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Ajay Trading Co. Vs. Commercial Tax Officer, Begum Bazar Circle, Hyderabad - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberW.P. No. 3849 of 1984 and W.P.M.P. No. 4887 of 1984
Judge
Reported in[1985]60STC56(AP)
ActsAndhra Pradesh General Sales Tax Act - Sections 28(6) and 29; Central Sales Tax Act
AppellantAjay Trading Co.
RespondentCommercial Tax Officer, Begum Bazar Circle, Hyderabad
Excerpt:
.....of andhra pradesh general sales tax and central sales tax act, 1956 - petitioner was registered dealer carrying on business including of commission agent - stock of petitioner seized by assistant commercial tax officer in transit - writ petition before high court against seizure - assistant commercial tax officer can only levy and collect tax as per law - if tax is paid and security is furnished then authorities under act cannot seized goods - act of assistant commercial tax officer was unjustified. - - hh iii/i/mp/325/83-84 as well as under the central sales tax act (hereinafter referred to as 'the central act') under registration no. they usually obtain the supplies of costly items like cloves, cardamom, etc. even the respondent admits that he is a dealer registered both under the..........is further alleged that when the present writ petitioner was contacted, he denied having done any business and stated that he had only lent his name to other to defraud the government. in the counter-affidavit, it is also further stated that : 'he is a servant employed by sri poonam chand, residing at begum bazar, hyderabad. sri poonam chand provides food and shelter to him .......... he does not have means even for livelihood. he deposed that his employer obtained his signatures on certain blank papers and forms and he was in no way connected with the business being carried on in the name and style of m/s. ajay trading company. but his employer sri poonam chand denied to have done any business.' 4. on 17th february, 1984 mr. o. p. bhandari, sales tax practitioner, approached the.....
Judgment:

Madhava Reddy, C.J.

1. This writ petition is filed for the issue of a writ of certiorari and any other appropriate writ to quash the proceedings of the Commercial Tax Officer, Begum Bazar Circle, Hyderabad, dated 6th February, 1984. It is the case of the petitioner that he is a 'registered dealer' duly registered under the Andhra Pradesh General Sales Tax Act (hereinafter referred to as 'the Act') under registration No. HH III/I/MP/325/83-84 as well as under the Central Sales Tax Act (hereinafter referred to as 'the Central Act') under registration No. HH III/I/MP/182/83-84. As part of his business, which included commission agency business, the petitioner approached M/s. Malkani Transport Co., Hyderabad to take delivery of eight bags of clove despatched by M/s. Sham International, Bombay under letter No. 45522 dated 4th February, 1984 through lorry No. MWT 5610. The transport company informed the petitioner that the goods were detained by the Commercial Tax Officer, Begum Bazar Circle, Hyderabad, the respondent herein, by his order dated 6th February, 1984. In that order it is stated that when the lorry MWT 5610 was checked by the A.C.T.O. (Intelligence) and the A.C.T.O., Begum Bazar, Hyderabad, along with other kirana stocks, eight bags of cloves were found in the lorry transported under way bill No. 30 dated 6th February, 1984 issued from Bombay. In the way bill the consignor is stated to be M/s. Sham International, Bombay and the value of the goods is noted as Rs. 71,000. The consignee's name is noted as M/s. Ajay Trading Co., Hyderabad, the petitioner herein. The address of the consignee was given as Malakpet, Hyderabad and the CST No. as HH/182/83. The consignor, M/s. Sham International gave a letter to the driver of the vehicle in which it is stated that the stock is being sent for sale on commission basis. The total weight of the stock as noted in the way bill is 405.500 kgs. and its value is Rs. 71,000. It is also stated that verification with the Sales Tax Officers having jurisdiction over Malakpet area revealed that CST registration No. HH/182/83 was not issued to the petitioner. In these circumstances, the stock of eight bags of cloves was detained pending further enquiry. The respondent passed a receipt to one Mohd. Iliyas, a partner of M/s. Malkani Transport Co., Hyderabad for eight bags of cloves detained by him. It is this action of the respondent that is attached as illegal and without jurisdiction. It is claimed that this consignment which is sent from Bombay for sale in Hyderabad on commission basis through a registered dealer is not liable to tax in Andhra Pradesh and the respondent has no jurisdiction to detain, much less seize these goods.

2. The respondent filed a counter-affidavit. While admitting that the petitioner was a registered dealer with registration certificate numbers as mentioned in the writ petitioner's affidavit filed in support of the writ petition, it is asserted that the dealer has no locus standi to claim the goods as he had stated before the respondent that he has no means of livelihood and that he is not the real owner of the goods. It was further averred in the counter that it was found from the records of the Malakpet Commercial Taxes Officer that the dealer had filed A-2 returns showing 'Nil' turnover for the months of September, October and November, 1983 and though the return for the month of December, 1983 was to be filed by 15th January, 1984 he did not file any. He filed a return of the turnover for the first time on 17th February, 1984, i.e., eleven days after the goods were detained. Neither the petitioner nor the transporter approached the respondent for the release of the goods till 17th February, 1984. He further alleges that :

'In the city of Hyderabad, the big dealers in the line of kirana trade obtains R.Cs. in the name of their employees and servants from whom the department cannot collect the taxes even though the demand is raised for want of capacity of the R.C. holder to pay taxes. They usually obtain the supplies of costly items like cloves, cardamom, etc., in the name of these hangover R.Cs., get them unloaded at their regular shops, sell them without accounting and evade the tax if the transport is not checked. Unless the department seized and detains the goods pending enquiry and verification, the dealer gets away without paying taxes on the goods. The real identity of the persons behind the facade of the bogus registrations can be established only after thorough verification after seizure of the goods. If it is checked on the way, they will account for that particular transaction only and pay tax in the name on whose behalf the transport is made. Having suspected the bona fide of the transaction, I have detained 8 bags of cloves after preliminary enquiries are made.'

3. It is also averred that after obtaining the extracts of the registers of the commercial taxes check post at Sangareddy, petitioner-company was found to have transported on five occasions between 29th October, 1983 and 30th January, 1984 consignment of cloves of the value of Rs. 4,09,200. It is asserted that no businessman would lock up his funds in the goods without sales for months together. It is further alleged that when the present writ petitioner was contacted, he denied having done any business and stated that he had only lent his name to other to defraud the Government. In the counter-affidavit, it is also further stated that :

'He is a servant employed by Sri Poonam Chand, residing at Begum Bazar, Hyderabad. Sri Poonam Chand provides food and shelter to him .......... He does not have means even for livelihood. He deposed that his employer obtained his signatures on certain blank papers and forms and he was in no way connected with the business being carried on in the name and style of M/s. Ajay Trading Company. But his employer Sri Poonam Chand denied to have done any business.'

4. On 17th February, 1984 Mr. O. P. Bhandari, sales tax practitioner, approached the respondent, stated before the respondent that the business related to Sri Shyam Sunder and demanded the return of the goods.

5. From the above facts stated even in the counter-affidavit filed by the respondent, it is clear that the goods are supported by way bills. The way bills give all the necessary particulars of the consignor and the consignee. The consignee is a person registered under the Act; even the respondent admits that he is a dealer registered both under the State Act as well as under the Central Act. The registration numbers mentioned by the petitioner are admitted to be correct. The person mentioned in the certificate is very much in existence. Whether he is a benamidar for one Poonam Chand or he is doing business in his own right does not affect the liability, if any, to pay the taxes. Certificate he is not a fictitious person. When the consignment is supported by proper documents, the respondent has only the power to collect the tax, if any, either under the State Act or the Central Act. According to the petitioner, this consignment having been sent for sale on commission is not liable to tax in Andhra Pradesh. Be that as it may, even assuming that the turnover is liable to tax either under the State Act or the Central Act, the respondent is empowered to merely detain the goods under section 29 of the Act for the purpose of enforcing the payment of tax. If the tax is paid or if the respondent demands security and that security is furnished, the goods cannot be detained. The so-called power to seize the goods for the alleged evasion of tax on the earlier transactions or consignments said to have been indulged in by the petitioner does not entitle the sales tax authorities to detain the present consignment. As soon as the tax payable on this consignment is paid or offered to be paid albeit under protest, the consignment in question has to be released. When the petitioner is a registered dealer and is bound to file returns and in the returns that are ultimately filed the five consignments that are mentioned in the counter-affidavit are not accounted for, it will certainly be open to the commercial tax authorities to include that turnover in the assessment order that may be passed and recover the tax and the penalty, if any. But that power is wholly different from the power to detain goods in transit, which is vested in the authority, only to enforce payment of the tax, if any, payable in respect of that particular consignment. However, for the tax alleged to be due in respect of a turnover which does not constitute a part of the present consignment, even before any assessment and demand is made, the present consignment cannot be detained. Following the judgment of the Supreme Court in Check Post Officer v. K. P. Abdulla and Bros. [1971] 27 STC 1 (SC), a Division Bench of this Court in W.P. No. 3515 of 1970 dated 10th November, 1971 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 supra) has struck down section 28(6) of the Act holding it to be ultra vires of the power conferred upon the State Legislature. In that view the order made by the Commercial Tax Officer seizing and confiscating the goods was held to be unsustainable. Thus the authorities under the Andhra Pradesh General Sales Tax Act have no power to seize and confiscate any goods found in any office, shop, godown, vehicle, vessel or any other place of business when they are supported by documents. They may only assess and levy tax as per law and proceed to recover the tax so levied. It is, therefore, clear that the action of the respondent in detaining the goods on any ground whatsoever, even before making any assessment, it illegal and wholly without jurisdiction. In respect of the goods in transit which are liable to tax, the power to detain is vested in the authorities under section 29 of the Act only to enforce payment of the tax or furnishing security as the case may be. The respondent has acted beyond the confines of section 29 of the Act in detaining the goods in question, for section 29 merely empowers him to detain the goods for the purpose of enforcing the payment of tax payable in respect of that particular consignment. Section 29 does not authorise detention of goods for alleged evasion of tax on the turnover which is suspected to have been suppressed; much less does it authorise the detention of the goods till such time as the suspected turnover is brought to tax and such tax is paid or recovered. We are, therefore, clearly of the view that the action of the respondent in detaining the goods for the purpose mentioned in the counter-affidavit is wholly without jurisdiction. We have separately ordered that the goods be released in favour of the petitioner on payment of the tax that he may, if at all, be ultimately be held liable to pay in respect of the present consignment. That fully safeguards the interests of the Government as envisaged by section 29 of the Act. The goods shall be released forthwith as ordered in W.P.M.P. No. 4887 of 1984. In this view the writ petition is allowed. No costs. Advocate's fee Rs. 150.

6. On the pronouncement of the above order, the learned counsel for the respondent requested for leave to appeal to the Supreme Court. Against the decision striking down section 28(6) of the Act no appeal was filed. That decision rendered in W.P. No. 3515 of 1970 on 10th November, 1971 (Kotha Rama Doss v. Deputy Commercial Tax Officer) (printed at page 53 supra) was accepted by the respondent for the last eleven years. So far as the power under section 29 is concerned, it is upheld. Therefore, we are unable to certify that this matter involves such substantial questions of law of general importance as require the consideration of the Supreme Court or that it is otherwise a fit case for grant of leave to appeal to the Supreme Court. Leave refused.


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