Hon'ble Dr. Satish Chandra,J.
Heard Sri S.M.K. Choudhary, learned counsel for the petitioners and Sri H.P. Srivastava, learned Additional Chief Standing Counsel for the respondents and perused the record.
In this bunch of writ petitions, common question of facts and law is involved. Hence, with the consent of the parties' counsel, we proceed to decide these writ petitions by the present common judgment.
The petitioners have preferred these writ petitions under Article 226 of the Constitution of India with the grievance that they have established City Booking Agencies in the city of Lucknow which is a part and partial of the Railway Administration under Section 28-A(8) of the Trade Tax Act. The consignment could not be seized as the goods shall be deemed to be that of the railways. According to petitioners' counsel, the goods of City Booking Agencies have been seized by the Trade Tax Department of the State without taking note of the terms and conditions of the agreement entered with the railways. The 'City Booking Agency' is a part and partial of the railways, hence the Trade Tax Department lacks jurisdiction to seize the goods or impose penalty.
In some of the cases, penalty has been imposed, being not satisfied with the reply submitted by the petitioners and in some of the cases notices have been issued and penalty has been imposed under Section 15A(1)(K) of the Trade Tax Act and in some of the cases, the Assessing Officer has passed the order imposing trade tax on the petitioners.
By an interim order passed by this Court, the goods were released.
While assailing the action of the respondents with regard to all these four categories of cases, Sri S.M.K. Choudhary, learned Senior Counsel submits that law has been settled by the Division Bench of this Court that City Booking Agencies are part and partial of railways, hence they are not liable to pay the trade tax. He has invited attention of the Court to the fact that earlier a Division Bench of this Court has decided the identical issue and thereafter the matter went to Hon'ble Supreme Court. Their Lordships of Hon'ble Supreme Court remitted the matter directing the High Court to decide the issue afresh with conclusive finding as to whether the 'City Booking Agencies' are part and partial of the railways in terms of the definition under the Railways Act or not ? Thereafter, the Division Bench of this Court, by judgment and order dated 29.07.1997, passed in Civil Misc. Writ Petition No. 914 of 1985 decided the issue. A copy of the Division Bench's judgment dated 29.07.1997 has been filed as Annexure No. 1 to the writ petition.
A perusal of the judgment reveals that the controversy in question was thoroughly considered by the Hon'ble Supreme Court and later on, by the Division Bench of this Court. Hon'ble Supreme Court while considering the dispute during the first round of litigation held that whenever Assessing Authority decide an issue, then it is open for the aggrieved party to prefer a statutory appeal against the order passed by the Assessing Authority. In view of above disputed question of fact and law, the finding so recorded by the assessing authority, the order should be challenged before the Appellate Authority and Appellate Authority has ample power to decide the question on the issue involved therein.
The Division Bench of this Court in the case of Union of India vs. Sales Tax Officer, while deciding the controversy by judgment and order dated 29th July, 1997 has reproduced the observation of the Hon'ble Supreme Court which, for convenience, is reproduced as under:-
"Having so observed, the Supreme Court reproduced the reasoning of the High Court and thereafter held in para 5 at p.278 as follows :
".............But before we consider the provisions relevant to the above contention, it is necessary to clarify that the question whether the goods being transported from the Railway godown were being in fact transported to city booking agency (assuming for a moment that it is part of Railway) is always a question of fact. Mere claim to that effect is not conclusive. In fact, the grievance of the sales tax authorities is that a large scale evasion is going on under the cover of transporting the goods from the Railway Station to the city booking agencies. Their case is that goods are being transported to the premises of dealers under the guise of and with the connivance of the said agencies and that this fraud is resulting in loss of crores of revenue to the state. We shall therefore, first examine whether the High Court was justified in interfering with the finding of fact recorded by the Deputy Commissioner in this case ? Now, the power of the sales tax authorities to stop and check the goods being transported to satisfy themselves that they are being validly transported is undoubted. If they are satisfied that the goods being transported were imported into the State of Uttar Pradesh but that they are not accompanied by the documents/forms required by the Act and the Rules they are entitled to seize the goods and levy the tax and penalty as is provided by law. The said power necessarily includes the power to decide the question whether the goods in fact were being transported to city booking agency or to some other place. In the present case, a finding was recorded by the Deputy Commissioner that the story of transport of the said seized goods to the city booking agency, Bhoosa Toli is untrue, for the several reasons recorded in his order. He was of the opinion that the goods were really being taken to some other place and since they were not accompanied by the requisite documents/forms, they are liable to be seized. The said finding is one of fact which could have been and ought to have been questioned in an appeal provided by the Uttar Pradesh Sales Tax Act. It was not done and the High Court was approached directly by way of a writ petition. We must say, with due respect to the Division Bench of the High Court, which decided the matter, that they interfered with the finding of fact without even referring to the several grounds on which it was based. We have set out hereinbefore the several grounds on which the finding of the Deputy Commissioner is based and the reasons for which the said finding was set aside by the High Court which clearly establishes that the High Court has not even referred to all the reasons and grounds assigned by the Deputy Commissioner and yet set aside his finding. Moreover, a writ court cannot interfere with a finding of fact unless the finding is based on no evidence or is perverse, i.e., a finding which no reasonable person would have arrived at".
(Emphasis supplied) It will be seen that the Supreme Court set aside the judgment of the High Court quashing the order of the Deputy Commissioner and, inter-alia, remitted the question whether the Deputy Commissioner was right in holding that at the time of the seizure, the goods were not in custody of the railway and the Sales Tax authorities were free to seize the goods under Section 13-A(6) and no protection as provided under sub-section (8) of Section 28-A could be availed of by the petitioners, for consideration afresh according to law. From the above reproduced and delineated portion of the judgment of the Supreme Court, it is manifest that the finding recorded by the Deputy Commissioner is a finding of fact which ought to have been questioned in an appeal, provided under the Act, if the petitioners felt aggrieved of that. In the light of these observations of the Supreme Court. We refrain from entering into the findings of fact, recorded by the Deputy Commissioner and hold that the petitioners may challenge such finding of the Deputy Commissioner which is a finding of fact in appeal, if not already challenged.
The Supreme Court yet observed towards the end of para 5 p.278 as under:
"This finding of ours should have concluded the civil appeal but we were requested by both the parties to determine the larger question, viz., whether the Railway booking agencies do or do not form part of the "Railway" ? While we agree that the said question should be decided, we find that the relevant material is not placed before us for determining the said question and for that reason, the matter requires to be remitted to the High Court."
The Supreme Court remitted the question: whether the city booking agencies established at Kanpur- or for that matter anywhere else in the State of Uttar Pradesh fall within the expression "Railway" as defined in Section 3(4) of the Railways Act, 1890 or Section 3(31) of the Railways Act, 1989?"
In pursuance to the observations made by the Hon'ble Supreme Court, the Division Bench further considered the various provisions of Railways Act, 1890 as well as Railways Act, 1989 and the Railway Establishment Manual (in short, 'Manual') containing the procedure with regard to transaction of business. The Division Bench noted that Railway Commercial Manual, Vol-2, which is the compilation of the instructions regulate the procedure with regard to out-agencies, in the present case, 'City Booking Agency'. The Division Bench held that instructions contained in the Manual apply with regard to City Booking Agencies, which shall be deemed to be 'out agencies' provided in Para 2604 of the Manual. The finding recorded by Division Bench in the aforesaid case is reproduced as under:
"Para 2604 provides that all passengers, luggage, parcels and goods traffic offered for despatch at the out-agency should be booked direct to destination stations including out-agencies open for receipt of such traffic. No traffic should, however, be booked from an out-agency to its serving station. The expression "serving station" in this para means a station of which the out-agency is an extended hand. An out-agency is nothing but a sub-office of a railway station. The railway station of which work is undertaken and shared by an out agency, is called the serving station.
Para 2605 says that the tickets, way bills, invoices and other money value books and forms prescribed for use at the railway stations should be used by the out-agencies also. All the rules laid down for the indent, examination, custody, issue and use of such tickets, books, forms etc. in this Manual or notified separately to the staff, will equally apply to the out-agencies. Para 2606 fictionally states that the booking of traffic from the out-agency should be carried out as if the out-agency is constituted by the railway administration."
The Division Bench also considered the fact that the City Booking Agencies having entered into agreement with railway to regulate their services and thereby the City Booking Agencies have been conferred power to do all such things which are ordinarily done by the railways, as out-agency. They are substituted with all obligations which are to be discharged by the railways. The observation of the Division Bench in the aforesaid judgment is reproduced as under:
"We have also gone through the agreement deed entered into between M/s Kamal Prakash Ashok Kumar - contractor of the City Booking Agency, Bhoosa Toli, Kanpur, Annexure-1 to the supplementary affidavit (no agreement of any other contractor is filed by the railway). The said agreement deed does not contain any condition contrary to the instructions, as contained in the Manual. From the above reproduced instructions and the agreement deed, it is amply clear that the city booking agency is the extended hand of the Railways. The goods are booked at the city booking office in the same fashion as they are booked at the serving station. The city booking agency is set up only to facilitate the booking of traffic. If one does not find it convenient to go to the Railway Station, he can get his goods booked or ticket reserved at the city booking office. City booking office is nothing but an extended hand or a sub office of the railway station. The city booking agency is fully controlled by the railway administration. For booking and transporting the goods, the contractor of the city agency receive remuneration for the services rendered as per the contract and the contractor is fully responsible for the safety of the goods as is the railway administration. It is the duty of the city booking agency to account for the entire parcels to the serving station and also the entire receipts. The city booking agency is required to maintain the same document/forms and that has to follow the same procedure as prescribed in the Manual for the railways.
From the Manual and the agreement deed, the only inference that can be drawn is that the city booking agency is nothing but an office of the railway and hence 'railway' within the meaning of Section 3(4) of the Act of 1890 and of section 2(21) of the Act of 1989. Legal position of other city booking agencies will be the same if their agreements do not contain any condition, contrary to the instructions, as stated in the Manual. But in this case, agreements of other agencies having not been filed, we will confine our observations only to the city booking agency being run by M/s Kamal Prakash Ashok Kumar."
In view of above, there appears to be no dispute with the proposition of law as argued by Sri S.M.K. Choudhary, learned Senior Counsel that the 'City Booking Agencies' shall come within the definition of 'Railway' and tax may not be imposed by the respondents with regard to the goods lying in the custody of 'City Booking Agencies'.
However, dispute arises when a doubt is raised about the transaction of goods transported from the railway station to the City Booking Agency and thereby the Trade Tax Department of the State intercept the goods and, in case, reply given by the City Booking Agency is not found to be satisfactory and the goods are seized, then either the penalty is imposed or assessment is done for the purpose of tax. This aspect of the matter has also been dealt with by the Division Bench of this Court (supra). The Division Bench held that whenever the goods are transported from the railway station to the City Booking Agencies and version of the contractor is not found to be satisfactory or the contractor does not possess requisite document, then it shall be incumbent upon the Trade Tax Officer of the Department (now VAT Act) to call for the record from the railways and in case from the record furnished by the railways, it is found that the goods seized or intercepted were transported to the City Booking Agencies which works/functions in accordance to the agreement, then such goods neither can be seized nor penalty can be imposed or may take into custody for the assessment under Trade Tax Act (now VAT Act). The observations made by the Division Bench of this Court (supra) dealing with this aspect of the matter is reproduced as under:
"Before parting with the case, we would like to observe for the advantage of the departmental authorities that before seizing the goods being allegedly transported to the city booking agency from the railway station, they should ordinarily verify the version of the contractor of the city booking agency from the record of the railway administration. It may not be possible for the contractor of the city booking agency to produce the entire material before the departmental authority right at the spot where the goods are intercepted, but the material to the satisfaction of the departmental authorities might be available with the railway administration, where requisite forms/registers/documents are maintained in connection with the booking and receipt of the parcels. Simply because the instructions compiled in the Manual do not obligate upon the railway administration to supply all the documents in support of the fact that the goods had been received at the serving station and they were being transported to the city booking agency for being delivered to the respective consignees and for that reason goods-in-transit are without documents, no immediate inference could be drawn that the goods sans documents were being transported to an unknown destination. The goods will normally be transported from the railway station to the city booking office under gate passes or other documents, prescribed under the Manual, but the goods-in-transit may not be accompanied by entire materials, available with the railway administration to establish the goods, in fact, had been booked from outside to the city booking agency and they were being transported to the city booking agency from where the consignees are expected to take the delivery. The authorities before seizing the consignment-in-transit, should satisfy, as far as possible, and as the fact situation of a given case demands whether necessary materials in support of the contention of the railway administration/city booking agency are available with the railway administration. If such course if followed then that would surely abviate avoidable litigation."
Sri S.M.K. Choudhary, learned Senior Counsel has invited attention to another judgment of this Court, reported in 1998 U.P.T.C. 1214 City Booking Agency, Lucknow and another vs. Trade Tax Officer, wherein the Division Bench of this Court has quashed the demand notice on the ground that the goods seized were belonging to the city booking agency.
Keeping in view the settled proposition of law and also the fact that city booking agency has been held to be 'railway' for the purpose of Trade Tax Act and for the goods, in transit, to the city booking agency, the protection shall be available as envisaged in sub-section (8) of Section 28-A of the Act. Taxing Authorities will have no right to interfere in possession of the goods by the petitioners.
In view of the pronouncement of this Court (supra) and also the observation made by the Hon'ble Supreme Court while dealing with the four categories of cases mentioned (supra), we dispose of these writ petitions with the following directions :
(a) in those cases where assessing authority has already passed assessment order and against which statutory appeal lies, it shall be open to the petitioners to prefer an appeal within a period of one month. In case such appeal is filed, then the competent appellate authority shall entertain the same on merit and decide it in accordance with law by passing a reasoned and speaking order, expeditiously and preferably, say, within a period of two months from the date of filing of the appeal;
(b) in those cases where notices were issued by the assessing authority or the officer of Trade Tax Department under Sections 13 and 13-A of the Trade Tax Act, the petitioners may submit a reply within a period of one month and after receipt of reply from the petitioner, the competent authority shall decide the same in accordance to law keeping in view the judgment of this Court (supra) by passing a speaking and reasoned order expeditiously and preferably within a period of two months;
(c) in those cases where goods were already delivered by the city booking agency transported from the railways to consignee, it is for the consignee to defend his cause by approaching the Trade Tax Department in accordance with the Trade Tax Act and no interference in such matters is warranted;
(d) In those cases where notice under Section 15A(1)(k) has been served on the petitioner imposing penalty without providing a show-cause notice or opportunity of hearing, petitioner may file objection within four weeks and the authority concerned shall decide the issue afresh after considering the petitioner's objection in accordance to law and keeping in view the judgment of this Court (supra) by passing a speaking and reasoned order expeditiously and preferably within a period of three months.
In all those cases where goods have been released in pursuance to the interim order passed by this Court, consignment so released shall be subject to the decision so taken in the manner as indicated hereinabove.
In this bunch of writ petitions for the cases where we have directed to prefer an appeal, it shall open for the petitioners to move an application for interim relief, which shall be decided by the competent authority within a period of two weeks, from the date of its filing.
Subject to aforesaid direction, for a period of three months or till the matter is adjudicated or till disposal of controversy, in question, in the manner indicated hereinabove, whichever is earlier, parties shall maintain status quo as in exists today.
The writ petitions stand disposed of in terms of above.
Order Date :- 21.9.2011 Rakesh-ANK/-