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1972 Supreme(P&H) 130
PUNJAB & HARYANA HIGH COURT
Bal Raj Tuli, J.
Dunlop India Limited
Versus
State Of Punjab
Civil Writ No. 3289 of 1971,
Decided On : MAY 5, 1972
The power of seizure of goods under Sub-section (8) of Section 14-B of the Punjab General Sales Tax Act is unconstitutional as it is not incidental or ancillary to the power to levy sales tax.
Headnote:
PUNJAB GENERAL SALES TAX ACT - SECTION 14-B - SEIZURE OF GOODS - POWER OF SEIZURE OF GOODS UNDER SUB-SECTION (8) OF SECTION 14-B IS UNCONSTITUTIONAL - IT IS NOT INCIDENTAL OR ANCILLARY TO THE POWER TO LEVY SALES TAX.
Fact of the Case:
The petitioner-company sent some tyres and tubes from West Bengal to their sub-depot at Jullundur. At the Shamboo Barrier in Patiala District, the vehicle carrying these goods was checked by the Taxation Inspector on duty. The driver produced form ST XXIV indicating the value of the goods at Rs. 50,000. The original invoices and other documents showed that the value of the goods was about Rs. 1,15,518.25. The Taxation Inspector seized the goods and called upon the general manager of the petitioner-company to attend his office within seven days to settle the dispute. The petitioner-company made a representation to the Joint Excise and Taxation Commissioner, Patiala. The office manager of the petitioner-company appeared before the officer-in-charge of the check post and his statement was recorded. He was shown all the papers from which he worked out the total value of the goods at Rs. 1,23,666.42, out of which goods of the value of Rs. 17,114.07 were taxable at 6 per cent, and the remaining at 10 per cent. The manager of the petitioner-company was allowed the option of getting the goods released on payment of Rs. 7,000 and to furnish a revised declaration showing the value of the goods at Rs. 1,23,666.42. The manager of the petitioner-company paid the amount under protest and got the goods released.
Finding of the Court:
The power of seizure of goods as given by Sub-section (8) of Section 14-B, which is challenged by the learned counsel for the petitioner, is unconstitutional in view of the judgment of their Lordships of the Supreme Court in The Check Post Officer, Coimbatore, and Ors. V/s. K.P. Abdulla and Brothers [1971] 27 S.T.C. 1 (S.C.).
Issues: Whether the power of seizure of goods under Sub-section (8) of Section 14-B of the Punjab General Sales Tax Act is constitutional.
Ratio Decidendi: The power to confiscate goods carried in a vehicle cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods. Sub-section (3) assumes that all goods carried in a vehicle near a check post are goods which have been sold within the State of Madras and in respect of which liability to pay sales tax has arisen, and authorises the Check Post Officer, unless the specified documents are produced at the check post or the barrier, to seize and confiscate the goods and to give an option to the person affected to pay penalty in lieu of confiscation. A provision so enacted on the assumption that goods carried in a vehicle from one State to another must be presumed to be transported after sale within the State is unwarranted. In any event, power conferred by Sub-section (3) to seize and confiscate and to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax. A person carrying his own goods even as personal luggage from one State to another or for consumption, because he is unable to produce the documents specified in Clauses (i), (ii) and (iii) of Sub-section (3) of Section 42, stands in danger of having his goods forfeited. Power under Sub-section (3) of Section 42 cannot be said to be ancillary or incidental to the power to legislate for levy of sales tax.
Final Decision: The petition is allowed with costs and the order of the officer-in-charge of the check post seizing the goods and charging Rs. 7,000 from the petitioner-company for getting them released is quashed and the respondents are directed to refund the amount recovered from it.
Bal Raj Tuli, J.
1. The petitioner-company is registered under the Companies Act with its registered office at Calcutta. It sent some tyres and tubes from Shah Ganj in West Bengal to their sub-depot at Jullundur, through Messrs. Central Goods Transport Corporation, Calcutta, under challan Nos. 53/341-47, dated 29th June, 1970. At the Shamboo Barrier in Patiala District, the vehicle carrying these goods was checked by the Taxation Inspector on duty on 6th July, 1970, at 1-00 A.M. The driver produced form ST XXIV indicating the value of the goods at Rs. 50,000. The original invoices and other documents which had been handed over by the petitioner-company to the transport corporation showed that the value of the goods was about Rs. 1,15,518.25. The Taxation Inspector, therefore, concluded that the driver of the truck had filed a false declaration supplied to him by the petitioner-company with a view to evade sales tax on the tyres and tubes which were being carried by him in the truck. The Taxation Inspector recorded the statement of the truck driver wherein he admitted that the declaration produced by him was not in accordance with the invoices and bills given by the petitioner-company to the transport corporation, which he was carrying. The driver wanted time to produce the parties before any order regarding seizure of the goods was passed by the Taxation Inspector, who agreed to grant him time.
2. Shri S. R. Bhutani, a representative of the petitioner-company and Shri Bhagwan Dass, a representative of the Central Goods Transport Corporation, appeared before the officer-in-charge of Shamboo Barrier and explained that a clerk of the Transport Corporation had inadvertently filled in the figure "Rs. 50,000" instead of the real amount and that there was no intention to evade any tax in view of the fact that the original invoices and bills, which were being carried by the driver, showed the correct valuation of the goods. The officer-in-charge of the check post did not feel convinced and seized the goods on the ground that the declarations furnished in form ST XXIV were found to be incorrect. He called upon the general manager of the petitioner-company to attend his office within seven days personally or through an authorised agent to settle the dispute. On 22nd July, 1970, the petitioner-company made a representation to the Joint Excise and Taxation Commissioner, Patiala. But before that representation could be decided, the office manager of the petitioner-company appeared before the officer-in-charge of the check post on 23rd July, 1970, and his statement was recorded. He was shown all the papers from which he worked out the total value of the goods at Rs. 1,23,666.42, out of which goods of the value of Rs. 17,114.07 were taxable at 6 per cent, and the remaining at 10 per cent. It was thus determined that the difference between the declaration made in form ST XXIV and the correct value of the goods was Rs. 73,666.42. The manager of the petitioner-company was allowed the option of getting the goods released on payment of Rs. 7,000 and to furnish a revised declaration showing the value of the goods at Rs. 1,23,666.42. The manager of the petitioner-company paid the amount under protest and got the goods released. Thereafter, a representation was made by the petitioner-company to the Joint Excise and Taxation Commissioner, Punjab, on 8th March, 1971, to revise the order of the Check Post Officer dated 23rd July, 1970, and to order the refund of the amount received by him for releasing the goods seized. On 21st April, 1971, the petitioner-company was informed "legal remedies may please be sought in the case cited as subject" by the Excise and Taxation Commissioner. The petitioner then filed the present petition challenging the order seizing the goods and releasing them only on receipt of Rs. 7,000.
3. Written statement has been filed by respondent No. 3, justifying the action taken by the department under Section 14-B of the Pu
