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2005(5) Supreme 794
Supreme Court of India
(From Allahabad High Court)
Mrs. Ruma Pal & Dr. AR. Lakshmanan, JJ.
M/s. Bharat & Co. —Appellant
versus
Trade Tax Officer & Anr. —Respondents
Civil Appeal No. 5081 of 2005
(Arising out of SLP (C) No. 3387 of 2004)
Decided on 17-8-2005
Counsel for the Parties :
For the Appellant : K. Radhakrishnan, Sr. Advocate, Krishnanand Pandeya and G. Prasad, Advocates.
For the Respondents : Ms. Shobha Dixit, Sr. Advocate, Kamlendra Mishra, A. Bhalla, R.K. Dubey and Ms. R. Singh, Advocates.
Held : In our opinion, the High Court was wrong in dismissing the appellant’s petition. The Trade Tax Tribunal as early as on 31st March, 2000 had held that the appellant had the locus standi to ask for the release of goods because the appellant was the owner of the goods. The decision of the Tribunal was not challenged by the respondents. The decision of the Tribunal not being challenged, the issue of title was concluded in the appellant’s favour. In the face of this order, it was not open to Assistant Commissioner, Trade Tax on remand to reject the application of the appellant on the ground that it was not the owner of the goods. The High Court should have considered this aspect of the matter particularly when it had been expressly drawn to the High Court’s attention. The High Court was also precluded from re-deciding the same issue between the same parties. Besides, the High Court’s finding that the ownership of the goods had passed to M/s. Kamakhya Lime Industries only because it had been named in the Consignment Note appears to be incorrect. (Paras 19 and 20)
In the second round the Tribunal had directed the release of the goods to the appellant by its order dated 9th August, 2000 subject to furnishing the security of Rs. 4 lakhs. The High Court by the interim order passed in the revisional application also directed the seized goods to be released to the appellant on the furnishing of security by its order dated 28th September, 2000. Even according to the respondents the goods were released formally to the appellant against security furnished by the appellant. Yet the last order of seizure in execution of the recovery certificates against the purchaser was issued on the basis that the goods had been released to M/s. Kamakhya Lime Industries. (Para 21)
It is true that the respondents have said that the two invoices of the appellant have been prepared bearing the same number but in respect of different quantities of gambier. It is however, nobody’s case that the total of the two invoices did not tally with the number of bags in fact found on the truck. No material has been brought on record by the respondents to show that the value of the gambier as on the date of transport was less than that shown on the invoices except for the unsupported estimate of the TTO that the gambier was worth Rs. 20 lakhs. The appellant in any event was not concerned with any interstate sale that the purchaser might have effected after the delivery. As far as it was concerned, the sale was and intrastate one and subject to Central Sales Tax 1956, and therefore, outside the purview of the State Act. (Para 23)
Judgment
Ruma Pal, J.—Leave granted.
2. This appeal has been preferred from an order passed by the High Court of Allahabad dismissing the appellant’s writ petition. The appellant had asked for a direction on the respondents to hand over possession of 400 bags of gambier which had been detained on 20th August 1999 and subsequently seized.
3. The appellant carries on business in Mumbai. It sent the gambier to one M/s Kamakhya Like (sic) Industries, Varanasi. A declaration form (Form 31) issued under the U.P. Trade Tax Act, 1948 (referred to as the Act) had been sent by the purchaser to the appellant in connection with the sale of the gambier. The gambier was despatched by truck from Bombay. At the Uttar Pradesh check-post the goods were detained on 19.8.1989. Certain documents were produced. The documents were found to be discrepant. A show cause notice was issued by the then Trade Tax Officer-II (hereinafter referred to as TTO-II), Sahayta Kendra Trade Tax, Jhansi to the truck driver on 20th August, 1989. It was alleged in the show cause notice, inter-alia, that the appellant dealt in chemical and solvent and that the existence of the selling dealer was doubtful. As far as the purchasing dealer was concerned, it was said that the Form-31 was issued to the firm to import lime stone and coal and it was not registered or authorized to trade in gambier. It was also said that the registration certificate had expired and that the signature of the present dealer on the documents produced did not tally with the signature of the proprietor already on record. It was also noted that there was a discrepancy in the name of the purchaser in the documents produced by the truck driver in that the name in one place was shown as Kamakhya Like Industries, and in another as Kamakhya Lime Industries. On the basis of these facts, the TTO-II said he was satisfied that the goods were being imported with the intention of evading payment of tax by adopting fraudulent means and that the goods in question were detained under Section 28-A of the U.P. Trade Tax Act.
4. Although no copy of the show cause notice was served either on the purchaser or the appellant as the selling dealer. The appellant submitted an application for extension of time to reply to the show cause notice on 2nd September 1999. According to the respondents, the time to file the reply was extended till 10th September 1999. As there was no reply to the show cause notice on 11th September 1999 an order was passed by the TTO-II seizing the goods on the grounds that the bills were discrepant and were, therefore, bogus and that the entry of the gambier in the account books of the appellant was doubtful. The estimated value of the gambier was given as Rs. 20 lakhs on the basis of which the release of the gambier was permitted to deposit of a sum of Rs. 8 lakhs either in cash or in the form of draft by 20th September 1999.
5. On 13th September 1999, one Mr. Arvind Desai claiming to be a partner of the appellant submitted an application under Section 13-A(6) of U.P. Trade Tax Act, 1948 for release of the goods. On receipt of the application, the TTO-II who had issued the show cause notice and passed the order of seizure, went to Mumbai and made inquiries from the Sales Tax Officer there who, according to the respondents, certified that the said Arvind Desai was not a partner of the appellant. The TTO also found that there were no entries of money transactions relating to the purchase of the gambier in the bank accounts of the appellant in Mumbai. Incidentally, the partners of the appellant admittedly registered with the Sales Tax Authorities, confirmed that Arvind Desai was a partner of the appellant firm.
6. On 8th October 1999, an order was passed by the assessing authority under Section 15A(1)(o) against the proprietor of the purchaser holding that the gambier had been transported with the “pre-plan intention of tax evasion” and, therefore, penalty of Rs. 8 lakhs was imposed. However, it was only
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