Heard learned counsel for the revisionist and the learned Standing Counsel.
The challenge in the present revision is to assessment proceedings taken for the purposes of imposition of penalty by the assessing authority in respect of certain import of consignments of Indian Made Foreign Liquor (IMFL) by the revisionist. The imposition of penalty has been affirmed by the Tribunal in second appeal. The case of the revisionist was that it was engaged in the manufacture and sale of IMFL and its main unit of manufacture was in the State of Madhya Pradesh. For the purposes of effecting sale in the State of U.P., the revisionist is stated to have established a Bonded Warehouse. The IMFL upon deposit of import fee and under cover of import permits entered the State of U.P. The goods in question prior to being unloaded at the Bonded Warehouse are stated to have been intercepted when it was found that they were not accompanied by Form-31. On the basis of the above lapse proceedings for imposition of penalty were initiated against the revisionist. The assessing authority by an order dated 25 November 1998 imposed a penalty of Rs. 2,44,687/-. This was reduced by the first appellate authority in appeal to Rs. 1,30,500/-. This order of the first appellate authority was challenged before the Tribunal which has confirmed the same by its order dated 24 January 2006.
From a reading of the order of the Tribunal, this Court finds that what has primarily weighed with it while upholding the order of the first appellate authority is that admittedly the goods at the time of interception were not accompanied with Form - 31. The Tribunal recorded that insofar as the consignments which formed the subject matter of Appeal No. 431 of 2003 is concerned, Form - 31 was furnished subsequently. It has held that a deliberate attempt was therefore made in order to evade the payment of tax.
Section 28A enjoins any person who intends to bring, import or otherwise receive into the State from any place outside goods in such quantity or measure as may be prescribed, to be accompanied with a declaration which is to be obtained from the assessing authority. It is with reference to this provision that the rules require the revisionist to import the IMFL under cover of Form - 31. While the need and the purpose for which this form must necessarily be obtained is founded on the principle that the Department must have knowledge of taxable goods entering into the State, the issue which faces this Court is as to whether the failure on the part of the assessee to produce the Form -31 at the time when the goods were intercepted would necessarily entail the imposition of penalty. Admittedly the imposition of penalty shall stand governed by the provisions of sub-section (6) which reads as under:
"28A(6) Where the officer making search or inspection under this section finds any person transporting or attempting or abetting to transport any goods which this section applies without being covered by the proper and genuine documents referred to in preceding sub-sections and if, for the reasons to be recorded, he is satisfied, after giving such person an opportunity of being heard, that such goods were being so transported in an attempt to evade assessment or payment of tax due or likely to be due under this Act, he may order for detention of such goods."
As would be evident from a reading of the said provision when the officer making an inspection finds that any person is transporting or has attempted to transport goods without them being covered by proper and genuine documents and for reasons to be recorded he is satisfied that such goods were so transported in an attempt to evade an assessment or payment of tax he is empowered to then detain the goods. A reading of the said provision indicates that the revisionist in this case clearly falls within the mischief of the first part of sub-section (6) inasmuch as admittedly the goods were not accompanied by the documents which were mandated in terms of sub-section (1) of Section 28A. However, before imposition of penalty, the officer must also be satisfied that such goods were being so transported in an attempt to evade assessment and payment of tax. The finding on this score is liable to be recorded bearing in mind the special characteristics of the imported article which in this case is IMFL.
As noted above, what the revisionist sought to import into the State of U.P. was IMFL. It is not disputed that IMFL starting from the time of its production to its supply and distribution is a product which is controlled extensively by excise officers pursuant to the provisions of the U.P. Excise Act, 1910. It is pursuant to the special provisions which stand attached to commodities like IMFL that the import and export of such commodities from one State to another are circumscribed by the requirement of deposit of import fee and the obtaining of import permissions. The consignment in question is stated to have been duly accompanied with the import permit and is also stated to have reached the bonded warehouse. Once and the moment, the goods reach the Bonded Warehouse the assessee looses all control over the said commodities inasmuch as during the period of consignment these goods remain under the physical control of the excise department. A consignment of IMFL cannot be dispatched, moved or sold from a bonded warehouse without the permission and scrutiny of the excise officers. It is in light of these peculiar statutory restrictions which stand placed in respect of dealings in IMFL that this Court finds that the charge of an intent to evade payment of tax was not made out. Once the goods had duly been accounted for and had entered the bonded warehouse, the revisionist-assessee could have in no manner effected sale without the permission of the excise officers. It is also not disputed that the U.P. Trade Tax Act, 1948 did not levy a tax on the import of IMFL. The tax as is admitted by learned counsels would stand attracted only at the stage where the IMFL left the bonded warehouse for the purpose of sale. It therefore, cannot be countenanced that the officials of the Trade Tax Department would therefore have no knowledge or notice of a future movement of these goods. The issue of an intent to evade payment of tax, therefore does not arise. While it is true that Form - 31's were submitted in certain cases by the revisionist subsequently, bearing in mind the above, this Court finds that the imposition of penalty upon the revisionist would not be liable to be sustained.
This revision shall accordingly stand allowed. The orders of the assessing authority dated 25 November 1998, first appellate authority dated 7 April 2000 as well as the Tribunal dated 24 January 2006, are hereby set aside.