# M/S Som Distilleries & Breweries Ltd. Thru' Auth. Sign. Revisionist v. Commissioner Of Trade Tax U.P

- **Citation:** (2016) 7 ILRA 725
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-07-19
- **Bench:** Yashwant Varma
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-som-distilleries-breweries-ltd-thru-auth-sign-revisionist-v-commissioner-of-44204
- **Pages:** 4

## Headnote

U.P. Trade Tax Act, 1948 - S. 28A(6) - Penalty - Non-production of Form-31 - Requirement of
intent to evade tax - IMFL consignments imported with valid permits - Goods intercepted without Form-31
- Tribunal affirming penalty on ground of absence/subsequent submission of Form-31 - Validity -

Held, S. 28A(6) contemplates two conditions: (i) absence of proper documents, and (ii) satisfaction of
authority that transportation was with intent to evade tax - While first condition stood satisfied, second was
not established (paras 3-4) - IMFL being an excise-controlled commodity, its import, storage and movement
are strictly regulated and once goods enter bonded warehouse, assessee loses control and cannot effect sale
without permission (para 5) - Tax not leviable at stage of import but only upon clearance for sale, hence no
occasion for evasion at interception stage (para 5) - Mere non-production or subsequent furnishing of Form31 is a procedural lapse and does not ipso facto establish mens rea (paras 2, 5) - Tribunal erred in presuming
evasion without material evidence - Penalty unsustainable.

Result: Revision allowed - Orders of authorities set aside.
726 INDIAN LAW REPORTS ALLAHABAD SERIES

## Text

7 All. M/S Som Distilleries & Breweries Ltd. Thru' Auth. Sign. Vs Commissioner Of Trade
 Tax U.P.
725
trial, rather it is said that the deceased was killed during dead hours of night by some unknown
persons, hence, we are of the view that place of occurrence is also established.

29. After considering all the aspects and evidence on record, we are of the considered view
that the prosecution has successfully proved the charges levelled agianst the accused beyond
reasonable doubt. Learned trial court has rightly appreciated the evidence on reocrd. We do not find
any illegality, in the impugned findings. Accordingly appeal is devoid of any merit and is liable to
be dismissed and is accordingly dismissed. Accused is on bail. His bail is cancelled. He shall be
taken into custody forthwith to serve out the sentence awarded by the learned trial court.

30. Office is directed to certify this order to the learned trial court to ensure compliance.
Office is further directed to transmit the lower court record forthwith.
------------
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.07.2016

BEFORE

THE HON'BLE YASHWANT VARMA, J.

Sales/Trade Tax Revision No.- 699 Of 2006

M/S Som Distilleries & Breweries Ltd. Thru' Auth. Sign. ...Revisionist
Versus
Commissioner Of Trade Tax U.P. ...Respondent

Counsel for the Revisionist:
Nishant Mishra

Counsel for the Respondent:
S.C.

U.P. Trade Tax Act, 1948 - S. 28A(6) - Penalty - Non-production of Form-31 - Requirement of
intent to evade tax - IMFL consignments imported with valid permits - Goods intercepted without Form-31
- Tribunal affirming penalty on ground of absence/subsequent submission of Form-31 - Validity -

Held, S. 28A(6) contemplates two conditions: (i) absence of proper documents, and (ii) satisfaction of
authority that transportation was with intent to evade tax - While first condition stood satisfied, second was
not established (paras 3-4) - IMFL being an excise-controlled commodity, its import, storage and movement
are strictly regulated and once goods enter bonded warehouse, assessee loses control and cannot effect sale
without permission (para 5) - Tax not leviable at stage of import but only upon clearance for sale, hence no
occasion for evasion at interception stage (para 5) - Mere non-production or subsequent furnishing of Form31 is a procedural lapse and does not ipso facto establish mens rea (paras 2, 5) - Tribunal erred in presuming
evasion without material evidence - Penalty unsustainable.

Result: Revision allowed - Orders of authorities set aside.
726 INDIAN LAW REPORTS ALLAHABAD SERIES

(Delivered by Hon'ble Yashwant Varma, J.)

1. Heard learned counsel for the revisionist and the learned Standing Counsel.

2. 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.

3. 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.

4. 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."
7 All. M/S Som Distilleries & Breweries Ltd. Thru' Auth. Sign. Vs Commissioner Of Trade
 Tax U.P.
727
5. 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.

6. 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.

7. 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.
-----------
728 INDIAN LAW REPORTS ALLAHABAD SERIES

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 21.07.2016

BEFORE

THE HON'BLE RAJAN ROY, J.

Service Single No.- 6627 Of 2006
&
Service Single No.- 4769 Of 2003

Om Prakash Srivastava ...Petitioner
Versus
Hon'ble High Court Of Judicature Of Allahabad & Ors. ...Respondents

Counsel for the Petitioner:
O.P. Srivastava, Manjive Shukla, Virendra Kumar Dubey

Counsel for the Respondents:
C.S.C., Gaurav Mehrotra

Service Law-Departmental Proceedings after Retirement-Article 351-A, Civil Services
Regulations-Limitation- Departmental proceedings against retired employee can be instituted only in
accordance with Proviso (a) to Article 351-A-Proceedings deemed to be instituted on date of issuance of
charge-sheet-Charge-sheet issued after retirement and beyond four years of alleged incident barred-Mere
decision to initiate proceedings prior to retirement irrelevant-Proceedings vitiated.
Departmental Enquiry-Proof of Misconduct-Standard of proof- Even in departmental proceedings,
charges must be supported by tangible and credible evidence-Serious charge like forgery cannot be
sustained on conjectures or suspicion-Absence of expert evidence, denial by concerned authority, or material
linking delinquent renders findings perverse.
Departmental Enquiry-Procedural Fairness-Ex parte enquiry- Even where delinquent does not
participate, enquiry must be conducted in accordance with law by fixing date, time and place and proving
charges through evidence-Failure to follow basic procedure vitiates enquiry.
Disciplinary Authority-Duty to pass reasoned order- Final order must consider inquiry report,
evidence and representation of delinquent-Non-speaking order without reasons and without consideration of
reply unsustainable.
Service Law-Misconduct-Negligence vs. Forgery- Failure to obtain signatures on judicial order may
constitute negligence-However, allegation of forgery requires strict proof-In absence of proof of forgery,
major penalty unsustainable.
In Result- Impugned disciplinary proceedings and orders of pension cut quashed; respondents directed to
release retiral dues-Writ petition dispose off.
Cases cited
Nand Kishore Prasad Vs State of Bihar and Ors.AIR 1978 SC 1277
Kuldeep Singh Vs. Commissioner of Police & Ors.(1999) 2 SCC 10
Sher Bahadur Vs. Union of India & Ors.(2002) 7 SCC 142
Bank of India Vs. Degalse Suryanarayana(1999) 5 SCC 762
Union of India Vs. H.C. GoelAIR 1964 SC 864
State of U.P. And Ors. Vs. Harihar Bholenath(2006) 13 SCC 460
Delhi Development Authority Vs. H. C. Khurana(1993) 3 SCC 196