2018 (12) TMI 229 - HC - VAT and Sales Tax

Confiscation of goods - scope of transporter - illegal transportation of goods - confiscation of vehicle when the offence was compounded by the transporter and the goods which were being transported in the vehicle were released - Section 57 of 2002 Act - compounding of offence - Held that - Explanation (ii) under Section 57 of 2002 Act defines expression transporter which includes the owner of the vehicle carrying the goods, whether an individual, a firm, association, society or company, and the Manager, if any, of such owner. In the present case as evident from the facts adverted at, with the admission of guilt and having paid twice the amount of penalty, the collusion with the dealer involved in avoidance or evasion of tax stood established beyond any iota of doubt. The contention that with the compounding of offence the illegality gets validated and that an action under sub-section (9) of Section 57 of 2002 Act is not attracted is taken note of and rejected at the outset. The depositing of penalty which is twice the amount of tax establishes the factum that the transporter in possession or in control of goods has colluded with the dealer who evades the tax, which attracts action under sub-section (9) of Section 57 of 2002 Act. Trite it is that in construing provisions designed to prevent tax evasion, if the legislature uses words of comprehensive import, the Courts cannot proceed on an assumption that the words were used in a restricted sense so as to defeat the avowed object of the legislature. A penalty provision in a taxing statute, as held in Gujarat Travancore Agency, Cochin Vs. Commissioner of Income Tax, Kerala, Ernakulam 1989 (5) TMI 1 - SUPREME COURT , is not to be equated to a criminal statute requiring impliedly the element of mens rea and unless there is something in the language of the Act indicating needs to establish mens rea. There is no substantial question of law, as proposed, arises for consideration - appeal dismissed.

Summary

Issues:
1. Whether the appellant is covered under the definition of "transporter" in terms of Section 57 of the Madhya Pradesh Value Added Tax Act, 2002?
2. Can the vehicle of the appellant be confiscated when the offence was compounded by the transporter and the goods were released?
3. Can a person who has done business with a particular transporter be treated as a transporter and have their vehicle confiscated when illegalities were committed by the transporter while using other vehicles?

Analysis:

Issue 1: The court examined the definition of "transporter" under Section 57 of the Act, which includes the owner of the vehicle carrying goods. In this case, the appellant owned the truck hired by a transport company for transporting goods. The vehicle entered the State of Madhya Pradesh and was involved in an incident where the goods' value was misrepresented. The transporter, including the appellant, admitted guilt and compounded the offence under the Act.

Issue 2: The court delved into the provisions of Section 57 regarding the powers of the check post officer and the consequences for violations. The transporter admitted guilt and paid the penalty as required by the Act. The court highlighted that the collusion with the dealer involved in tax evasion was established by the payment of twice the penalty amount, leading to the confiscation of the vehicle under sub-section (9) of Section 57.

Issue 3: The court addressed the argument that compounding the offence validated the illegality and negated the need for action under sub-section (9) of Section 57. The court rejected this contention, emphasizing that the payment of the penalty indicated collusion with the dealer for tax evasion. The court cited legal principles to support its interpretation of the penalty provisions in taxing statutes and the strict construction of penal statutes.

The court concluded that no substantial question of law arose for consideration based on the facts and legal provisions analyzed. Consequently, the appeal was dismissed without costs.