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

...2/-

- 2 -  

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

...3/-

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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

...4/-

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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

...5/-

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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--

...6/-

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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.

...7/-

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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

...9/-

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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 --

...10/-

- 10 -  

[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: ..................

...11/-

- 11 -  

[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:......

...12/-

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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.

...13/-

- 13 -  

[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.

...14/-

- 14 -  

[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

...15/-

- 15 -  

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.