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TMI Blog2009 (9) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... orter" may have committed? Held that:- In the present cases, apart from the fact that the composition amount could not be shown to be unreasonably high or oppressive, the impugned orders state that the petitioners had opted for composition of the offence under sections 29(4), 29(5), 29(6) and 29(12). The petitioners, as "transporter", contend, at the time of hearing of these writ petitions, that they had not opted for composition. It, thus becomes a disputed question of fact as to whether the petitioners had, or had not, as a matter of fact, opted for composition. Such a disputed question of fact cannot be decided and determined in a writ proceeding, such as, the present one, and the resort, in such a case, must be taken by a person within the scheme of the statute itself. Considered in this light, it becomes clear that if it is the contention of the petitioners that they had not opted for composition, they have to take remedial option provided in the statute itself and not by way of a writ petition under article 226 of the Constitution of India as has been done in the case at hand. - W.P. (C) Nos. 134,159,170 of 2005 - - - Dated:- 23-9-2009 - ANSARI I.A. , J. I.A. ANSAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enables the authorities under the TST Act to assess and collect taxes from the dealers for the goods imported by them into the State of Tripura. Rule 64A of the Tripura Sales Tax Rules, 1976 (in short, the TST Rules ) casts obligation on the transporters , carriers and transporting agents , who carry/transport taxable goods in the State of Tripura to apply for registration in a prescribed format. The petitioner accordingly applied for and was granted registration as a transporter / carrier of taxable goods in the State of Tripura. Being a registered transporter , the petitioner is required to obtain form No. XIV from the Superintendent of Taxes concerned in order to enable the petitioner transport goods from one place to another in the State of Tripura. Under the scheme of the relevant statute and the Rules framed thereunder, the names of importing dealer , with the dealer's registration number, place of dispatch, contents, weight, value, details of consigner's invoice and some other particulars, are required to be filled up by the transporter in form No. XIV prior to transacting business as a transporter . Two copies of such filled up forms are required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted under section 29. As reflected by the proceedings, recorded in the order dated August 13, 1998 aforementioned, pursuant to reasonable opportunity given to the petitioner to satisfy the authorities concerned by producing relevant materials that no such offences, as alleged, had been committed by the petitioner, the Superintendent of Taxes concluded that the petitioner, as a transporter , having not been able to produce requisite materials, shall be held to have committed offences under section 29(4), 29(5), 29(6) and 29(12) of the TST Act. The proceedings, as recorded in the impugned order dated August 13, 2009, further reflect that according to the Superintendent of Taxes, the petitioner's representative was informed about the provisions of section 32 of the TST Act, relating to composition of offences committed under the penal provisions aforementioned, and, on being so informed, the petitioner's representative, as a transporter , admitted guilt and opted to compound the offences instead of facing prosecution and incurring punishment. The petitioner was, therefore, as already indicated above, held liable to pay, in all, a sum of Rs. 94,701 as total liability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all, a sum of Rs. 8,02,281 as total liability of the said 16 numbers of consignments, the taxable liability being Rs. 2,67,427 and another sum of Rs. 5,34,854 being composition amount. A notice of demand, in terms of rule 25 of the Tripura Sales Tax Rules, was accordingly raised by the Superintendent of Taxes. W.P. (C) No. 170 of 2005: By order, dated October 22, 1998, the petitioner, which is a registered partnership firm, was directed by the Superintendent of Taxes, Charge IV, Kailasahar, Agartala, to deposit a sum of Rs. 5,23,011 on the ground that the petitioner, as a transporter , had delivered as many as 16 numbers of consignments of taxable goods, on being imported into the State of Tripura, without declaration form, as is required to be given in form No. XVIII, and that the petitioner had failed to maintain a register in form No. XXII, reflecting true and correct account of every consignment of goods imported into Tripura and delivered by the petitioner, as carrier or transporter , to the consignee, and the petitioner has, thus, committed offences under section 29(4), 29(5), 29(6) and 29(12) of the TST Act. The taxable liability of the said consignments was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of tax. The representative of the petitioner appeared before the Superintendent of Taxes concerned and, despite obtaining time, failed to produce necessary documents to support transportation and delivery of the said consignments with requisite permits. In such circumstances, the petitioner's representative was informed by the authority concerned that the petitioner's acts and omissions were punishable under section 29(1), 29(4), 29(5), 29(6), 29(12) and section 30 of the TST Act, 1976. The representative of the petitioner informed the authorities concerned that the petitioner was not willing to face prosecution and incur punishment and, therefore, opted for composition. As the petitioner's representative opted for composition, the impugned orders were passed against the petitioner-firm and in terms of the orders, which were so, passed, the notice of demands were duly issued. The orders, impugned in these writ petitions, and the notices of demands are wholly in accordance with law and may not, therefore, be interfered with. Submissions: I have heard Mr. Somik Deb, learned counsel for the petitioners, and Mr. NC Paul, learned Government Advocate appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompound any offence(s) under the TST Act and, consequently, he can also not be made liable to pay tax by taking recourse to section 32. What, in effect, Mr. Deb submits is that tax is to be paid by a dealer as defined in section 2(b) and since a transporter does not fall within the definition of dealer , the question of applying to a transporter the provisions of section 32, which embodies provisions for composition of offences, does not arise and he, as a transporter cannot be made liable to pay tax by taking recourse to section 32, when he is, otherwise, not a dealer and not being a dealer , does not have, in the light of the provisions of section 3, the liability to pay tax. Referring to the provisions of section 13A, which has been introduced by the Tripura Sales Tax (Eighth Amendment) Act, 2000, with effect from August 20, 2000, Mr. Deb submits that it is section 13A, which has, for the first time, made the provisions for imposition of liability to pay tax on the transporter if the transporter has delivered taxable goods to any person without obtaining permit from the dealer or if the transporter has concealed actual number of consignments transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese provisions of recovery more rigorous that the provisions for imposition of penalty on the transporter to the extent of 150 per cent of the tax involved have been made in addition to the tax liability. In support of his submission that Hayden's Rule is attracted to the case at hand, Mr. Deb has referred to Ameer Trading Corpn. Ltd. v. Shapoorji Data Processing Ltd. reported in [2004] 1 SCC 702, and Collector of Central Excise, Ahmedabad v. Orient Fabrics (P) Ltd. reported in [2004] 1 SCC 597; [2004] 2 RC 1. The State, contends Mr. Deb, cannot, therefore, in the present cases, realize, by taking recourse to section 32, tax liability of the dealer in respect of a transaction, which had taken place, when section 13A was not in the statute book. Mr. Deb also contends that in respect of a transaction, which had taken place before August 20, 2000, (when section 13A was not in force), the question of applying section 32 and thereby imposing, on the transporter , the liability to pay tax or penalty or both did not arise at all. In the present case, therefore, submits Mr. Deb, the impugned orders and the notices of demands were wholly without jurisdiction and may not be sustaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates offences and provides punishment for such offences, can be applied to a transporter . This would, obviously, require examination not only of section 29, but also of, at least, some of those provisions, which impose certain obligations on a transporter . Let me point out, at the very outset, that a transporter according to section 2(p), which has been introduced by the Tripura Sales Tax (Eighth Amendment) Act, 2000, means a registered transport company, a carrier or a transporting agent, operating transport business in Tripura in taxable goods. As already indicated above, the definition of transporter has been introduced by the Tripura Sales Tax (Eighth Amendment) Act, 2000, on August 20, 2000. Before coming into force of the Tripura Sales Tax (Eighth Amendment) Act, 2000, the definition of transporter did not exist in the statute in question. In view of the fact that in the case at hand, we are confronted with a situation, where we have to determine the application of section 32 to the case of a transporter , we have to, first, ascertain as to what the expression transporter , used in the TST Act, conveyed during the period, when the expression transporter ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her a transporter was also covered by the penal provisions contained under section 29? It may, now, be noted that sub-section (1) of section 29 stands divided into several clauses; clauses (4), (5), (6) and (12) are of relevance to our case. Section 29(1)(4) provides that whoever fails, when required by, or under the provisions of the TST Act, to produce any accounts, evidence, or documents, or to furnish any information, shall, on conviction before a Judicial Magistrate and in addition to any tax including interest, if any, or penalty or both that may be due from him, be punishable with imprisonment, which may extend to six months or with fine not exceeding one thousand rupees or with both, and when the offence is a continuing one, with a daily fine not exceeding fifty rupees during the period of continuance of the offence. Similarly, section 29(1)(5) lays down that whoever fails, or neglects, to comply with any requirement made of him under the provisions of the TST Act, shall, on conviction, be liable for punishment to the same extent as a person, who commits an offence under section 29(1)(4). Moreover, section 29(1)(6) lays down that whoever , knowingly produces incor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner. A bare reading of section 36A shows that section 36A imposes an obligation on a transporter , carrier or transporting agent to maintain proper account of goods, which transporter , carrier or transporting agent , as the case may be, moved, transported to, or outside, Tripura. Section 36A further requires a transporter , carrier or transporting agent , to furnish, on demand made by the Commissioner, such information as the Commissioner may require as regards transportation of the goods. Section 36A further makes it an obligation of a transporter , carrier or transporting agent to produce the books of accounts for inspection and examination by the Commissioner, if so demanded by the Commissioner. In the backdrop of the above statutory obligations, which section 36A imposes on a transporter , when one dispassionately reads the penal provisions contained in section 29(1)(4), 29(1)(5), 29(1)(6), 29(1)(12) and section 30, what becomes transparent is that the expression whoever , occurring in these provisions, was, and still remains, squarely applicable to even a person, who, in the ordinary sense of the term, functioned as a transporter by carrying taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 264, 286, 300A and 301 of the Constitution of India. The challenge was based on the ground that the members of the Tripura Goods Transport Association are mere transporters and not dealers within the meaning of section 2(b) and, hence, the obligations, which the TST Act and the TST Rules cast on them, were beyond the competence of the State Legislature inasmuch as no such obligation can be cast on a person other than a dealer . The apex court, however, held the impugned provisions to be valid pieces of legislation. The appeal was accordingly dismissed. Amongst others, section 38B was upheld, which requires every transporter, carrier or transporting agent operating his business relating to taxable goods in Tripura to obtain a certificate of registration in prescribed manner from the Commissioner of Taxes on payment of such fees as may be prescribed. Having analyzed the provisions of the TST Act and the Rules framed thereunder, and by taking into account the entire scheme of imposition of tax, recovery thereof, penalty for evasion, etc., the apex court pointed out in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, that the impugned provisions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st on the transporters, then, any dealer, under a false name can dispatch taxable goods to another person through a transporter, evading sales tax liabilities on such goods. The apex court further pointed out that incorrect and incomplete declaration in the forms, such as form No. XXIV, if not made punishable, would defeat the very purpose of enacting these provisions and would help unscrupulous dealers escape their liability to pay tax. According to the apex court, in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, each of these provisions stood introduced for the purpose of ensuring that no evasion of tax takes place. Coming to section 36A, the apex court pointed out that the maintenance of accounts by the transporters under section 36A, was to help taxing authority trace the dealer, fix the goods transported and thereby impose tax liability on the dealer. There is no provision, held the apex court, in the TST Act and the TST Rules, which fixes any liability on a transporter , to pay tax, which a dealer is, otherwise, liable to pay. The apex court observes, in Tripura Goods Transport Association [1999] 112 STC 609; [1999] 2 SCC 253, that the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, let us, now, turn to section 32, which reads as under: Section 32. Composition of offences. (1) Subject to such conditions as may be prescribed, the Commissioner may, either before or after institution of criminal proceedings under this Act, accept from the person who has committed or is reasonably suspected of having committed an offence under this Act or the Rules made thereunder, by way of composition of such offence (a) where the offence consists of the failure to pay, or the evasion of, any tax recoverable under this Act, in addition to the tax including interest if any or penalty or both so recoverable, a sum of money not exceeding one thousand rupees or double the amount of the tax recoverable, whichever is greater, and (b) in any other case a sum of money not exceeding one thousand rupees in addition to tax recoverable. (2) On payment of such sum as may be determined by the Commissioner under sub-section (1), no further proceeding shall be taken against the person concerned in respect of the same offence. A patient reading of section 32 shows that under sub-section (1) of section 32, a Commissioner may, before or after institution of a criminal procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 29 and section 30, since the offences, committed by a transporter, are relatable to checking of evasion of tax, composition of offence under section 32 would also confine itself within this sphere. In no way, any of these provisions place any liability on the transporter, which is, otherwise, on a dealer under this Act. Similarly, as aforesaid, the maintenance of account by the transporters, carriers or transporting agent under section 36A is only to help the authorities concerned in checking evasion of tax. This does not put, according to the Supreme Court in Tripura Goods Transport Association's case [1999] 112 STC 609; [1999] 2 SCC 253, any such obligation on the transporter, which can make one hold that these provisions transgress the legislative competence of the State Legislature. Similarly, by virtue of section 38(2) read with rule 46A, a transporter is required to disclose, at the check-post, by way of filling up form No. XXIV, complete accounts of the goods carried by him. This form requires the transporter to disclose the name and address of the consignor, whether a registered dealer or not, place of dispatch and destination of goods, lorry number, descrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by way of the TST (Eighth Amendment) Act, 2000, was liable to be prosecuted for commission of offences under section 29 and section 30 and a transporter, who becomes so liable for prosecution, has and always had the option to offer to compound such offence(s) in terms of section 32. While upholding these provisions, in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, the apex court pointed out: (page 622 of STC) . . . Every taxing statute has charging sections. It lays down the procedure to assess tax and penalties, etc. It also provides provisions to cover pilferage of such revenue by providing such mechanism as it deems fit, in other words, to check evasion of tax and in doing so if any obligation is cast on any person having connections with the consignor or consignee in relation to such goods, may be other than a dealer, to perform such obligation in aid to check evasion and in case he is made liable for any offence for his dereliction of duty or deliberate false act contrary to what he is obligated to do. . . The apex court laid down, in no uncertain words, that the impugned provisions are not charging provisions and no tax liability is plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whoever . In Commercial Taxes Officer v. Swastik Roadways reported in [2004] 135 STC 1 (SC); [2004] 3 SCC 640 the provisions of sections 57, 58 and 59 of the Madhya Pradesh Commercial Tax Act, 1994, were put to challenge. As per the provisions, contained in sections 57, 58 and 59, the clearing and forwarding agents (in short, C F agents ) were required to furnish information, including statement of accounts, to the Commissioner, if required by the Commissioner, in respect of transaction of any dealer with them. By virtue of sub-section (2) of section 56 of the said Act, penalty was provided if there was a failure, on the part of the C F agent, to furnish such information as the Commissioner was entitled to obtain from them. Section 58 provided the mechanism for control of the tax authority on the functions of the C F agents so as to prevent or check evasion of tax. Same as the present case, it was contended, in Swastik Roadways [2004] 135 STC 1 (SC); [2004] 3 SCC 640, that by virtue of the provisions, contained in sections 57, 58 and 59, the C F agents were sought to be treated as dealers and, consequently, penalized, though they had nothing to do with the sale and/or purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that there was no proximate connection between the clearing and forwarding agents, on the one hand, and the tax evasion, on the other. Dealing with the merit of the contention of the respondents in Commercial Tax Officer v. Swastik Roadways reported in [2004] 135 STC 1 (SC); [2004] 3 SCC 640, that since the basis of penalty was three times the tax evaded by the owner or dealer, section 57(2) falls beyond the ancillary power to levy tax on the sale or purchase of goods, the apex court justified such stringent provisions by holding that such provisions were necessary for, and aimed at, checking tax evasion. In this regard, the apex court observed, in paragraph 12 of its decision, thus: (page 10 of STC) 12. We also do not find merit in the contention of the respondents that since the basis of penalty was three times the tax evaded by the owner/dealer, section 57(2) falls beyond the ancillary powers to levy tax on the sale and purchase of goods. In support of it, it was argued that such penalty was indeed a tax on sale of goods. That such penalty could not have been levied on the clearing and forwarding agent, as there was no sale or purchase in his hands nor he has any au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1) of section 42 of the Act or no cash memo or bill or challan has been produced before the prescribed authority under sub-section (3) or rupees one thousand, whichever is greater. Section 44 of the AGST Act (since stands repealed) empowered any authority, appointed under section 3(1) of the AGST Act, if he had reason to suspect that any dealer was attempting to evade tax or that any person was transporting goods or any other person had kept his accounts in such a manner as was likely to cause evasion of tax payable under the AGST Act, to seize, for reasons to be recorded in writing, such accounts and registers or documents. Power had also been given to the authority, appointed under section 3(1) of the AGST Act, to enter into and search any place of business of any dealer . The said section empowered the authority, under clause (b) of sub-section (5) of section 44 of the AGST Act, to impose a penalty equal to three times the amount of tax calculated on the value of such goods and to release the goods as soon as the penalty was paid in case the dealer or the person in-charge of the goods failed to produce any evidence or satisfy the said authority regarding the proper ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is also a part of such preventive measures against any evasion of taxes and the same should not be read in a narrow sense. As regards the role of the transporters, the apex court, in A.B.C. (India) Ltd. v. State of Assam reported in [2005] 142 STC 88 (SC); [2005] 6 SCC 424 categorically held the transporters to be the part and parcel of sale and/ or purchase of goods and observed that the transporters can also be made liable to pay a dealer's such taxable liability, which the transporter might have helped the dealer to evade. The relevant observations made by the apex court, in A.B.C. (India) Ltd. [2005] 142 STC 88; [2005] 6 SCC 424, read as under: (pages 100 and 101 of STC) 22. In our view, transporters are not strangers to the sale or purchase of goods; to the contrary are parts and parcel and are directly involved in storing the goods purchased or sold by, and in many cases such, transactions are fictitiously carried on in false names and addresses besides false classifications vis-a-vis transportation of such goods in and outside the State making themselves party to the episode of such fictitious transactions for the sole purpose of evasion of tax by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other persons, who commit any of the offences under section 29, would fall under clause (b) of sub-section (1) of section 32, which provides for composition of offence by imposing liability to pay a sum of rupees one thousand in addition to tax recoverable . Clause (b) does not impose any tax liability on transporter nor does it create any charging provisions for payment of sales tax on the transporter . What it does is that the amount, which is required to be paid as a tax liability by a dealer , makes recoverable from the transporter by taking resort to clause (b) of sub-section (1) of section 32 if the transporter opts for composition of offence, which he has committed under any or all the clauses of section 29 and under section 30. Apart from the fact that section 32, despite being challenged, has been upheld, in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, the fact remains (as can be seen on a microscopic analysis) that clause (b) does not impose payment of tax on a transporter . What it does is that the tax, which was payable by the dealer , is made recoverable from the transporter if the transporter , who has committed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory measures as may be necessary in order to ensure that no tax escapes assessment. The statute may also provide for penalty to be imposed on a person, whose conduct helps in evasion of tax. When a transporter helps in evasion of tax by a dealer , the penal provisions may impose a penalty to the extent of recovering an amount equivalent to the value of the taxable goods. The quantum of penalty may, in fact, be to the extent of tax recoverable or even far more than that. Such stringent provisions may be made in order not only to enable the State recover tax, but also deter persons from violating the provisions of the statute. No wonder, therefore, that section 32 of the TST Act has provided for imposition of penalty at the rate of three times of tax calculated on the value of the goods. The provisions, so made in section 32, were upheld in Tripura Goods Transport Association's case [1999] 112 STC 609 (SC); [1999] 2 SCC 253. In such circumstances, and, particularly, when even sections 29, 30 and 32 have been held to be within the legislative competence of the State, the impugned orders of assessment and the demand notices, which have been issued pursuant to the said orders o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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