Kamal Kumar Agarwal Vs Commissioner of Commerl.Taxes,w.B..

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2757 OF 2010 (Arising out of S.L.P. (C) No.3905 of 2008)

Kamal Kumar Agarwal ...Appellant(s)

Versus

Commissioner of Commercial Taxes, West Bengal & Ors. ...Respondent(s)

J U D G M E N T

S.H. KAPADIA,J.

Leave granted.

Heard learned counsel on both sides.

In this civil appeal arising out of special leave

petition, we are required to consider the scope and effect

of Section 68(3) of the West Bengal Sales Tax Act, 1994

[`Act', for short] read with sub-rule (6) of Rule 211A of

the West Bengal Sales Tax Rules, 1995 [`Rules', for

short].

On 8th September, 2001, M/s. Sanman Trade Impex

Private Limited, Mumbai, appointed the appellant as it's

Customs House Agent [CHA] to clear the consignment of

goods imported from Hamburg. To enable the appellant to

clear the consignment, M/s. Sanman Trade Impex Private

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Limited sent all the relevant documents required for

getting the goods cleared from Kolkata to Mumbai. M/s.

Sanman Trade Impex Private Limited also forwarded copy of

the Declaration in Form 44A, duly endorsed, to the

appellant to be produced before the Sales Tax Authority

posted at Haldia [for short, `first checkpost']. M/s.

Sanman Trade Impex Private Limited appointed M/s.

Brahmaputra Roadways, Kolkata, as it's transporter for

onward transportation of imported goods from Kolkata to

Mumbai. According to the appellant, the imported goods

were to be handed over by him to the transporter, M/s.

Brahmaputra Roadways, along with all the necessary

documents for onward transportation of goods to it's final

destination after getting the goods duly cleared from the

Customs and Port Authorities. According to the appellant,

the goods were duly received by M/s. Sanman Trade Impex

Private Limited on 30th October, 2001, which fact is duly

certified by the letter from M/s. Sanman Trade Impex

Private Limited informing him that the subject-goods have

been received by it intact and in good condition.

On 24th August, 2001, M/s. Paluck Trade Links, New

Delhi, appointed the appellant as it's CHA to clear the

consignment imported by it from London. At this stage, we

may state that, in this civil appeal, we are concerned

with two items, namely, Soda ash imported from Hamburg and

Aluminium Scrap imported from London. To continue the

chronology of facts, M/s. Paluck Trade Links, New Delhi,

also appointed M/s. Brahmaputra Roadways as it's

transporter for onward transportation of the imported

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goods from Kolkata to Delhi. On July 30, 2002, a show-

cause notice was issued to the appellant by the Assistant

Commissioner of Commercial Taxes alleging contravention of

Section 68 of the Act. The appellant was asked to explain

as to why penalty should not be levied for such

contravention. In reply, the appellant contended that he

had no obligation or liability under Section 68 of the Act

in respect of transportation of goods from Haldia to

Chichira [exit checkpost]. According to him, the goods

could be moved only by the owner or the importer directly

by itself or through it's transporter. According to the

appellant, a CHA has no role to play in the movement of

goods. He submitted that he was appointed by the importer

only to get the documents cleared from the Customs and

Port Authorities and not for movement of goods for which

it is the importer who appoints a transporter. Therefore,

according to him, the notice was not maintainable in terms

of Section 68 of the Act. The appellant further submitted

that he was not required to keep an endorsed copy of the

said Declaration. In this connection, reliance was placed

on Rule 211A(6) of the Rules. According to the appellant,

under Rule 211A(6) of the Rules, the endorsed copy had to

be returned to the person transporting the goods for

onward movement to it's final destination. Hence,

according to him, the show-cause notice was not

maintainable.

By order dated 27th December, 2002, the Assistant

Commissioner of Commercial Taxes imposed a penalty on the

appellant for failure to produce the endorsed copy of the

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Declaration in terms of Rule 211A(6) of the Rules. Being

aggrieved by the order, the appellant preferred a revision

before the West Bengal Taxation Tribunal, which

application stood rejected. The decision of the West

Bengal Taxation Tribunal has been upheld by the High Court

vide judgement dated 17th December, 2007, hence, this civil

appeal is filed by the appellant.

For the sake of convenience, we quote hereinbelow

the relevant provisions of the Act:

“68. Restriction on movement of goods.-- [1] To ensure that there is no evasion of tax, no person shall transport from any railway station, steamer station, airport, port, post office or any checkpost set up under section 75 or from any other place any consignment of goods except in accordance with such restrictions and conditions as may be prescribed.

[2] xxx xxx xxx xxx

[3] Subject to the restrictions and conditions prescribed under sub-section (1) or sub-section (2), any consignment of goods may be transported by any person after he furnishes in the prescribed manner such particulars in such form obtainable from such authority or in such other form as may be prescribed.

69. Interception, detention and search of road vehicles and search of warehouse, etc.-- For the purpose of verifying whether any consignment of goods are being or have been transported in contravention of the provisions of section 68 or section 73, the

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Commissioner, an Additional Commissioner, or any person appointed under sub-section (1) of section 3 to assist the Commissioner, may, subject to such restrictions as may be prescribed,--

[a] intercept, detain and search at any place, referred to in sub-section (1) of section 68, a road vehicle or river craft or any load carried by a person, or

[b] search any warehouse or at any other place in which, according to his information, such goods so transported in contravention of the provisions of section 68 have been stored, or

[c] intercept, detain and search at any checkpost or any other place referred to in sub-section (2) of section 73, any goods vehicle.

71. Penalty for transporting goods in contravention of section 68 or section 73.-- [1] If any goods are seized under section 70, the Commissioner or the Additional Commissioner may, by an order in writing, impose upon the person from whom such goods are seized or the owner of such goods, where particulars of the owner of such goods are available, or where there is no claimant for such goods at the time of such seizure, any person who subsequently establishes his claim of ownership or possession of such goods, after giving such person or owner, as the case may be, a reasonable opportunity of being heard, a penalty of a sum not exceeding fifty per centum of the value of such goods as may be determined by him in accordance with the rules made under this Act:

Provided that the sum of penalty that may be imposed under this sub-section shall not exceed--

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[a] thirty per centum of the value of goods if the rate of tax leviable under sub- section (1) of section 17, or sub- section (1) of section 18, or sub- section (1) of section 20, in respect of such goods does not exceed ten per centum;

[b] fifty per centum of the value of goods if the rate of tax leviable under sub- section (1) of section 17, or sub- section (1) of section 18, in respect of such goods exceeds ten per centum.

[2] A penalty imposed under sub-section (1) shall be paid by the person or the owner of goods, as the case may be, into a Government Treasury or the Reserve Bank of India by such date as may be specified by the Commissioner or the Additional Commissioner in a notice to be issued for this purpose, and the date so specified shall not be earlier than fifteen days from the date of the notice:

Provided that the Commissioner or the Additional Commissioner may, for reasons to be recorded in writing, extend the date of payment of the penalty for such period as he may think fit.

71B. Penalty for contravention of the provisions of section 68 when goods transported are not available.-- [1] Where the goods are, or have been, transported by a person, dealer or casual trader in contravention of restrictions or conditions prescribed under section 68 and such goods are not available for seizure under sub- section (1) of section 70, the Commissioner, or the Additional Commissioner, shall, after giving such person, dealer or casual trader a reasonable opportunity of being heard, impose a penalty of a sum not exceeding twenty-five per centum of the value of such goods.

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[2] The procedure for imposition of penalty as prescribed under section 71A shall apply mutatis mutandis in the matter of imposition of penalty under this section.

72. Regulatory measures for transport of goods through West Bengal.

[1] When a goods vehicle, transporting any goods [other than goods sales of which are tax-free under section 24], enters into West Bengal, and such vehicle transporting such goods is bound for any place outside West Bengal, the transporter of such goods shall have to make, in the prescribed manner, a declaration on the body of the consignment note or on a document of like nature that the goods being so transported in his vehicle shall not be unloaded, delivered or sold in West Bengal and he shall also specify in such declaration the name of the last checkpost through which the vehicle transporting such goods shall move outside West Bengal.

[2] xxx xxx xxx xxx

[3] xxx xxx xxx xxx

[4] The transporter shall carry with him the consignment note or the document of like nature containing the declaration duly countersigned under sub-section (3) while transporting the goods through West Bengal and produce such consignment note or document of like nature before the Commissioner at the last checkpost that he reaches before the exit of the vehicle with such goods from West Bengal, and the Commissioner shall, in the prescribed manner, endorse such consignment note or document of like nature evidencing exit from West Bengal of the vehicle transporting the same goods as are specified in such consignment note and return the same to the transporter.

xxx xxx xxx xxx ...8/-

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[5] The Commissioner may, subject to such conditions and restrictions as may be prescribed, intercept at any place, other than those referred to in sub-section (2) and sub-section (4), within West Bengal any goods vehicle and require the transporter to produce before him the declaration and other documents referred to in sub-section (2) and search such goods vehicle for verification of the goods with the declaration and other documents produced, if any, by the transporter.

[6] Where the Commissioner or the other authority referred to in sub-section (5) is satisfied, for reasons to be recorded in writing, that the transporter has contravened the provisions of this section, he may, after giving the transporter a reasonable opportunity of being heard, impose, by an order to be passed in the prescribed manner, such penalty, not exceeding twenty-five per centum of the value of the goods so transported, as may be determined by him in accordance with the rules made under this Act.

73. Measures to prevent evasion of tax on sales within West Bengal.

[1] Where a transporter carries from any place in West Bengal in a goods vehicle any consignment of goods and such vehicle is bound for any place outside West Bengal, he shall, in addition to a document of title to the goods, carry with him, in respect of such goods,--

[a] where carriage is caused by a sale of such goods, two copies of the bill or cash memorandum issued by the seller of such goods, and a way bill in the prescribed form, or such document, containing description, quantity or weight and value of the goods and such other particulars as may be prescribed, or

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[b] where carriage is caused otherwise than by a sale of such goods, two copies of the forwarding note, delivery challan or document of like nature, by whatever name called, issued by the owner or consignor of such goods, and a way bill in the prescribed form containing such particulars as may be prescribed.

We may also quote hereinbelow Rule 211A of the

Rules along with the Declaration Form appended to the said

Rule:

“211A. Procedure for transport from railway station, port, airport etc. of any consignment of goods despatched from any place outside West Bengal and bound for any place outside West Bengal.-- (1) Where any consignment of goods other than those referred to in the Explanation to sub-rule (1), or in sub-rule (2), of rule 210 despatched from any place outside West Bengal reaches a railway station, port, airport or post office in West Bengal and such consignment of goods is bound for any destination outside West Bengal, any person shall, before taking delivery of such goods from any such place, make a declaration in the format appended to this sub-rule.

DECLARATION [See sub-rule (1) of rule 211A]

To The .................... ..................Checkpost/Charge/Section/Division

I, ........................., do hereby declare that --

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[1] I am a person who is importing or bringing into West Bengal/I am a person who is authorised by the importer mentioned in the invoice/bill of lading/ bill of entry/air consignment note/railway receipt/ postal receipt to take delivery of the consignment of goods despatched from ................., a place situated outside West Bengal;

[2] the said consignment of goods has reached a railway station, port, airport or post office in West Bengal, namely,..............;

[3] the said consignment of goods is bound for a destination outside West Bengal, namely, .........;

[4] the delivery of the said consignment is required to be taken by me for the purpose of transporting such consignment of goods to its destination outside West Bengal;

[5] the said goods shall not be, either wholly or partly, unloaded, delivered or sold in West Bengal;

[6] the statements in this declaration are true to the best of my knowledge and belief;

I am furnishing hereunder the particulars/ information relating to the said consignment:-

[a] name, address and sales tax registration No., if any, of the consignor outside West Bengal: ..............

[b] railway receipt/bill of lading/air- consignment note/postal receipt No. and date thereof: .................

[c] invoice No. and date : ...............

[d] description of each commodity of the consignment: ..................

[e] quantity/weight of each commodity in the consignment: ..................

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[f] value of the consignment with custom duty, freight etc.: ...............

[g] name, address and sales tax registration No. of the consignee outside West Bengal:.................

[h] name, address, licence No. and telephone No. of the clearing and forwarding agent, if any, in West Bengal who is handling the consignment on behalf of the consignee:...............

[i] mode of transportation of the consignment to the destination outside West Bengal after taking delivery: .................

[j] registration No. of the road vehicle if such goods are transported to such destination by a road vehicle: ...............

[k] railway receipt/bill of lading/air- consignment note/postal receipt No. and date:................

[l] name of the exit checkpost: ................

[m] approximate date by which the vehicle shall move outside West Bengal: ................

[n] where the goods are being transported by a road vehicle,--

[i] whether there is any possibility of transhipment in West Bengal [please tick whichever is applicable] yes/no;

[ii] if yes,--

[A] place of such transhipment :...... [B] vehicle No. after the transhipment is effected: ...............

[C] name and address of the transporter: ................. [D] consignment note No. and date:......

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Signature of the importer/clearing and forwarding agent/the person taking delivery

of the consignment of goods from port, airport, railway station, post office for despatch of the same outside West Bengal

Date: ........ Full name of the signatory

Address of the signatory

Note:- Please strike out whatever is not applicable.

[2] The declaration made under sub-rule (1) shall be produced in triplicate along with a copy of invoice, railway receipt, bill of lading, air-consignment note, postal receipt or a document of like nature before the Assistant Commissioner, Commercial Tax Officer or Assistant Commercial Tax Officer posted at the checkpost situated in or around the railway station, port, airport or post office from which the delivery of the consignment of goods as referred to in sub-rule (1) is to be taken.

[3] If no checkpost has been set up in or around the railway station, port, airport or post office from which the delivery of the consignment of goods as referred to in sub-rule (1) is to be taken, the declaration under the said sub-rule (1) shall be produced in triplicate by the person taking delivery of such goods along with a copy of invoice, railway receipt, bill of lading, air-consignment note, postal receipt or a document of like nature before the Assistant Commissioner or Commercial Tax Officer having jurisdiction over the area in which such railway station, port, airport, or post office is situated.

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[4] The declaration along with a copy of documents as referred to in sub-rule (2) or sub- rule (3) produced before any of the authorities mentioned in such sub-rules shall be countersigned with his office seal by such authority and the two countersigned copies of such declaration shall be returned to the person referred to in sub-rule (1).

[5] For the purpose of section 69, the person referred to in sub-rule (1) shall, while transporting any consignment of goods on its way to destination outside West Bengal, stop his vehicles on being asked by such Assistant Commissioner or Commercial Tax Officer as the Commissioner may authorise in this behalf, at any place and present before him, on demand, the countersigned copies of the declaration referred to in the said sub-rule along with invoice, consignment note, road challan or any other document of like nature.

[6] The two copies of the declaration duly countersigned under sub-rule (4) shall be produced before the Assistant Commissioner, Commercial Tax Officer or Assistant Commercial Tax Officer posted at the exit checkpost and such authority shall, on being satisfied upon verification of the goods being transported with those specified in such declaration, endorse such declaration, retain one copy of such endorsed declaration and return the other copy of it to the person transporting such goods for onward movement to the place of destination outside West Bengal after recording in a register the particulars given in the endorsed declaration and other connected documents and also the particulars of transhipment of the goods, if any, in West Bengal.

[7] For the purposes of interception, detention, search and seizure by any authority under this rule, the procedure in such matters contained in the provision of rule 212 shall apply mutatis mutandis.

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[8] Any infringement of any provision of this rule by the person referred to in sub-rule (1) shall be deemed to be a contravention of the provisions of section 68 by the person referred to in the said sub-rule.”

The Act has been enacted to consolidate and amend

the laws relating to the levy of tax on sale or purchase

of goods in the State of West Bengal. Under Explanation

(2) to Section 2(10) of the Act, an agent for handling or

transporting of goods or handling of document of title to

goods is a “dealer”. Agents of all types have been

included in the definition of the word “dealer” under

Section 2(10) of the Act. [See State of West Bengal vs.

O.P. Lodha & Anr. (1997) 105 STC 561 (SC)]. Section 68

occurs in Chapter VIII of the Act, which deals with

maintenance of accounts; search and seizure of accounts;

measures to regulate transport of goods; checkposts;

seizure of goods; imposition of penalty, etc. To ensure

that there is no evasion of tax, Section 68 of the Act,

inter alia, states that no person shall transport from any

Port or any checkpost or from any other place any

consignment of goods, except in accordance with such

restrictions and conditions, as may be prescribed. [See

Section 68(1) of the Act] The important words which occur

in Section 68(1) of the Act are “no person”. It does not

refer to the word “transporter”. This aspect is of some

significance because Section 68(1) of the Act puts a

restriction on the movement of goods. The checkposts are

designed and meant to prevent the evasion of sales tax and

other dues. This restriction stands lifted subject to the

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compliance of certain provisions of the Act. Under

Section 68(3) of the Act, any consignment of goods may be

transported by any person after he furnishes in the

prescribed manner such particulars in such Form as may be

prescribed. The expression “any person” in sub-section

(3) of Section 68 of the Act would include, a clearing and

forwarding agent, a transporter or any person who makes a

Declaration in the prescribed manner. Therefore, sub-

section (3) is not confined to a transporter, as is sought

to be argued on behalf of the appellant. Secondly, sub-

section (3) indicates that any consignment of goods may be

transported by any person after he furnishes particulars

in the prescribed Form. In this connection, we may refer

to Rule 211A of the Rules. The said Rule occurs in

Chapter XV of the Rules, which deals with restrictions on

transport of any consignment of goods, regulatory measures

for movement of such goods in transit through West Bengal,

interception, search, seizure and penalty for

contravention, and certain measures to prevent evasion of

tax on sales within West Bengal. If one reads Chapter

VIII of the Act with Chapter XV of the Rules, one finds

that both Chapters deal with regulatory measures to avoid

tax evasion. Therefore, in our view, the machinery

provisions under the Act constitute an integral part of

the charging provisions. These regulatory measures are

intended to ensure that there is no evasion of tax.

Therefore, one cannot read the Act by segregating the

machinery provisions from the charging provisions. Rule

211A of the Rules deal with procedure for transport from

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Port, checkposts, etc., of any consignment of goods

despatched from any place outside West Bengal and bound

for any place outside West Bengal. In the present case,

the subject-goods have come from Hamburg, which is a place

outside West Bengal. They passed through the customs

barrier, the port barrier and the sales tax barrier at

Haldia [which is the first checkpost] and, ultimately,

were bound for Mumbai through the exit checkpost at

Chichira. In short, the goods were meant to be in transit

through the State of West Bengal and they were bound for

Mumbai, which is a place outside West Bengal. In such a

situation, Rule 211A of the Rules was applicable.

In this case, we are required to ascertain whether

the appellant, who has signed the Declaration in the

prescribed Form, has complied with the said Rule? If not,

the consequence of non-compliance? If one reads Section

68(3) of the Act along with Rule 211A(1) of the Rules, one

finds that `any person', before taking delivery of the

consignment from any port, etc., is required to make a

Declaration in the prescribed Form and only on making the

requisite Declaration, such `any person' is allowed to

transport the consignment of goods through West Bengal to

a place outside the State. In other words, no person will

be able to transit the consignment of goods through the

State of West Bengal without making a Declaration in the

prescribed Form. Before taking delivery of such goods,

such a person shall make a Declaration in the Form

appended to Rule 211A(1) of the Rules. Such a

Declaration, therefore, is a condition precedent for

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taking delivery of the goods from Port, Airport, etc., to

any place outside the State of West Bengal. In this

connection, once again, we may emphasise that in Rule

211A(1) of the Rules, the words used are “any person”.

These words include, a clearing and forwarding agent, a

transporter and Customs House Agent or any other person,

who makes a Declaration in the Form prescribed. In this

connection, clause (4) of the Declaration is equally

important. It mandates a statutory obligation on the

declarant, who takes delivery of the consignment to

transport such consignment to it's destination outside

West Bengal [which, in the present case, is Mumbai]. The

declarant could be an importer or a clearing and

forwarding agent or any person taking delivery of the

consignment. This obligation is imposed on the declarant

so that, in the event of detection of tax evasion, it

would not be open to the declarant to deny his liability

which, in our opinion, under the Scheme of the Act is an

absolute liability in the sense that if the declarant

commits breach of his obligation under the Act read with

the Rules, then a legal presumption is drawn against

him, of course, subject to rebuttal. It is important

to note, in this connection, that the appellant in this

case was the declarant. He had appended his

signature on the Declaration prescribed under Rule

211A(1) of the Rules. At this stage, we may point out

that, under the procedure prescribed in the Rules, the

declarant, before taking delivery of the goods from the

port, has to make a Declaration in the prescribed Form in

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which he undertakes unequivocally to transport such

consignment to it's destination outside the State of West

Bengal. With such Declaration, the appellant becomes

liable for a breach if he fails to produce the counter-

signed copy of the Declaration before the Assessing

Authority. The Declaration is in triplicate. One copy

duly endorsed remains with the Sales Tax Authority at the

first checkpost which, in the present case, is at Haldia.

The remaining two counter-signed copies of the Declaration

in the prescribed Form are carried by the declarant to the

exit checkpost where one copy is retained by the Authority

and the other is given to the declarant. In the present

case, the endorsed counter-signed copy of the Declaration

has not been produced by the appellant in the impugned

proceedings before the Assessing Authority. Non-

production thereof raises a legal presumption of tax

evasion. The reason is that when countersigned copy of

the Declaration is not produced, law presumes, unless

otherwise proved, that goods in question have been

consumed, used or otherwise disposed of within the State.

In the present case, there is no evidence whatsoever to

rebut that presumption. There is no material to indicate

that the goods had crossed the border at Chichira, except

a confirmation from the consignee that it has received the

goods in question. We cannot accept such confirmation

from the consignee primarily because, under the Act, the

importer/consignee is not liable for the breach. The

consignee is not the declarant. In the present case, the

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consignee [importer] has not undertaken any obligation to

take the goods in transit through the State of West Bengal

to it's destination outside the State. If one reads

carefully Section 68 of the Act, one finds that the

provisions of said section contemplate a regulatory

measure to ensure that there is no evasion of tax. Even

if Section 68 of the Act is treated as a machinery

section, even then the said Section has been enacted to

ensure that there is no evasion of tax. In that sense, if

one examines the Scheme of the Act, it becomes clear that

non-production of the endorsed counter-signed copy of the

Declaration before the Competent Authority would give rise

to a legal presumption of tax evasion, subject to such

presumption being rebutted.

On behalf of the appellant, it was urged that,

under the Scheme of the Act, the word “transporter” has

been defined by way of an Explanation to Section 72 of the

Act. This argument was advanced to demonstrate that

Sections 68, 71B and Explanation (a) to Section 72 of the

Act are applicable only to a transporter, i.e., the owner

or any person having possession or control of a goods

vehicle or the driver or any other person in charge of

such vehicle, who transports the goods on account of any

other person or on his own account and, therefore, the

said provisions do not apply to CHA. We find no merit in

this argument. As stated above, the appellant, as a

declarant, could be an importer, a clearing and forwarding

agent, etc., who undertakes the delivery of the

consignment for the purpose of transporting such

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consignment of goods to it's destination outside West

Bengal. Once such a Declaration is made by the appellant,

he is a transporter, even assuming that the said

provisions, namely, Sections 68, 71B and Explanation (a)

to Section 72, are applicable only to a transporter. The

matter can be looked at from another angle. Section 68

imposes a restriction when it says that no person shall

transport any consignment of goods from any Railway

Station, Airport, Port, etc., except in accordance with

such conditions and restrictions, as may be prescribed.

In other words, the restriction on movement of goods under

sub-section (1) of Section 68 of the Act can only be

lifted in a situation falling under sub-sections (3) and

(4) of Section 68 of the Act. Under sub-section (3), any

person, who seeks delivery of the consignment, is required

to undertake an obligation that he is undertaking that

delivery for transporting such consignment to it's

destination outside West Bengal. Section 71B of the Act

is consequential upon contravention of provisions of

Section 68 when goods transported are not available. It

says that where the goods are transported by a person in

contravention of restrictions or conditions prescribed

under Section 68 of the Act read with Rule 211A of the

Rules, including the Declaration therein, and if such

goods are not available for seizure, the Prescribed

Authority shall, after giving reasonable opportunity of

being heard, impose a penalty. That penalty is an amount

not exceeding twenty five per cent of the value of such

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goods. Section 71B read with Section 68 of the Act

indicates that if the declarant undertakes delivery of the

consignment with an obligation to transport such

consignment of goods to it's destination outside West

Bengal and if he contravenes any restrictions or

conditions prescribed under Rule 211A of the Rules read

with the Declaration, then such person becomes liable to

pay penalty on ad valorem basis. In the present case, the

appellant has not produced before the Assessing Authority

any evidence to show that the consignment, whose delivery

has been taken from the Customs Port, has gone out of West

Bengal. He has not produced the endorsed countersigned

copy of the Declaration before the Assessing Authority.

In such a case, law presumes that the subject-goods have

been sold unauthorisedly within the State of West Bengal

and that is the sole reason why penalty has been imposed

on ad valorem basis, i.e., on certain percentage of the

value of the goods. It was open to the assessee to prove

to the contrary and rebut the above legal presumption.

However, he has failed to do so. Further, when the

appellant signs the Declaration in terms of Rule 211A(1)

of the Rules, he, inter alia, undertakes an obligation to

act as a transporter. Under Section 72 of the Act, if any

person transports a consignment from any place outside the

State and, in order to go to it's destination at a place

outside the State, seeks to pass through the State of West

Bengal, he is required to make a Declaration, as

prescribed in Rule 223(1) of the Rules on the body of the

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consignment note before the appropriate Authority of the

first checkpost for his verification and counter-

signature. Further, the transporter is required to carry

such a Declaration and other documents and produce them

before the Prescribed Authority of the last checkpost for

his verification. In our view, Section 72 of the Act read

with Rule 223(1) of the Rules has no application to the

facts of the present case. Section 72, no doubt, deals

with goods being transported through the State of West

Bengal; however, the said section specifically refers to

entry of a “goods vehicle” into West Bengal and such

vehicle transporting the goods is bound for a place

outside West Bengal. In the present case, we are

concerned with goods coming from Hamburg in Germany into

the Port in West Bengal, hence, Section 72 of the Act has

no application. Moreover, the word “transporter” has been

defined specifically for the purpose of only Sections 72

and 73 of the Act and has not been defined for the entire

Act. In the circumstances, it is not open to the

appellant to say that there is a clear dichotomy between a

transporter and a CHA/clearing and forwarding agent. In

the present case, we are concerned with the contravention

of the provisions of Section 68 of the Act by a person who

makes a Declaration in the prescribed Form in terms of

Rule 211A(1) of the Rules.

One of the key arguments advanced on behalf of the

appellant herein was that Rule 211A(6) of the Rules

applies to the transporter/carrier, who is in possession

of two countersigned copies of the Declaration when the

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goods are being transported across the exit checkpost of

West Bengal, because it is the transporter who gets back

the endorsed Declaration as “a person transporting the

goods for onward movement”. According to the appellant,

Rule 211A(8) of the Rules has no application as the said

sub-rule is consequential to the applicability of sub-rule

(6) of Rule 211A, which sub-rule is applicable only in the

case of a transporter. In other words, according to him,

sub-rule (6) casts an obligation on the transporter and

not upon the CHA, whose assignment is confined to the

precincts of the Customs Port. We find no merit in this

submission. Under sub-rule (2) of Rule 211A of the

Rules, the Declaration, in triplicate, is required to be

produced along with the copy of invoice, railway receipt,

bill of lading or document of like nature before the

Prescribed Authority posted at the checkpost situated in

or around the Railway Station, Port, Airport or Post

Office from which the delivery of the consignment of goods

is to be taken. Sub-rule (3) of Rule 211A of the Act

deals with a situation where there is no checkpost set up

in or around the Railway Station, Port, etc. We are not

concerned with that situation in this case. Under sub-

rule (5), it is, inter alia, provided that, in cases of

interception, detention and search of vehicles falling

under Section 69 of the Act, the declarant under sub-rule

(1) shall, while transporting any consignment on it's way

to the destination outside West Bengal, shall stop his

vehicle on being asked by the Prescribed Authority to

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produce the countersigned copies of the Declaration

referred to in sub-rule (1) of Rule 211A along with the

invoice, consignment note, road challan or any other

document of like nature. Therefore, sub-rule (5) squarely

applies to a declarant under sub-rule (1). Under sub-rule

(6), two copies of the Declaration duly countersigned

shall be produced before the Prescribed Authority posted

at the exit checkpost and such Authority shall, on being

satisfied upon verification of the goods being transported

with those specified in the Declaration, endorse such

Declaration, retain one copy of such endorsed Declaration

with it and return the other copy to the person

transporting such goods for onward movement to the place

of destination outside West Bengal after recording in his

register the particulars given in the Declaration. As

stated above, it is the case of the appellant that sub-

rule (6) of Rule 211A applies to a transporter and not to

a CHA. We find no merit in this submission. If one reads

sub-rule (6), it becomes clear that the said sub-rule

refers to copies of the Declaration duly countersigned

under sub-rule (4) to be produced before the Prescribed

Authority at the exit checkpost. Sub-rule (4), in turn,

refers to a Declaration being made under sub-rule (2)

which, in turn, refers to the Declaration made under sub-

rule (1) of Rule 211A of the Rules. Therefore, under sub-

rule (4), such a Declaration is required to be

countersigned by the Prescribed Authority and two copies

thereof are returned to the declarant under sub-rule (1).

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In other words, sub-rule (6) applies to a declarant who

could be a transporter, CHA, clearing and forwarding agent

or any person taking delivery of the consignment of goods

from the Port for despatch of the same outside West

Bengal. Further, as stated above, clause (4) of the

Declaration refers to an obligation being undertaken by

the declarant that the delivery is required to be taken by

him for transporting such consignment to it's destination

outside West Bengal. Hence, with the making of the

Declaration, the appellant undertook the obligation to

transit the consignment to the destination outside the

State for which the proof was the countersigned copy of

the Declaration.

Before concluding, we may state that a request was

made by the learned senior counsel appearing on behalf of

the appellant that, in the event of this Court rejecting

this civil appeal, the Department may give the benefit of

instalments to the appellant to make payment towards

impugned penalty. We do not wish to express any opinion

thereon.

Accordingly, we find no merit in this civil appeal,

which is, accordingly, dismissed with no order as to

costs.

......................J. [S.H. KAPADIA]

......................J. [AFTAB ALAM]

New Delhi, March 26, 2010.

KAMAL KUMAR AGARWAL Vs COMMISSIONER OF COMMERL.TAXES,W.B..

KAMAL KUMAR AGARWAL Vs COMMISSIONER OF COMMERL.TAXES,W.B..