2005 Supreme(SC) 978

2005(5) Supreme 395
Supreme Court of India
(From Gauhati High Court)
S.N. Variava & Dr. AR. Lakshmanan, JJ.
M/s. A.B.C. (India) Ltd. —Appellant
versus
State of Assam and Anr. —Respondents
Civil Appeal No. 2768 of 2000
With
Writ Petition (Civil) No. 622 of 2000
Decided on 4-8-2005
Counsel for the Parties :
For the Appellant : M.L. Lahoty, Paban K. Sharma, Ms. Poli Kataki, Himanshu Shekhar, Advocates.
For the Respondents : Krisna Sarma, V.K. Sidhartha, Ms. Namarata Chadda, Advocates for M/s. Corporate Law Group, Advocates.

Important point
Maintenance of accounts by the transporters is only to help the taxing authority to trace the dealer, fix the goods transported, therefore Sections 42 and 44 of the Assam General Sales Tax Act are held to be valid piece of legislation.

Headnote:Assam General Sales Tax Act, 1993—Sections 42 and 44—Business of transportation of goods on behalf of customers—Seizure of books of accounts and documents made by authorities at the offices and godowns of respondents—Appellant challenged validity of Sections 42 and 44 of the Act along with impugned assessment alleging that transporters are not ‘dealers’ within the meaning of the Act—Whether any obligation to maintain the documents such as registers, cash memos, challans etc. as required u/s 44 of the Act could be imposed upon transpor­ters—(Yes).

       Held : In our view, under Section 42 of the Act, it is an obligation on every clearing, booking or forwarding agent or any other person transporting goods who during the course of its business handles documents of titles to the goods for or on behalf of any dealer or person holding certificates under Section 14 of the said Act to furnish to the prescribed authority true and complete accounts, register, documents etc. The said Section also provides for levy of penalty at the rate of three times of tax calculated on the value of the goods in respect of which no particulars or information have been furnished under Section 42(1) of the Act or no cash memo or challan has been produced before the competent authority under Section 42(3) or Rs. 1000/- whichever is greater. The said Section empowers the appointed authority to enter and search any place of business of any dealer if he has reason to believe that any dealer is attempting to evade tax for that any person transporting goods for any other person who has kept in accounts in such a manner as is likely to cause evasion of tax. As per the accepted norms of taxation the jurisdiction whatever is ancillary or subsidiary provision necessary for achieving the object of a tax statute is ­covered by Entry 54 of List II of the Seventh Schedule to the Constitution of India. The Entries in the Legislative List have a very wide meaning and scope and should have a broad interpretation so as to make provisions in the Act workable and in the interest of the revenue. The obligation imposed upon the transporters under Sections 42 and 44 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. (Para 19)

       In our view, the transporters are not strangers to the sale or purchase of goods, to the contrary are parts and parcels and are directly involved in storing the goods purchased or sold by, and in many cases such, transactions are fictitiously carried on in false name and address besides false classifications vis-a-vis transportation of such goods in and outside of the State making themselves party to the episode of such fictitious transactions for the sole purpose of evasion of tax by the dealers purchasing and selling such goods. (Para 20)

       In our opinion, there cannot be any irregularity to call for books of accounts, documents, evidence etc. as the same is necessary for the tax authorities to make proper verification and scrutiny of the genuineness of the transactions. Issuance of notice for verification of a transaction is a formal step and the same is required for proper verification and scrutiny of the genuineness of the transaction to safeguard the interest of the State revenue. (Para 22)

       Thus it is seen that Sections 42 and 44 of the Act do not impose any liability upon the transporter, carriers etc. to pay any sales tax under the Act. The said sections are basically meant to check the tax evasion. Thus the requirement of maintenance of document and the certificate of registration by a transporter or any such agent is only for similar purpose as incorporated under Sections 36 A and 38 B of the Tripura Sales Tax Act, 1976 which has been held to be a valid piece of legislation by this Court. (Para 24)