Back
1999 Supreme(Gau) 6
GAUHATI HIGH COURT
J.N.Sarma, J.
Nibaran G.Momin -Appellant
Versus
State of Assam -Respondent
Civil Rule No. 1199 of 1996
Decided On : 07-01-1999
A.Maleque, A.S.Choudhary, S.Seal, S.I.Rahman , R.Majumdar, I.Hussain, H.N.Sharma
The requirement of security deposit for transit passes under section 46 (15) of the Assam General Sales Tax Act, 1993 and Rule 43 (7) (j) of the Assam General Sales Tax Rules, 1993 is a valid measure to prevent evasion of sales tax and does not violate the fundamental rights of the petitioners.
Headnote:
ASSAM GENERAL SALES TAX ACT, 1993 - SECTION 46 (15) - RULE 43 (7) (J) - VALIDITY OF SECURITY DEPOSIT REQUIREMENT FOR TRANSIT PASSES - COURT UPHOLDS THE LEGALITY OF SECURITY DEPOSIT REQUIREMENT TO PREVENT SALES TAX EVASION.
Fact of the Case:
The petitioner, an association of veneer-cum-saw mill owners, challenged the legality of the security deposit requirement imposed by the Superintendent of Taxes at the Kabaitari check post for transit passes issued to transport veneer from their factories to plywood factories in other states. The petitioners argued that the requirement was illegal and arbitrary and caused harassment to their members.
Finding of the Court:
The court upheld the validity of the security deposit requirement, finding that it was a reasonable measure to prevent evasion of sales tax. The court noted that the requirement was authorized by section 46 (15) of the Assam General Sales Tax Act, 1993 and Rule 43 (7) (j) of the Assam General Sales Tax Rules, 1993, and that it was necessary to ensure that goods transported under transit passes were actually taken out of the state and not sold within Assam.
Issues: 1. Whether the security deposit requirement for transit passes was illegal and arbitrary. 2. Whether the requirement violated the petitioners' fundamental rights.
Ratio Decidendi: The court held that the security deposit requirement was not illegal or arbitrary, as it was authorized by statute and was a reasonable measure to prevent evasion of sales tax. The court also held that the requirement did not violate the petitioners' fundamental rights, as it was not excessive or unreasonable.
Final Decision: The court dismissed the writ petition, holding that the security deposit requirement was valid and that the petitioners had not been subjected to undue harassment.
(1) Illegal and arbitrary use of power under section 44 of the Assam General Sales Tax Act, 1993 and Rules 42,43 (7) (j) of the Assam General Sales Tax Rules, 1993.
(2) Illegal process of demanding security deposit for each consignment from the member mills of the petitioner's Association in spite of having all valid documents and even after payment of duties.
2. It is claimed that the mills have the valid permit/permission under Rule 10 of the Transit Rules framed by the Govt of Assam under sections 40 and 41 of the Assam Forest Regulation, 1891 and the Garo Hills Forest Act, 1968. The petitioners claimed to have also the Certificate of Registration issued under the Meghalaya Purchase Act read with Rule 39 for purchasing logs after payment of royalty as per Meghalaya Govt Schedule. They also claimed to have the Certificate of Registration issued under the Central Sales Tax Act (Registration and Turnover) Rules, 1957 for carrying out the inter-State sale of their manufactured goods. The member mills of the Association of the petitioner in course of its business of sale of commercial veneer is to transport the same by truck, etc from its factory and deliver the same to the plywood factories of its customers situated in various places of the country. While transporting the veneer for delivery to its various customers it has to cross a number of check posts in Meghalaya as well as in Assam. The first check post is at Kabaitari check post and the last check post is Srirampur or Boxirhat check post. Though the member mills of the petitioner's Association have all the valid certificates, the Superintendent of Taxes, Kabaitari check post while issuing Transit Pass insists on depositing security deposit at the rate of 10% of the value of the goods carried by the truck which the member Mills are depositing under compulsion. The respondent No.3, ie the Superintendent of Taxes, Kabaitari Check Post directed the member mills to get the Transit Pass counter signed at the last check gate either at Srirampur or Boxirhat and when the said counter signed Transit Pass is shown at Kabaitari check post, the security deposit is released/refunded. This has caused harassment to the petitioners and as such the petitioners pray that a Mandamus may be issued to stop this illegal process of demanding/obtaining security deposit from the member mills of the petitioner's Association for the consignment transported/ transhipped by them when they are found carrying properly accounted goods with valid documents, namely valid Transit Pass, Bill, Challan and other documents.
3. Affidavit-in-opposition has been filed. But the original copy is not there. A copy is now furnished by Mr. Choudhury and the same is kept on record. In the affidavit-in-opposition it is stated as follows :
"Under section 46 (15) of the Assam General Sales Tax Act, 1993 and Rule 43 (7) (j) when a goods vehicle coming from any place outside the State of Assam and bound for any place outside Assam but merely passes through the State of Assam the person in charge of such vehicle is required to apply to and obtain a transit pass in Form XXV from the Officer In-charge of the entry check gate and is required to surrender/deliver one copy of such transit pass at the exit check gate in token of the fact that the consignment that was brought within Assam was actually taken out of Assam and has not been delivered or sold within Assam. In the case of failure to do so, presumption would be drawn that the goods brought in such consignment have been sold within the State of Assam and the person in charge/driver of the vehicle shall be a dealer within the meaning of clause (10) of section 2 of the Assam General Sales Tax Act.
The Hon'ble Supreme Court in Sodhi Transport Co vs. State of UP, (1986) 62 STC 381 (SC) held that the provisio
