CIVIL WRIT JURISDICTION CASE No.2434 OF 1993 ***** In the matter of an application under Articles 226 and 227 of the Constitution of India. ***** M/S JAGDAMBA PLYWOOD INDUSTRIES PRIVATE LTD., A company incorporated under the provisions of the Companies Act, 1956, having its registered office at Ashiyana Chambers, Exhibition Road, Patna and factory at Industrial Area Hajipur through its Director Sushil Kumar Khemka. ...... Petitioner. Versus 1. THE STATE OF BIHAR. 2. The Deputy Commissioner of Commercial Taxes, Hajipur Circle, Hajipur. 3. Assistant Commissioner of Commercial Taxes, Hajipur Circle, Hajipur. ...... Respondents ----------- For the Petitioner: Mr. S.D. Sanjay, Advocate with Mr. Gautam Kejriwal & Mr. Akash Chaturvedi, Advocates. For the S t a t e: Mr. Anil Kumar Verma, Assistant Counsel to Standing Counsel No.3. P R E S E N T THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE HON'BLE MR. JUSTICE JAYANANDAN SINGH ****** S.K. Katriar, J. This writ petition is directed against the order dated 18.11.1992 (Annexure-8), passed by the Deputy Commissioner of Commercial Taxes, Hajipur Circle, Hajipur, in Case No.31(3)22/91- 92, whereby he has imposed penalty of Rs.33,916/- in terms of Section 31(3) of the Bihar Finance Act 1981 (hereinafter referred to as the „Act‟). 2. A brief statement of facts essential for the disposal of this writ petition may be indicated. The petitioner is a private limited company registered under the provisions of the Companies 2 Act 1956, with its registered office at Exhibition Road, Patna, and its manufacturing unit at Hajipur, District- Vaishali at Hajipur. The petitioner Company was manufacturing plyboard for which purpose it was purchasing raw materials from different places including Calcutta. It had purchased a consignment of raw materials, namely, veneer, from Suradhani Chemical and Board Mfg. Co. (P.) Ltd., Calcutta, to be used for manufacture of finished products at its Hajipur unit. The consignment left Calcutta on 26.12.1991 by Truck No. BHA-4115 whether the destination was Patna or Hajipur is the question which gives rise to the present lis. The truck left Calcutta on 26.12.1991, and was intercepted at Hajipur on 28.12.1991. The Driver was given three hours‟ time to explain as to why the truck was found in Hajipur, when the challan and other documents had shown Exhibition Road, Patna, as the destination. The matter was taken up after three hours on 28.12.1991, and by order of the same date, i.e. 28.12.1991 (Annexure-5), it was held that the consignment was intercepted at Hajipur in contravention of section 31 (2a) of the Act. Therefore, penalty in terms of Section 31(3) of the Act was imposed and was quantified at Rs.33,916/-. The truck was detained by the Sales Tax authorities and was released on deposit of Rs.33,917/-, on 31.12.1991 (Annexure-6). The petitioner challenged the same by preferring appeal before the learned Joint Commissioner of Commercial Taxes (Appeals), Central Division, Patna, which was rejected on 9.6.1992. The petitioner approached the Commercial Taxes Tribunal, Bihar, Patna by preferring Case 3 No.PT-169/92, which was allowed by order dated 14.9.1992 (Annexure-7), the order of penalty was set aside, and was remitted to the learned first authority to reconsider the matter on the sole ground that the petitioner had not been given adequate time and opportunity to explain his position. On a reconsideration of the matter, the learned Deputy Commissioner has rejected the claim of the petitioner by the impugned order. Hence this writ petition at the instance of the petitioner. 3. We have perused the materials on record and considered the submissions of learned counsel for the parties. We should first of all acquaint ourselves with the provisions of law which govern the present matter. Section 31 of the Act headed “Furnishing of information by clearing and forwarding agents and seizure of goods carrier etc. Sub-sections (2a) and (2b) and (3) of Section 31 are relevant in the present context and are reproduced hereinbelow: 31. Furnishing of information by clearing and forwarding agents and seizure of goods carrier etc.- xxx xxx xxx xxx xxx xxx xxx xxx (2a) A person transporting goods shall carry a declaration in such form as may be prescribed by the Commissioner supported by a cash memo or bill in case the movement is as a result of sale or a chalan in case the movement is otherwise than as a result of sale, in respect of goods which is being transported on a goods carrier, vehicle or a vessel or is otherwise in transit or in transit storage and shall produce such cash memo or bill or challan as the case may be, along with the aforesaid form of 4 declaration on demand before the prescribed authority; Provided that the Commissioner, by notification in this respect, may prescribe a form of declaration or adopt a form of declaration or permit prescribed for the purpose of sections 34 and 35 of this part, and he may also prescribe in the said notification, the manner in which such declaration or permit shall be utilised for verification and assessment of tax payable under this part; Provided further that the Commissioner may exempt any person or dealer or class of registered dealers from the requirement of this sub-section. (2b) The prescribed authority may in order to verify that the transportation of goods is being made in accordance with the provisions of sub-section (2a) intercept, detain and may search any carrier, vehicle or vessel and may also search the warehouse or godown or any other such place of transit storage, where goods are kept in course of transportation, and, if the said authority is satisfied on such verification and search that the transportation of goods is being made in contravention of the provisions of sub-section (2a) or in a manner which is likely to lead to evasion of tax payable, he may, notwithstanding anything contained in this part, seize the goods or the carrier or vehicle or vessel along with the goods and documents relating to the goods and the carrier, vehicle or vessel. (3) If any clearing, booking or forwarding agent or Dalal or person transporting goods contravenes the provision of sub-section (1) or (2a) in a manner which is likely to lead to evasion of any tax payable under this part, the prescribed authority may, without any prejudice to any action under Section 49 of this part on the charge of abetment, after giving the person concerned an opportunity of being heard in the manner prescribed, direct him to pay by way of penalty, an amount which shall be equal to three times the amount of tax calculated on the value of goods in respect of which no particulars or information or incorrect particulars or information has been furnished under sub-section (1) or no cash memo or bill or challan and the prescribed declaration by the Commissioner under sub-section 5 (2a) has been produced before the prescribed authority under sub-section (2a) or rupees one thousand whichever is greater. Explanation. - For the purpose of this sub- section- (i) “Dalal” shall include a person who renders his services for booking of, or taking delivery of, consignment of goods at a Railway station, booking agency, goods transport company office, or any place of loading or unloading of goods or contrives, makes and concludes bargains and contracts for or on behalf of any dealer for a fee, reward, commission, remuneration or other valuable consideration or otherwise. (ii) “Person transporting goods” shall, besides the owner, include the manager, agent, driver employee of the owner, or person in charge of a place of loading or unloading of goods other than a rail-head, or a post office, or of a goods carrier carrying such goods, or a person who accepts consignments of such goods for despatch to other places or gives delivery of any consignment of such goods to the consignee. It appears to us that if movement of goods creates an impression that if transportation of goods is likely to lead to evasion of tax, then penalty may be imposed in terms of sub-section (3) of Section 31 of the Act. It thus appears to us that, before the authorities decided to impose the penalty, they had to be satisfied that the movement of goods was likely to result in evasion of tax. 4. It appears to us that the petitioner is registered under the Companies Act, having its registered office at Exhibition Road, Patna. It further appears that its manufacturing unit is at Industrial Area, Hajipur, in the township of Hajipur, District- Vaishali, at Hajipur. It is relevant to state that the township of Patna and 6 township of Hajipur are separated by river Ganga and connected by a bridge. The petitioner company was manufacturing plyboard at its Hajipur unit for which it was purchasing raw materials from outside the Bihar. The consignment in question was a truck loaded with veneer purchased from Suradhani Chemical & Board Mfg. Co. (P) Ltd., Calcutta. A photo copy of the bill/Challan dated 26.12.1991, is marked Annexure-3, and was valued at Rs.86,170.90p. A photo copy of the declaration dated 26.12.1991 is the road permit issued by the Commercial Tax Department, West Bengal, indicates transportation of the goods to Bihar from West Bengal. Annexure 3/B is the photo copy of the road permit and is dated 26.12.1991. It is relevant to state that the chalan (Annexure-3) states M/s Jagdamba Ply-Board Industries (P) Ltd. with its address 503- Ashiana Chamber, Exhibition Road, Patna-800001. Annexures 3, 3/A and 3/B mention M/s Jagdamba Ply-Board Industries (P.) Ltd. as the purchaser. Annexure-4 is the gate-pass for removal of excisable goods from a factory or warehouse on payment of duty and is dated 26.12.1991. It mentions just the same description of goods, the kind, quantity and quality of goods as mentioned in Annexure-3 series. These were surely the documents placed before the learned first authority on the first occasion as well as on the second occasion which is evident from a perusal of the two orders. The calculation of penalty is based on these documents. 4.1) We would also like to notice a few other documents. Annexure-1 is a photo copy of the registration certificate dated 7 12.10.1990, issued by the office of the Managing Director of North Bihar Industrial Area Development Authority, Muzaffarpur showing the petitioner‟s registration office at Exhibition Road, Patna, and shows allotment of manufacturing site in Industrial Area, Hajipur, for production of Commercial Plyboard. Annexure-1/A is dated 18.1.1992, and is the final certificate of registration. This mentions that the factory is located at Industrial Area, Hajipur. Annexure-2 is a photo copy of the petitioner‟s registration as dealer with the Deputy Commissioner of Commercial Tax, Special Circle, Patna, and is under the provisions of the Bihar Finance Act 1981.These documents may or may not have been before the learned Deputy Commissioner. 5. The combined effect of the aforesaid documents is that the goods were purchased in Calcutta on payment of sales tax on the goods in question under the West Bengal Act. The same had been transported from Calcutta to Bihar by road and in a truck. The documents further create a clear impression in our minds that the petitioner‟s registered office is at Exhibition Road, Patna, and the manufacturing unit is at Hajipur. It is elementary to state that the raw materials in such big quantity cannot be meant for the registered office, and the destination was really the manufacturing unit at Hajipur separated by river Ganga only. The petitioner‟s address in some of the documents mentioned is Exhibition Road, Patna, for full identification of the petitioner for purchase, sale, and ownership of the goods. In such a situation, we do not find it 8 possible to conclude that the goods could not have been transported to the Hajipur unit in a situation, where some of the documents mentioned Exhibition Road, Patna, as the consignee‟s address. Secondly, the goods were after all purchased in Calcutta on payment of sales-tax under the West Bengal laws, and had been validly transported by road to Bihar. The documents appear to us to be complete and had been brought to the notice of the learned authorities under the Act who perhaps refused to attach value to those documents. It was obviously a mala-fide act on the part of authorities to harass the petitioner for ulterior motives. 6. All Companies in Bihar are registered with the Deputy Commissioner of Commercial Tax, Special Circle, with its sole office in Patna. The petitioner‟s manufacturing unit at Hajipur has been allotted to it by an instrumentality of the Bihar Government and is supported by valid documents. 7. We further feel unhappy that, in spite of the order of remand passed by the learned Tribunal, the learned Deputy Commissioner upheld the penalty on wholly unconvincing and perfunctory grounds. The impugned order dated 18.11.1992 thus makes a poor reading and shows inveterate determination to uphold the penalty. He has not examined the documents placed before it, has shown no sense of justice, and has assigned most unconvincing reasons in support of the order. For example, it attaches importance to the appellate order which has gone against the petitioner, little realising that the appellate order has merged into the revisional 9 order passed by the Tribunal as a result of which the appellate order has lost all identity and existence. It was revisional order which is alone in force and will govern the issue. He also most illogically attaches importance to the fact that three hours‟ time was adequate for him to explain the situation little realising that this aspect of the matter has not favoured with the Tribunal and was, therefore, remitted back to him for a fresh consideration. Instead of attaching any importance to this aspect of the matter, he was duty bound in law to examine all the documents to appraise due legal importance which he completely failed to do. It is a case of purposive evasion of duties and functions. 8. It is evident that the learned Deputy Commissioner of Commercial Tax, Hajipur, was bound in law to record the requisite finding that movement of goods was likely to result in evasion of tax. When he has not examined the documents where is the question of such a finding? Such a finding by the very scheme of the Act has to be objective and the learned authority has to record a finding that it is in contravention of sub-section (2a) and shall likely to result of evasion of tax. No such finding has been recorded which renders the impugned order bad in law. Learned counsel for the petitioner has rightly relied on the judgment of a Division Bench of this Court in M/s East India Transport Agency Vs. The State of Bihar and others, reported in 1995 (1) P.L.J.R. 647. 9. In the result, this writ petition is allowed, and the order dated 18.11.1992 (Annexure-8) is hereby set aside. The 10 learned Deputy Commissioner of Commercial Tax, Hajipur Circle, is hereby directed to refund a sum of Rs.33,917/- along with interest at the rate of 6% from 31.12.1991, till the date of refund. He shall ensure refund of the same within a period of three months from the date of receipt/production of a copy of this order. (S.K. Katriar, J.) J.N. Singh, J. I agree. (J.N. Singh, J.) Patna High Court, Patna. Dated the 10th day of August, 2010. S.K.Pathak/ (NAFR)