VAIBHAV LAMINATES Vs. DEPUTY COMMERCIAL TAX OFFICER IV

JUDGEMENT

(1.) The petitioner is a registered dealer engaged in purchase and sale of laminated sheets. He is an assessee for the purpose of sales tax. The petitioner's assessments were being made every year under the provisions of the Andhra Pradesh General Sales Tax Act, 1957 and the Central Sales Tax Act, 1956 (hereafter referred to as "the State Act" and "the Central Act", as the case may be). According to the petitioner, he has been paying taxes on the sale turnovers registered in the books of account and disclosed to the department in the monthly returns. The laminated sheets were also liable to tax at the rate of 12 per cent in terms of the relevant entry No. 17A of the Sixth Schedule to the Act which provides levy of tax at every point of sale. The laminated sheets were not liable to tax at the point of purchase. The petitioner submitted that he effected inter-State purchases of laminated sheets from one M/s. Durban Ltd., in Gujarat and inter-State purchase was covered by relevant documents, viz., invoice issued by the consignor, lorry receipt and advance way bill of the petitioner and the said consignment was being carried in goods vehicle bearing No. AP 9 V 1576 of Bombay Andhra Transport Organisation. While the vehicle was carrying the goods during the course of inter-State trade or commerce in transit, it was inspected on July 26, 2004. The inspection, according to the petitioner, revealed that transportation of laminated sheets was covered by Invoice No. 153, dated July 22, 2004 issued by the manufacturer. According to the instructions issued by the Commissioner of Commercial Taxes through a circular, every dealer who was purchasing laminated sheets from outside the State was supposed to issue advance way bills and accordingly the consignment was covered by way bill. According to the petitioner, no irregularities or defects or omission were found by the inspecting authorities in regard to the transportation of the goods. However, the respondent issued a detention notice on July 27, 2004. It is submitted that there is no power under the State sales tax law to detain the goods, though the power is vested with the authorities to seize the goods and take further action thereafter including confiscation, if found that the goods were not accounted for. As such the notice issued on July 27, 2004 was without authority of law. The petitioner further submitted that having found no defect or irregularity in the documents accompanying the goods, the respondent maintained that the sale price of the goods contained in the sale bill was less than the prevailing market price in the State of Andhra Pradesh, therefore the goods were detained with the vehicle pending enquiry and a notice has been issued on July 27, 2004 to the driver of the vehicle Mr. Jafar. It is further submitted that the excise duty-cum-invoice challan No. 153 issued by the outside State supplier mentions the basic excise duty as well as the cess levied under the provisions of the Central Excises and Salt Act, 1944. The respondent, on July 26, 2004, issued a notice to the petitioner requesting him to quote the price/value at which he intends to sell the goods covered by the invoice for taking necessary action in the matter. The petitioner further contended that though he was under no obligation, yet showing respect to the sovereign State, he submitted a letter on July 29, 2004 indicating the proposed sale price which was inclusive of sales tax payable at 12 per cent and other expenses. But the respondent detained the consignment on July 27, 2004 and entrusted the detained goods only on Aug. 10, 2004 to the Central Warehouse. It is submitted that the action of the respondent in detaining the goods with vehicle was without authority of law. It is contended that even if it is assumed that the power of seizure of goods could also authorise the respondent to detain the goods, nevertheless such action was arbitrary, improper and unjust as the documents were not defective. It is also contended that the goods vehicle along with the goods could not be detained for an alleged suspicion that the sale price charged by the manufacturer in other State for the goods sold to the petitioner was less than the local market price in Hyderabad. The question of under invoicing of goods would only arise if the petitioner had sold the goods in Andhra Pradesh, but the goods were detained while they were in transit. Sec. 38 of the State Act clearly prohibits the applicability of the provisions of the State Act to inter-State purchases or sales, as the case may be. It is also contended that the authorities of the department have no power to detain the goods and the provisions of the Central Act cannot be invoked by the authorities of the department in exercise of power under the State Act as the inter-State sale cannot be interfered with by the authorities under the State Act. In these circumstances the writ petition was filed and a direction was sought that the respondent should release the goods, i.e., laminated sheets to the petitioner.

(2.) Counter-affidavit was filed by the respondent-Deputy Commercial Tax Officer, in which he submitted that while he was discharging his official duties duly undertaking the vehicular traffic check on July 27, 2004 at M.J. Market, near Osmanganj, Hyderabad, he inspected a lorry bearing No. AP 9 V1576 which contained laminated sheets. The driver of the vehicle was asked to produce the documents relating to the consignment in question. The driver produced the documents. The documents revealed that the price shown for the goods, i.e., laminated sheets was far below the market price. Therefore, in his opinion, there was a prima facie case against the petitioner about his indulgence in clandestine activity and in resorting to suppression of turnover for the purpose of evading sales tax on the true value of the goods. Therefore for further verification into the matter, a detention notice was issued on July 27, 2004 in exercise of the powers vested under Sec. 29 of the State Act. Thereafter an enquiry was made which revealed the following results:

(3.) It is also submitted in the counter that the petitioner filed a letter on July 29, 2004 quoting a price of Rs. 220 per laminated sheet excluding sales tax at 12 per cent. It is submitted that the petitioner having given the quotation has committed himself to sell the goods to the department at the rate indicated in the quotation. In the normal trade practice every dealer who issues a quotation for the sale of goods would readily come forward to effect sale, if the quotation given by him is accepted by the purchaser. However in the present case, for obvious reasons, the petitioner went back on the quotation given by him as he knew that the price quoted by him was far below the prevailing market price. It is further submitted that the petitioner purchased the goods, according to the papers, at Rs. 180 per laminated sheet of 8 x 4 having a thickness of 1 mm and he quoted the price of Rs. 220. The petitioner now could not complain any financial loss as the department was offering the price quoted by him. The department has also accepted the offer given by the petitioner to purchase the laminated sheets at the rate of Rs. 220 per sheet and accordingly the petitioner was requested to raise a sale bill in favour of Joint Commissioner (Enforcement) along with advance cash receipt voucher. The petitioner having received the said notice did not respond. Subsequently a notice was issued to him on Aug. 18, 2004. It is submitted that Sec. 38 of the State Act has no application to this case. It is further submitted that the petitioner was afforded personal hearing on Aug. 21, 2004. However he did not appear personally, but sent a letter dated Aug. 21, 2004 stating therein that the personal hearing was useless in view of the matter pending in the High Court.