the consignees.

2. Applicability of Section 28(6) to Goods in Transit:

The court analyzed whether Section 28(6) of the Act, which allows for the seizure and confiscation of goods not accounted for by the dealer, applied to goods in transit. The STAT had ruled that Section 28(6) did not apply as the goods were in transit and not found in the godowns or places of business of the dealer. However, the court found this interpretation to be a misdirection in law, emphasizing that the goods were seized from the godowns of the transporter, which were ostensibly used for further transshipment. The court held that Section 28(6) could be applied if the owner of the goods was unascertainable, as per Rule 48(4).

3. Burden of Proof Regarding the Movement of Goods Out of the State:

The court highlighted that under Section 29B of the Act, the burden of proving that goods have actually moved out of the state lies on the owner or person in charge of the vehicle. If this burden is not discharged, it is presumed that the goods have been sold within the state. The STAT had erroneously placed the burden of proof on the Department, ignoring the statutory presumption under Section 29B. The court found that the consignor and transporter failed to provide sufficient evidence to prove that the goods had moved out of Andhra Pradesh.

4. Validity of the STAT's Decision:

The court criticized the STAT for misdirecting itself by addressing the wrong questions and ignoring relevant provisions. The STAT had invalidated the confiscation orders based on the flawed reasoning that the goods were in transit and that the Department failed to prove the goods did not cross the state borders. The court emphasized that the STAT's decision was erroneous in law, as it overlooked the statutory burden of proof on the consignor and transporter and failed to appreciate the true scope of Section 28(6).

Conclusion:

The court allowed the tax revision cases, set aside the order of the STAT, and confirmed the confiscation orders passed by the CTOs at Vijayawada and Kasibugga. The writ petition filed by the consignor seeking the release of the confiscated goods was dismissed. The court underscored that the provisions of the Andhra Pradesh General Sales Tax Act, 1957, particularly Sections 28(6) and 29B, were correctly applied by the CTOs in seizing and confiscating the goods due to the failure of the consignor and transporter to prove that the goods were not sold within the state.