Allahabad High Court has held that tax liability cannot be fixed on the transporter merely because the assessee/transporter did not furnish the details of the consignor and the consignee of the completed transactions. The Court observed that merely because the Section 8A(5) of the U.P. Trade Tax Act, 1948 and Rule 84A of the U.P. Trade Tax Rules create certain obligations on transporter, it cannot be concluded that in the event of breach of the same, occurrence of taxing event at the hands of the transporter can be presumed.
FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT
1. Present revision has been filed by the assessee, who is a transporter, against the order dated 15.4.2008 passed by the Commercial Tax Tribunal, Meerut Bench II, Meerut in Second Appeal No.95 of 2002 for A.Y. 1998-99 (U.P.). By that order, the Tribunal has rejected the appeal filed by the assessee against the best judgment assessment made against the assessee.
2. Heard Sri Suyash Agrawal, learned counsel for the revisionist-assessee and Sri B.K. Pandey, learned counsel for the respondent-revenue.
3. Present revision has been heard on the following question of law:-
“(i) Whether in absence of any statutory provision enabling the revenue to draw and rely on any presumption as to trading performed by the assessee/transporter, any tax liability could have been fixed merely because the assessee did not furnish the details of the consignor and the consignee of completed transactions?”
4. During the assessment year in question, the assessee had engaged in the activity of transportation of goods. Thus, it was a carrier under the Carriers Act 1865. A survey was conducted at the business premises of the assessee at T.P. Nagar, Meerut on 19.3.1999. During that survey, bilty books found present were examined. Those disclosed transportation of large quantities of empty LPG cylinders. However, the names and other details of the consignor and the consignee involved in such transactions, were not fully recorded. At the same time, it may be noted here itself, not a single transaction of transportation of such empty LPG cylinders was stopped for checking while such goods were being transported by the assessee and no information with respect to such ongoing transaction was ever required to be furnished by the assessee, at the relevant time.
5. However, the Assessing Officer required the assessee to furnish the details of the consignor and the consignee together with their names and addresses with respect to completed transactions found recorded in the bilty books examined during the survey. Since the assessee expressed its enability to furnish those details, an adverse inference was drawn against the assessee of having itself engaged in the activity of trading in empty LPG cylinders. Accordingly, the assessee was assessed to tax on best judgment assessment basis on a total turnover of Rs.1,90,00,000/- and total tax of 10,00,000/- was imposed thereon. The challenge by the assessee was sustained in first appeal and the entire disputed tax was deleted. However, upon further appeal filed by the revenue, the same has been allowed in part. While, the issue of liability of the assessee had been decided against the assessee, the quantification on the best judgment assessment had been reduced.
6. Learned counsel for the assessee-revisionist submits that the activity of transportation of goods engaged by the assessee is governed by the provisions of Carriers Act, 1865. It nowhere obligates the assessee to maintain any system of accounts wherein, full details of the consignor and the consignee may be maintained. Insofar as, the provisions of the U.P. Trade Tax Act, 1948 (hereinafter referred to as ‘the Act’) is concerned, the same also does not require a transporter to maintain accounts from which the assessee may have been in a position to disclose to the taxing authority the full name and particulars of the consignor and the consignee. In such circumstances, it has been submitted that there is no statutory presumption or rule of evidence on which the revenue authorities may have relied to reach an adverse inference of the assessee having engaged in the activity of trading in empty LPG cylinders. Also, it has been submitted, there is complete lack of evidence of the assessee having ever engaged in the activity of trading in empty LPG cylinders. The Assessing Authority merely drew an adverse inference solely for the reason of the assessee having not given him the details of the consignor and the consignee. Therefore, the making of the best judgment assessment and the quantification of the turnover have been assailed as grossly perverse and based on no evidence.
7. Learned Standing Counsel has relied on the provisions of Section 8-A (5) of the Act and Rule 84-A of the U.P. Trade Tax Rules 1948 to submit that once the assessee, who is a transporter, failed to furnish the details sought from him, the statute allowed a presumption to be raised against him that he had sold the goods transported by him. Thus, it has been submitted that there is no error in the best judgment assessment made by the revenue authorities. As to the quantification, it has been submitted that sufficient relief has been granted by the Tribunal and therefore, no further relief may be claimed by the assessee.
8. Having heard learned counsel for the parties and having perused the record, in the first place, it would be relevant that the provisions of Section 8- A (5) and Rule 84-A of the Act may be taken note of. They read:-
“(5) Where any dealer transports any goods liable to tax, by a vehicle, he shall furnish to the transporter or driver or any other person-incharge of the vehicle, a duly filled goods transport memo in the prescribed form and the transporter or the driver or the person-incharge of the vehicle carrying such goods shall, on demand by an officer authorized under Sub-Section (2) of Section 13, produce such memo for his inspection. If the transporter or the driver or the person-incharge of the vehicle fails to produce such memo on such demand it shall be presumed:-
(a) The dealer has not accounted for such goods with a view to evade payment of tax; or
(b) If the dealer of such goods is not ascertainable, the transporter, and if the transporter is also not ascertainable the owner or the person-incharge of the vehicle, as the case may be, is transporting such goods in his own account;
and such dealer, transporter, owner or person-in-charge of the vehicle, as the case may be, shall be assessed, and be also liable to penalty in accordance with the provisions of this Act.”
“(1) The transport memo shall be in form XLIX, issued by Assessing Authority.
(2) No blank form shall be issued except on payment of fee by the dealer at the rate of rupee one, per form.
(3) Dealer shall duly fill the form and bifurcate it across the line just above the amount, which covers the minimum value of goods and it shall be carried along with the goods.
(4) Dealer shall keep the account of used form, retain its remaining portion and give the details to the Assessing Authority as and when asked by him.
(5) Owner or in-charge of the vehicle, shall duly fill and deliver the form, to the purchasing dealer at the time of delivery of such goods.
(6) The purchasing dealer shall retain the used form safely till the completion of assessment proceeding and shall produce it as and when demanded by the Assessing Authority.
(7) The provision of sub-rules (2) to (5), (7), (9), (10) and (13) to (16) of rule 85 shall mutatis mutandis apply to a form issued under this rule.”
9. Clearly Section 8 A(5) of the Act is not with respect to completed transactions of transportation of goods. Rather it is a provision that governs the conduct of the parties while the goods are in course of transportation. It is in that regard that the Act provides that the dealer would handover to the transporter complete documents/prescribed forms and the transporter or a person-in-charge of the vehicle (who would be carrying such goods during transportation), shall on demand, made under Section 13 (2) of the Act, produce such documents etc. for inspection. It is in the event of failure to discharge such obligations that an adverse presumption has been provided to be drawn on presumptive basis.
10. It is true that the presumption would remain rebuttable. However, that question does not call for attention in the present facts. It is not the rebuttable nature of the presumption drawn under Section 8-A (5) of the Act but whether the pre-conditions to draw such presumption arise in the facts of the present case, that requires consideration.
11. The fact that Section 8-A (5) of the Act postulates a presumption, may arise if the transporter or the driver or the person-in-charge do not produce the necessary documents for inspection under Section 13 (2) of the Act, it conclusively establishes that the demand for such documents may be made only at the time when the goods are under transportation and before they are seized. Once the goods have completed their journey, there is no jurisdiction remaining with any authority to act in exercise of powers under Section 8-A (5) of the Act and to demand those Documents that may not have been subjected to inspection or seizure may never give rise to proceedings with reference to Section 8-A (5) of the Act after conclusion of the transaction of transportation of the goods.
12. In view of the above, reliance placed by learned Standing Counsel of the provisions of Section 8-A (5) of the Act is found to be misplaced. Similarly, Rule 84-A of the Rules does not place any obligation and it does not provide for any presumption to be drawn against the transporter.
13. Merely because the Act and the Rules read with together create certain obligations on the transporter in the conduct of its business, it would not be enough to reach a conclusion that in the event of breach of the same, an irrebuttable or rebuttable presumption may arise as to occurrence of a taxing event taking place at the hands of the transporter.
14. By very nature of things, the transporter is not a person who is engaged in trading in goods. He is merely a bailee of the goods. For a tax liability to arise at his hands with respect to the goods under his bailment, a statutory provision would have to pre-exist or else, no liability may be fixed upon him. No such provision is found existing with respect to completed transactions.
15. As to the facts of the case, in absence of any material or evidence being brought on record to establish that though the assessee was a transporter but had engaged in trading in goods, again it could never be said that the assessee was liable to pay tax. It was for the revenue to have brought evidence to establish that the assessee had engaged in trading activity. That evidence being lacking the best judgement assesment and quantification of turnover are found to be with no legs. The question of law is answered in favour of assessee-revisionist and against the revenue-respondent.
16. In view of the above, the impugned order dated 4.2008 passed by the Commercial Tax Tribunal, Meerut Bench II, Meerut in Second Appeal No.95 of 2002 for A.Y. 1998-99 (U.P.) is set aside. The revision is allowed.