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TMI Blog2005 (6) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... eir branch office at Mangalore and head office at Pondicherry/Chennai, etc., on stock transfer basis. According to the petitioner, the goods in question were imported by the consignors into the country from abroad and formed part of their stock at Mangalore after clearance from the Mangalore Port. To reach the consignors head office, the transport vehicle has to pass through the State of Karnataka. If the vehicle has to move from Mangalore, in the normal course, it has to pass through check-post at Kannur, Mangalore, which is the entry or inward check-post in Karnataka and either the sales tax check-post at Hosur Road, Attibele or N. Vaddarahalli check-post, Mulbagal Taluk, Kolar District, which are known as exit or outward checkposts. The driver-in-charge of the aforesaid vehicle, in order to obtain a transit pass, to pass through the State while carrying imported naphtha and kerosene oil, as required under section 28AA of the Act, had submitted an application in triplicate in form 39AA to the officer-in-charge of the checkpost at Kannur, Mangalore, which is the entry check-post in Karnataka. The check-post officer, after making necessary inquiries had issued a pass on the duplic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to inter-State vehicle owners/drivers with fraudulent action committed offences. 4.. The owner of vehicles/drivers have failed to surrender the transit passes at the Attibele check-post within the stipulated date as prescribed under section 28AA(2) of the KST Act and rule 23F(3) of KST Rules. But, it is found that fictitious documents were created for having surrendered at the N. Vaddarahalli check-post and sent to this check-post. The goods transported in the transit passes were not transported to the place Pondicherry mentioned in the document but were unloaded in the Karnataka State and thereafter were sold unauthorisedly defrauding (evading) the taxes to be paid to the State. This has been proved and hence, the goods sold in the State have to be brought to assessment and assessed to tax for the goods involved in the transit passes as per section 28AA(4) of the KST Act, 1957." After receipt of the show cause notice, the owner of the goods vehicle had raised all possible objections to the proposal made in the show cause notice. The check-post officer after affording a reasonable opportunity of hearing to the owner of the vehicle and after considering several objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port Permit No. and date Goods Quantity Value Tax Penalty levied 1. 0240301/15-5-2002 Naptha 8.150 MT 1,40,180 16,822 16,822 2. 0240844/31-5-2002 Naptha 8.070 MT 1,33,155 15,979 15,979 3. 0185013/15-6-2003 Naptha 8.090 MT 1,39,148 16,698 16,698 4. 0185324/31-5-2003 Naptha 8.100 MT 1,39,320 16,718 16,718 Total penalty determined: Rs. 66,217 It is ordered that the abovesaid penalty of Rs. 66,217 shall be paid within 21 days failing which recovery action will be taken as per law." The owner of the vehicle aggrieved by the aforesaid orders of the checkpost officer, had carried the matter before the first appellate authority as provided under section 20 of the Act, who by his order dated July 22, 2003, after allowing the appeal has remanded the matter to the check-post officer for a fresh disposal in accordance with law and in the light of the observations made by him in the course of his order. The State Representative, at the instance of the Joint Commissioner of Commercial Taxes, had preferred appeals before the Karnataka Appellate Tribunal, inter alia, questioning the correctness or otherwise of the orders passed by the first appellate author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka Sales Tax Act, 1957 have a broader meaning and include all officers and authorities under the said Act and therefore, the Commercial Tax Officer, Check-post, Kannur and the State Representative have got authority to file appeals before the Karnataka Appellate Tribunal under section 22(1) of the said Act? (iii) Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in holding that the check-post officer is justified in imposing tax and penalty on the petitioner by presuming that the goods carried in the petitioner's vehicle are sold inside the State of Karnataka even though the assessing authorities of the consignors of the goods in their assessment orders had levied tax on the consignors of the very same goods covered by the transit passes in question by holding that they have sold the goods inside the State and the first appellate authority of one of the consignors has held that the consignor has transported the goods out of the State of Karnataka? (iv) Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal has committed an error in not disposing of the memorandum of cross-objections filed by the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her view. They have further observed, that both the provisions should be read, not only harmoniously, but also in such a way that they become functional. According to them, the words "State" and "Government" used do have a broader meaning so as to include all officers and authorities, who work under the concerned statute; the right to defend an order is akin to "lis" accrued by the aggrieved officer (the C.P.O. in this case); for all officers and the Government, the SR is the presenting hand before this court; the authorities under the Act are not lesser than the alleged violators of law before adjudicating courts. The officers can defend their orders. If the argument that the Government Secretariat alone is competent to decide whether to go in an appeal is accepted, the conclusion would be the one which will say that the CPO, cannot defend his own actions. The Tribunal concludes by referring to the observations made by the Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 66 STC 228; AIR 1987 SC 1353, that "the law courts are more honoured not because they become stringent to technicalities (which are also debatable) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal within a period of sixty days from the date on which the order was communicated to him." An appeal is an application by a party to an appellate court asking it to set aside or revise a decision of a subordinate court in an "appeal" within the ordinary acceptation of the term. It is now well-settled that there is no inherent or constitutional right to file an appeal and that right of appeal is a creature of the statute and the same has to be expressly conferred to enable its exercise. It is open to the Legislature to impose an accompanying liability upon a party on whom a legal right is conferred or prescribe a condition for exercise of right, if a party seeks to avail such remedy. Alternatively, it can be said that the right of appeal is a statutory right and it can be circumscribed by the conditions of grant. If the statute gives a right to appeal upon certain conditions, it is upon fulfilment of those conditions that the right becomes vested in and exercisable. If the statute specifically provides that an appeal could be filed only by a person authorised by the State Government in that behalf or if the statute limits the time within which an appeal can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Act provides for filing of an appeal to the Appellate Tribunal both by the Revenue as well as by an assessee under the Act, if they are aggrieved by an order passed by the assessing authority under section 12D of the Act or an order passed by the Deputy Commissioner or Joint Commissioner under sections 20 and 21 of the Act, respectively, within a period of sixty (60) days from the date on which the order is communicated to them. When it comes to filing of an appeal to the Appellate Tribunal by the Revenue/department, the statute provides that it can be preferred by an officer empowered by the State Government in this behalf. The power of taxation is essentially legislative power, for the reason, article 265 of the Constitution states that "no tax shall be levied or collected except by authority of law". The tax law has essential three features. Firstly, the provisions declaring liability to pay the tax, i.e., charging provisions; secondly, provisions for assessment of tax; and thirdly, provisions for collecting or recovering the tax including provisions for checking evasion of tax. Regarding the charging section, the declaration by a Legislature of the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, the Tribunal observes, that "the words 'State' and 'Government' used in section 22 of the Act have a broader meaning to include all officers and authorities, who work under the concerned statute and for all officers and the Government, the State Representative is the presenting hand before the Tribunal". The fallacy in the conclusion reached by the Tribunal is that, it is equating a State Representative with an officer empowered by the State Government to prefer an appeal against the orders passed by the authorities under the Act. There is no basis for this conclusion of the Tribunal and, in fact, it runs counter and contrary to the statutory provision. A right of appeal is a remedy for the enforcement of a right and this remedy is equally a substantive right, though remedial in nature. This right which is a superior right can be exercised only in accordance with the procedure prescribed by the statute and not by resorting to any other method and yet again, on an assumed statutory power. Under section 3(2) of the Act, a State Representative in a proceeding or proceedings before the Appellate Tribunal is competent to prepare and file a memorandum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner and the Deputy Commissioner are his senior officers. If the Revenue is aggrieved by the orders passed by the Joint Commissioner in exercise of his powers under section 21 of the Act or the orders passed by the Deputy Commissioner under section 20 of the Act, it can prefer appeals to the Appellate Tribunal. If an Assistant Commissioner, who is a junior officer in the hierarchy of officers in the department is allowed to prefer appeal/appeals before the Tribunal without specific authorisation by the State Government, he would be deciding the correctness or otherwise of the orders passed by his superior officer either to prefer or not to prefer any appeal before the Tribunal. The same is impermissible either under common law or under sales tax provisions. Therefore, the Legislature, in order to avoid such an anomalous situation, has entrusted the power to the State Government to scrutinise the orders passed by the officers under the Act, may be at the instance of the Commissioner of Commercial Taxes and take a decision whether to prefer an appeal before the Tribunal against the orders passed by an officer, who is superior in rank, than, that of the State Representative. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 937, 938, 939, 940, 941, 942, 943, 944, 945, 946, 1065, 1066, 1067, 1068, 1069, 1071, 1073, 1082, 1152, 1154, 1156, 1158, 1160, 1161, 1162, 1217, 1218, 1219 of 2004, STA Nos. 183, 1064, 1070, 1072, 1151, 1153, 1155, 1157, 1159, 1215 of 2004 and STA Nos. 1074, 1075, 1076, 1077, 1078, 1079, 1080, 1081, 1216, 1220, 1221, 1163 of 2004 filed by State Representative Sri Syed Jamal before the Karnataka Appellate Tribunal, Bangalore, which are already disposed of. By order and in the name of the Governor of Karnataka Sd. (VINEETHA P. SHETTY) Asst. Solicitor and Ex-Officio, Under Secretary to Government, Law Department (Lit-II)." The learned counsel for the petitioner after going through the memo filed by the learned Advocate-General, would contend, that the post facto permission granted by the State Government authorising the State Representative for having filed sixty two (62) appeals before the Tribunal still remains, the acts, without any authority or power and that defect cannot be cured by subsequent post facto permission/ratification. The issue that now falls for our consideration is, whether post facto permission or the order passed, ratifying the action of the State R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegal, the same can be ratified by a competent authority therefor". The Supreme Court in the case of Devender Pal Singh v. State of N.C.T. of Delhi [2002] 5 SCC 234; AIR 2002 SC 1661, has observed (page 1668 of AIR): ". . . Procedure is handmaid and not the mistress of law, intended to sub-serve and facilitate the cause of justice and not to govern or obstruct it. Like all rules of procedure, the requirement of recording 'under his own hand' demands an approach, which would be rational and practical and not otherwise." In Re, the State of Punjab v. Shamlal Murari [1976] 1 SCC 719; AIR 1976 SC 1177, the apex court has held (page 1179 of AIR): ". . . Procedural law is not to be a tyrant but a servant, not an obstruction but an aid to justice. . . .Procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice. Where the non-compliance, though procedural, will thwart fair hearing or prejudice doing of justice to parties, the rule is mandatory. But, grammar apart, if the breach can be corrected without injury to a just disposal of the case, the court should not enthrone a regulatory requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the agent has done. The interesting point, which has given rise to considerable difficulty and dispute, is that ratification by the principal does not merely give validity to the agent's unauthorised act as from the date of the ratification: it is antedated so as to take effect from the time of the agent's act. Hence the agent is treated as having been authorised from the outset to act as he did. Ratification is "equivalent to an antecedent authority".' 25.. In Bowstead on Agency (14th Ed.) at page 39 it is stated: 'Every act whether lawful or unlawful, which is capable of being done by means of an agent (except an act which is in its inception void) is capable of ratification by the person in whose name or on whose behalf it is done . . . The words "lawful or unlawful", however, are included primarily to indicate that the doctrine can apply to torts. From them it would follow that a principal by ratification may retrospectively turn what was previously an act wrongful against the principle, e.g., an unauthorised sale, or against a third party, e.g., a wrongful distress, into a legitimate one; or become liable for the tort of another by rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he things, which are Caesars'." But the question arises what is truly due to him (the State) under the law? This turns on an interpretation of the relevant fiscal statute, not as a judge fancies nor as taxing department desiderates but as read and decoded according to rules of reason and justice sanctioned by precedents of the highest judiciary. A constellation of principles governing interpretation of taxation legislation handed down to us by the High Bench, when systematised, becomes the jurisprudence of interpretation. Section 28AA of the Act as substituted by Act 5 of 2000 with effect from April 1, 2000, provides for transit of goods by road through the State and issue of transit pass. Sub-section (1) of section 28AA of the Act envisages that where a vehicle carrying goods taxable under the provisions of the Karnataka Sales Tax Act, from any place outside the State and bound for any place outside the State and passes through this State; or and which goods are imported into the State from any place outside the country and such goods are being carried to any place outside the State, the driver or any person-in-charge of such goods vehicle shall furnish such informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble presumption as regards the proof of a set of circumstances which would make a transaction liable to tax with the object of preventing evasion of the tax cannot be considered as conferring on the authority concerned the power to levy a tax which the Legislature cannot otherwise levy. A rebuttable presumption which is clearly a rule of evidence has the effect of shifting the burden of proof and it is hard to see how it is unconstitutional when the person concerned has the opportunity to displace the presumption by leading evidence. We are of the view that the words contained in section 28B of the Act only require the authorities concerned to raise a rebuttable presumption, that the goods must have been sold in the State if the transit pass is not handed over to the officer at the check-post or the barrier near the place of exit from the State. The transporter concerned is not shut out from showing, by producing reliable evidence, that the goods have not been actually sold inside the State. It is still open to him to establish that the goods had been disposed of in a different way. He may establish that the goods have been delivered to some other person under a transaction which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods inside the State. Therefore, the order passed by the check-post officer in levying penalty on the transporter of the goods, on mere assumption, that the goods carried in the vehicle have been sold in the State of Karnataka is contrary to the fact-situation and therefore, without any authority of law. This legal issue is in two parts. Firstly, with regard to levy of tax under section 28AA(4) of the Act and secondly, the levy of penalty under section 28AA(5) of the Act by the check-post officer. Sub-section (4) of section 28AA of the Act presumes, that, if the driver or any other person-in-charge of the vehicle does not comply with the provision of sub-section (2) of section 28AA of the Act, i.e., if he fails to hand over the transit pass to the officer at the check-post near the place of exit from the State, then it shall be presumed that the goods carried in the vehicle for which transit pass had been obtained as required under subsection (1) of section 28AA of the Act have been sold within the State by the owner of the vehicle and shall be assessed to tax by the officer empowered in this behalf, notwithstanding anything contained in sub-section (5) of section 5 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssertion made in this regard by the transporter is relevant to answer the specific issue, which the learned counsel for the petitioner has posed for our consideration and therefore, the same is extracted and it is as under: "Without prejudice to what is stated above, it is submitted that the goods transported in the said vehicle belonged to one M/s. Vivek Petro Chemicals (Pvt.) Ltd., Mangalore. This representative of the consignor accompanied the goods vehicle. He only obtained the transit pass and it was his duty to surrender the transit pass at the transit check-post. The said goods vehicle also crossed the State border. Therefore, your presumption that the goods have been sold in the State of Karnataka only because the transit pass has not been surrendered at the exit check-post at Attibele is not correct. In order to enable me to establish that your presumption that I have sold the goods inside the State is not correct, I request you to summon all the records of the proceedings initiated against the said M/s. Vivek Petro Chemicals (Pvt.) Ltd., by the Assistant Commissioner of Commercial Taxes (Intelligence)-II, Mangalore, and all the account books of the consignor mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he show cause notice, the transporter, firstly, has brought to the notice of the check-post officer that he is only a transporter and he cannot be fastened with any liability under section 28AA(4) of the Act and further, the consignor of the goods has been provisionally assessed by the Assistant Commissioner of Commercial Taxes (Intelligence)-II, Mangalore, on the very same transaction which is the subject-matter of the show cause notice and the goods transported in the said vehicle belonged to the dealers registered under the Act. The check-post officer while considering the objections filed by the transporter, in his order observes that under section 28AA of the Act, if the driver or person-in-charge of the goods vehicle does not surrender the transit pass, vehicle owners/drivers are held responsible and they are liable to be assessed under section 28AA(4) of the Act and also liable for payment of penalty under section 28AA(5) of the Act and no action can be initiated on the consignor or the consignee. To come to this conclusion, the checkpost officer has relied on the law declared by this court in the case of Sathu D'Souza v. Commercial Tax Officer (Intelligence), Bellary [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provides a rebuttable presumption and not irrebuttable conclusive presumption. The learned counsel for the petitioner would submit that in view of the Explanation appended to section 28AA of the Act, the initiation of the proceedings to levy tax and penalty on the transporter of the vehicle is without jurisdiction and without authority of law. It is further submitted that the transporter/petitioner on whom show cause notice was issued by the checkpost officer proposing to levy tax and penalty under section 28AA(4) and (5) of the Act, had brought to the notice of the check-post officer that the consignor has hired his vehicle for transportation of goods and therefore, the hirer of the vehicle for the purpose of this section be deemed to be the owner of the vehicle and therefore, the proceedings initiated against the petitioner, who is only a transporter is without authority of law and void ab initio. There is some merit in the contention of the learned counsel for the petitioner, but this aspect of the matter was neither urged nor argued before the check-post officer. In our opinion, the issue canvassed by learned counsel for the petitioner is a pure question of fact. At the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of time before the vehicle crosses the border of the State. Thus exit of the goods vehicle from the State without surrendering the transit pass at the last check-post is the basis to invoke the provisions of sub-section (5) of section 28AA of the Act. This section is not concerned with the owner of the goods. It operates only on the owner of the goods vehicle who having obtained a transit pass provided in sub-section (1) fails to hand over the same at the exit check-post. Under this sub-section, the owner of the goods will have no liability to pay the penalty. In the present case, the stand of the transporter in his reply to the proposal made in the show cause notice is that, it is the consignor's representative, who had applied and obtained the transit pass, and he or his driver is not aware about the issue of transit pass or non-surrender of the same. This version of the transporter is not only disbelieved by the check-post officer, but also by the Appellate Tribunal, which is the last factfinding authority. The check-post officer with reference to the documents available in his records has given a positive finding in the course of his order passed under section 28AA(5) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penal provision provided under the Act and therefore, we do not find any good reasons to interfere with the order so passed by the check-post officer. Now coming to the fourth issue, in our view, the same should not detain us for long. In this regard, the contention of the learned counsel for the petitioner is that, the Tribunal has committed an error in not disposing of the memorandum of cross-objections filed by the petitioner, even though as per section 22(2A) of the Act, such memorandum of cross-objections shall be disposed of by the Tribunal as if it were an appeal presented before it. To answer this issue, it may be necessary to notice the prayer made in the cross-objections filed before the Appellate Tribunal. A perusal of the grounds raised and the prayer made in the cross-objections filed before the Tribunal would clearly indicate that the petitioner has merely justified the orders passed by the first appellate authority and the only exception taken in the cross-objection filed against the orders passed by the first appellate authority is that the said authority was not justified in remanding the matter to the check-post officer for a fresh disposal of the matter in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is absent and therefore, the order passed by the check-post officer which has been confirmed by the Karnataka Appellate Tribunal is void ab initio. The submission made in this regard, in our view, has no merit whatsoever. We say so, for the reason, it is the driver, who was in-charge of the petitioner's vehicle had filed application in triplicate in form 39AA to the officer-in-charge of the check-post established near the point of entry into the State for issue of transit pass to transport the taxable goods outside the State by passing through this State. Under sub-rule (2) of rule 23F of the Rules, the officer-in-charge of entry check-post is bound to issue such transit pass on the duplicate and triplicate copies of the application retaining the original with him. Having obtained the transit pass, the driver or the personin-charge of the vehicle should deliver the duplicate transit pass within the stipulated time to the officer-in-charge at the last check-post or the barrier before his exit from the State. If the owner fails to deliver the same, it shall be presumed that the goods carried thereby have been sold within the State by the owner of the vehicle which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty under sub-section (5) of section 28AA of the Act for contravention of the provisions of sub-section (2) of section 28AA of the Act. Before the checkpost officer, the petitioner could have firstly produced the documentary evidence by securing the same from the consignor to show that the goods that were transported in the vehicle were imported goods and the delivery was taken at Mangalore and were accounted for in their books of account and it is only thereafter, the goods were transferred to its office either at Pondicherry or Chennai, and therefore, it is not a case where the vehicle was carrying the taxable goods under the Act from a place outside the State and bound for any place outside the State and was passing through the State, nor a case where the goods are imported into the State from any place outside the country and such goods are being carried to any place outside the State. In support of this documentary evidence, the petitioner could have also examined the consignor of the goods. Instead of doing so, it was the stand of the petitioner that the consignment during its movement was accompanied by his representative and therefore, he was not aware of issuance of tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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