2015 (3) TMI 477 - HC - VAT and Sales Tax

Detention of transit - notice was issued for reason of an earlier transit pass not surrendered at the exit check post - Held that - though a notice under Section 47(2) was not issued, effectively the vehicle was detained at the check post, for reason of an earlier transit-transport having not been properly registered at the exit check post. On failure to surrender a transit pass at the exit check post, necessarily, the department is entitled to take proceedings under Section 48(3) of the Act deeming, an owner or cosignor of the goods or owner or driver or the person in charge of the vehicle or goods, to be an assessee in default, presuming the sale to have been made within the State itself. The statute does not permit prevention of further transport in the same vehicle or detention of goods on that count. Admittedly the present consignment does not suffer any defect in transport and no notice on that count was issued. But for all practical purposes the goods and vehicle were detained, at the check post. If such detention is made, especially without notice under Section 47(2), that would fall foul of the statutory prescriptions, and violate Article 301 of the Constitution of India. The elaborate provisions dealing with transport of goods, and the prescription of documents to accompany such transport, intra-State and inter-State, is definitely to ensure revenue collection. It should also further trade and commerce and facilitate smooth movement of goods within and between the States. It is clear that Ext.P1 notice has been issued against the driver of the vehicle, who was in charge of the subsequent transport and 48 (3) deems; only a driver or owner or person, who was in control of the vehicle or the goods, at the time when the delinquency is noticed, to be an assessee in default. However, since, the registered owner of the vehicle, whose vehicle was used in the earlier transportation also, is before this Court, it is directed that the registered owner shall appear before the Commercial Tax Officer, Kasargod on 25.07.2014 when the registered owner shall be issued with a proper notice by the officer, under Section 48(3) and proceedings shall be carried on, against the petitioner or any other person who are held to be jointly and severally liable, as per the provisions. Ext.P1 cannot be given effect to if the driver of the subsequent consignment was not the one who carried the earlier one and proceedings shall be proceeded with against the petitioner herein, if he appears or otherwise the proceedings shall be on notice. The Department would be reserved the liberty to initiate proceedings simultaneously against the owner of the goods also; since the liability is joint and several. - Petition disposed of.

Summary

Issues:
1. Detention of goods and vehicle at check post due to failure to surrender transit pass.
2. Legality of detention without issuance of notice under Section 47(2).
3. Interpretation of Sections 48(1), (2), and (3) of the Act.
4. Compliance with statutory provisions for smooth transportation of goods.
5. Joint and several liability of persons involved in the transportation of goods.

Analysis:

1. The petitioner challenged the detention of goods and the vehicle at the check post due to the failure to surrender a transit pass issued for an earlier transport. The notice was issued against the driver, but the registered owner, who is before the Court, was also involved. The Court noted that while no notice under Section 47(2) was issued, the detention was made based on the failure to surrender the transit pass. The department was entitled to take proceedings under Section 48(3) deeming the owner, driver, or person in charge as an assessee in default for presuming the sale to have been made within the State.

2. The Court emphasized that the technical difficulty of e-tokens not being generated due to the system configuration cannot be a valid reason for detaining vehicles at the check post without proper notice. The statutory provisions aim to ensure revenue collection and facilitate the movement of goods. The detention without a notice under Section 47(2) would violate statutory prescriptions and Article 301 of the Constitution of India, which guarantees the freedom of trade and commerce.

3. Sections 48(1), (2), and (3) of the Act were analyzed in detail. These sections deal with obtaining and surrendering transit passes for goods transported through the State. Failure to surrender the transit pass at the exit check post presumes that the goods were delivered within the State for sale, making the persons involved jointly and severally liable for tax and penalty. The provisions protect the State's interest by ensuring compliance with documentation requirements.

4. The Court highlighted the importance of compliance with statutory provisions to facilitate smooth transportation of goods and to prevent illegal detentions. The judgment referenced a Full Bench decision that emphasized the need for regulations that promote the free flow of goods and trade. It was noted that restrictions obstruct trade, while regulations promote it, in line with Article 301 of the Constitution.

5. The judgment directed the registered owner to appear before the Commercial Tax Officer for proceedings under Section 48(3) regarding joint and several liability. It clarified that the notice issued against the driver cannot be enforced if the driver of the subsequent consignment was not involved in the earlier transportation. The Department was given the liberty to initiate proceedings against the owner of the goods due to the joint and several liability of persons involved in the transportation.

In conclusion, the Court's judgment addressed the legality of detention, compliance with statutory provisions, and the joint liability of persons involved in the transportation of goods, emphasizing the need for proper procedures to ensure smooth movement of goods and to uphold constitutional principles.