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TMI Blog2017 (1) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... en to pay the taxes honestly without resorting to subterfuges. No doubt, when a person transports goods from outside the State of U.P. to outside the State of U.P. in terms of Section 52 of the Act and Rule 58 of the Rules, the authorities under the Act have no power to seize the goods and demand security for release thereof but where, as in the present case, the transaction is sham, not genuine and make believe and originated for transportation from a place within the State of U.P. or intended to be sold within the State of U.P. with intent to evade tax then it would be a case falling under Section 48 of the Act - Decided against the assessee. - Sales/Trade Tax Revision No. 460 of 2016 - - - Dated:- 9-1-2017 - Surya Prakash Kesarwani, J. Counsel for Applicant : Bipin Kumar Pandey ORDER 1. Heard Sri B.K. Pandey, learned standing counsel for the applicants and Sri Suyash Agarwal, learned counsel for the respondent. This revision was initially heard on 29.11.2016 and it was admitted. Facts of the Case:- 2. Briefly stated the facts of the present case are that a truck bearing Registration No.UP22T4924 was intercepted by Assistant Mobile Squad, Commercial Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istent. Only two invoices which were with respect to exempted goods were found to be genuine. TIN numbers of the alleged sellers printed in the aforesaid 74 invoices were also found to be forged and fake. Entire action of the respondent was fraudulent. As per transit declaration form, the purchasers are unregistered as TIN No. of none of the purchasers have been disclosed either in the transit declaration form or in the fake invoices accompanying the goods. Invoices do not contain even addresses of alleged purchasers. He submits that in fact the goods have been sold by the respondent assessee to some undisclosed persons under the cover of fake invoices, fraudulently showing it as being transported from outside the State of U.P. to out-side the State of U.P. so as to evade payment of tax. He submits that there was clear breach of provisions of Section 48 of the U.P. VAT Act, and, therefore, the mobile squad authorities have not committed any error in seizing the goods and demanding cash security of 40% on the estimated value of such goods. However, the Tribunal has committed a manifest error of law and facts to direct for release of goods (except few) without considering or giving d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Vol.53)-232. He supports the impugned order of the Tribunal. 5. Considering the submissions of learned counsels for the parties and the questions, following questions of law are formulated under Section 58(2) of the Act for answer in this revision:- (i) Whether under the facts and circumstances of the case, seizure of goods and demand of cash security for its release under Section 48 of the U.P. VAT Act, 2008 is valid? (ii) Whether Delhi U.P. Border area of District Ghaziabad is no-man's land ? (iii) Whether transporters are strangers to the transaction of sale and purchase and totally ignorant about the consignors and consignees? (iv) Whether fraudulent transportation of goods and colourable devices used to give impression of transportation of goods from outside the State of U.P. to outside the State of U.P. shall fall under Section 52 or would be a case falling under Section 48 of the U.P. VAT Act, 2008? Relevant Provisions: U.P. VAT Act, 2008: Section 46 . Power of search, inspection and seizure in case of a person other than dealer:- Where a person carries on any activity ancillary or incidental to or in connection with business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nying goods contains wrong particulars or that it is doubtful if such goods are properly accounted for by any dealer in his accounts, registers or other documents, maintained in the ordinary course of his business, he shall have power to seize such goods, and the remaining provisions of this section shall mutatis mutandis apply in relation to such seizure. (3) An officer seizing the goods under sub-section (1) shall take all the measures necessary for their safe custody and forward the list, referred to in the proviso to sub-section (1), along with other documents relating to the seizure to the assessing authority concerned. (4) The said assessing authority shall serve on the dealer or, as the case may be, the person in charge of the goods at the time of seizure (hereinafter in this section referred to as the person in charge) a notice in writing requiring him to show cause, why a penalty should not be imposed. (5) If such authority, after taking into consideration the explanation, if any, of the dealer or, as the case may be, the person in charge and after giving him an opportunity of being heard, is satisfied that the said goods were omitted from being shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zing the goods, before forwarding the list and other documents referred to in sub-section (3), or the assessing authority at any time thereafter, is of the opinion that the goods are subject to speedy and natural decay or where the tax assessed or penalty imposed, as the case may be, is not deposited in accordance with the provisions of this Act, the officer seizing the goods or the assessing authority, as the case may be, may, without prejudice to any other action that may be taken in accordance with other provisions of this Act, cause the goods to be sold by public auction in the prescribed manner. The sale proceeds of such goods shall be adjusted towards the expenses of tax assessed or penalty imposed. The balance, if any, shall be refunded to the dealer or, as the case may be, the person in-charge in accordance with the provisions of sub-section (8). (10) If the amount deposited under sub-section (7) is more than the amount of penalty imposed under sub-section (5), the excess amount so deposited shall be refunded to the dealer or, as the case may be, the person in-charge by the authority with whom it was so deposited, in accordance with the provisions of section 40. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is discretion, direct the dealer or the person concerned to furnish copies of bill or cash memorandum or challan or invoice received by him from the selling dealer or the consignor of the other State for verification of the contents of the declaration or the certificate. (3) The concerned authority of rail, air, or post shall not deliver the consignment to the dealer or person concerned unless the declaration or certificate dully endorsed as aforesaid, is furnished before him. (4) The provisions in rule 54, and rule 56, except sub-rules (1), (6),(8) and (11) thereof and of rule 57 except sub rule (1) and (6) thereof shall mutatis mutandis, apply in regard to the declaration or certificate, as the case maybe, referred to in sub-rule (1). (5) The commissioner may from time to time issue instructions with regard to the procedure to be followed regarding taking of delivery of goods and submission of declaration or certificate. Section 165 of Indian Evidence Act 165. The Judge may, in order to discover or to obtain proper proof of relevant facts, ask any question he pleases, in any form, at any time, of any witness, or of the parties, about any fact relevant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said person 'Kayyum' moved a similar application denying physical verification of the goods. On 02.10.2016 and 03.10.2016, he moved applications submitting that he has no information as to when the owner of the goods or respondent-transporter shall come and the driver has gone leaving him and therefore, the goods cannot be checked. Ultimately on 05.10.2016, when neither respondents nor the owner of the goods turned up then the authorities recorded statement of one Sri Tahir, who was Khalasi of the truck. He stated that the driver of the truck and the helper, both have gone and he shall open the truck only when they come. On 06.10.2016, he took Mobile No.9412191336 of the authorities and stated that he shall inform the driver to talk on the said mobile number. Thereafter, the driver of the truck talked to the authorities through his Mobile No.7466031686 at the aforesaid mobile number of the authority at about 12.55 P.M. He stated that he is not in Pilibhit and shall return after 2-3 days since the vehicle owner 'Imran' has told him to go after 2-3 days and to get the goods verified in the presence of the goods' owner. On 07.10.2016, none turned up and instead the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The date was fixed for 14.10.2016. The aforesaid notice was duly received by the driver as well as the helper of the truck, namely, Sri Saddam and Sri Kayyum. However no one appeared on the date fixed. Consequently, Mobile Squad Authority passed an ex parte order under Section 48 of the Act for seizure of the goods giving an option for release thereof on deposit of cash security of ₹ 10,90,250/- being 40% of the estimated value of goods amounting to ₹ 27,25,624/-. 8. It is undisputed that the goods in question were loaded from Ghaziabad (U.P.) and 76 invoices out of total 78 invoices accompanying the goods, were found to be fake. The Mobile Squad Authority checked TIN number of each of the aforesaid invoices with the help of Tax Information Exchange System . None of the alleged firms were found with respect to the entered TIN number. The authority downloaded the information so received and placed a copy thereof on record which has also been perused by the court. Thus, the invoices accompanying the goods were found to be fake and fraudulent and TIN numbers printed thereon were found to be fictitious. 9. The invoices accompanying the goods loaded in the truck in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal by the impugned order dated 11.11.2016 on the ground that the goods were brought from Delhi to U.P. Border where they were loaded in the truck in question and thereafter TDF was downloaded for carrying the goods from outside the State of U.P. to outside the State of U.P. The Tribunal took the view that Chikambarpur Ghaziabad is a transshipment area where the respondents have transshipment branch and the goods have been loaded from that place, which is a free zone area and consequently, the seizure of the goods is invalid. The aforesaid findings of the Tribunal are not only baseless and perverse but also in conflict with the evidences on record. It is undisputed that the goods were loaded from Ghaziabad and, thereafter, TDF was downloaded whereas TDF is required to be downloaded before entry of goods within State of U.P. That apart, the invoices accompanying the goods were found to be forged and TIN numbers mentioned therein were fictitious. The name of dealers mentioned therein were found to be non-existent. Documentary evidence in this regard were well on record. The Tribunal has not set aside the findings of fact recorded in this regard by the Mobile Squad Authority as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is evident that from own applications of persons In-charge of the vehicles moved on 29.09.2016, 30.09.2016, 01.10.2016, 02.10.2016, 03.10.2016, 07.10.2016, 08.10.2016 and the statement of the driver of the truck, Sri Kayyum dated 06.10.2016 before the Mobile Squad Authority that the goods shall be allowed to be checked in the presence of the owners of the goods who are coming. However, owners of the goods had not turned up rather respondents persuaded the matter on their behalf. Thus, it is evident that the respondents are well aware of the real owners of the goods but they have suppressed the information and did not allow the real owners/consignors to come forward and instead preferred to pursue the case through authorised representative of a very distant place, i.e. Chhapra (Bihar). Specific queries were made by the Mobile Squad Authority based on documentary evidences regarding the invoices accompanying the goods to be fake, TIN numbers mentioned therein to be fictitious and the alleged dealers to be non-existent, yet none of the alleged consignors/owners of goods came forward nor respondents disclosed identity of real consignors/owners and consignees of the goods nor replied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State. If that power exists and exercisable statutorily throughout the State, surely a circular of the Commissioner cannot eclipse the same. That apart, in exercise of powers conferred under Section 52 of the Act read with Rule 58 of the Rules, the Commissioner of Commercial Tax has issued a circular dated 03.09.2013 providing for the procedure for vehicles passing through the State which person incharge of the vehicle is bound to follow. Paragraph-6 of the aforesaid circular dated 03.09.2013 provides as under: 17. The circular dated 31.01.1987 has been heavily relied by the respondents on the basis of certain judgments of this court contending that the area of Chikambarpur, Ghaziabad is a no man's land as per the circular. It is relevant to note that even the aforesaid circular has been cancelled by the Commissioner of Commercial Tax by circular dated 29.08.2016, which is reproduced below: 18. Thus, the circular dated 31.01.1987 is non-existent. That apart, it has no relevance in view of the facts found and the constitutional provisions mentioned above. Delhi U.P. Border area of District Ghaziabad is not no man's land rather it is part of District ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are strangers to the transaction of purchases and sales and totally ignorant about the consignors and consignees. In cases like the present case where transactions have been fictitiously carried on in false names and addresses, bogus invoices with fictitious TIN numbers printed therein and TDF-1 is downloaded on the basis of false particulars and forged papers by a transporter then he makes himself party to the episode of fictitious transaction with sole purpose of evasion of tax by undisclosed non-bonafide dealers. By seizure of goods in such cases transporter is not affected if he is really a transporter. Therefore, instead of being torch bearer of dishonest persons, he should allow the real consignors or consignees to come forward and assign reasons for concealing their real identity. The action of the departmental authorities in such cases to unearth evasion of tax is one of their fundamental duties under the Act. Question No.(iv) Whether fraudulent transportation of goods and colourable devices used to give impression of transportation of goods from outside the State of U.P. to outside the State of U.P. shall fall under Section 52 or would be a case falling under Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emper overall these centuries. Lord Denning observed in a language without equivocation that no judegment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud, for fraud unravels everything (Lazarus Estate Ltd. V. Beasley 1956(1)QB 702). (Emphasis supplied by me) 25. In the case of Ram Chandra Singh Vs. Savitri Devi and others, 2003(8) SCC 319, Hon'ble Supreme Court defined fraud and considered the effect of fraud and misrepresentation and held in paragraphs 15, 16, 17, 18, 25 and 37 as under : 15. Commission of fraud on court and suppression of material facts are the core issues involved in these matters. Fraud as is well-known vitiates every solemn act. Fraud and justice never dwells together. 16. Fraud is a conduct either by letter or words, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. 17. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. 18.A fraudulent misrepresentation is called deceit and consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment could be legitimately treated as voidable at the option of the employer or could be recalled by the employer and in such cases merely because the respondent employee has continued in service for a number of years, on the basis of such fraudulently obtained employment, cannot get any equity in his favour or any estoppel against the employer. 29.2 Verification of the character and antecedents is one of the important criteria to test whether the selected candidate is suitable to the post under the State and on account of his antecedents the appointing authority if find not desirable to appoint a person to a disciplined force can it be said to be unwarranted. 29.3 When appointment was procured by a person on the basis of forged documents, it would amount to misrepresentation and fraud on the employer and, therefore, it would create no equity in his favour or any estoppel against the employer while resorting to termination without holding any inquiry. 29.4 A candidate having suppressed material information and/or giving false information cannot claim right to continue in service and the employer, having regard to the nature of employment as well as other aspects, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and identity of real owners of the goods have been concealed by the respondents with only motive to evade tax under the Act or to help undisclosed persons to evade tax. It is a clear case of fraud, misrepresentation and suppression of facts by the respondents. This court cannot act to protect perpetuation of legal fraud. The courts are obliged to do justice. Fraud and justice never dwell together (Frans Et Jus Nunquam Cohabitant). This maxim has never lost its temper over all the centuries. The courts are not meant to permit dishonesty even on technical pleas. Dishonesty cannot be permitted to bear the fruit and benefit to the persons who played fraud or misrepresented or suppressed facts and in such circumstances, the court should not allow perpetuation of fraud by entertaining the technical pleas. The very foundation of the case of the respondent is based on falsehood and fraud. The respondents have suppressed material facts and did not disclose it despite being repeatedly asked by the Mobile Squad Authority. Even they abstained to answer the queries made by the court as afore-noted. They have not disclosed the real person/owner of the goods in question. Wrong has been clearly c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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