Holding

Section 29-A, read with Section 28-A(8) and (II), authorises the authorities to question the declared value of goods against market value and to issue a penalty notice.

Summary

A truck carrying 120 bags of supari owned by the respondent was stopped at a checkpost in Madhya Pradesh. The sales tax authorities found that the value declared in the accompanying documents was lower than the market value and issued a notice under Section 29-A(II) of the Madhya Pradesh General Sales Tax Act, 1958, seeking a penalty for alleged tax evasion. The respondent challenged the notice in the High Court, which quashed it on the ground that the statute did not empower the authorities to question the declared value against market rates. On appeal, the Supreme Court held that the provisions of Section 28-A(8) and (II) and Section 29-A(II) expressly allow the officer to verify the declaration, deem it false if the value is incorrect, and issue a notice of penalty. Consequently, the Court allowed the civil appeals, set aside the High Court order, and affirmed the authority’s power to question the value of goods.

Issues considered

Whether Section 29-A of the Madhya Pradesh General Sales Tax Act, 1958 empowers the sales tax authorities to question the value of goods declared in transport documents with reference to market value.

Legislation cited

Madhya Pradesh General Sales Tax Act, 1958s. 28-A(8), s. 28-A(II), s. 29-A(II)

Subjects

sales taxvaluationmarket valueSection 29-Acheckpostpenaltytax evasionMadhya Pradesh

Judgment

A COMMISSIONER OF SALES TAX AND ANR.
v.
MIS. P.T. ENTERPRISES AND ANR.

DECEMBER 8, I 999

B [S.P. BHARUCHA, D.P. WADHWA AND N. SANTOSH HEGDE, JJ.]

Sales Tax

Madhya Pradesh General Sales Tax Act, 1958-Sec.29-A-Whether
C empowers the authorities to question the value of goods as declared in the
documents with reference to market Value? Held, Yes.

A truck belonging to the respondent carrying 'supari' was checked by
the Sales Tax authorities and it was found that the value of g()ods as shown in
D the declaration form was less than the real value. Thus, a notice under Section
29-A (II) of the Madhya Pradesh General Sales Tax Act, 1958 was issued.
The writ petition filed by the respondent to quash the said notice was allowed
by High Court holding that the provisions of Section 29-A of the Act did not
authorise the authorities to question the value of the goods as contained in
the documents with reference to market value. Hence the present appeals.
E
Allowing the appeals, this <;ourt

HELD : 1.1. The High Court erred in holding that the provision of
Section 29-A of Madhya Pradesh General Sales Tax Act, 1958 does not
authorise the authorities to question the value of the goods as contained in
F the documents with reference to market value. (189-D)

1.2. The provisions of sub-section (8) and (II) of Section 28-A of the Act
clearly state that every person who transports goods of the kind notified by
the State Government, and it is not disputed that 'supari' is notified, must
carry with him an invoice, bill or challan or any other document issued by
G the consignor of the goods that gives particulars relative to the goods. The
transporter is obliged to stop the vehicle carrying the goods when required
to do so to allow the Sales Tax authority to verify and check the declaration
and documents aforesaid and to search the vehicle and inspect the goods. If
such search and verification shows that the declaration that has been filed in
H respect of the goods is false or incorrect in respect of, inter a/ia, the value
186
COMMISSIONER OF SALES TAX v. P.T. ENTERPRISES [BHARUCHA, J.] 187

thereof the authority may presume until the contrary is proved that an attempt A
is being made to evade sales tax. He must then record his reasons in this
behalf and supply a copy thereof to the transporter. If, after considering the
transporter's explanation, the authority remains unsatisfied, he is required
so to record and to serve on the transporter a notice to show cause why a
penalty should not be imposed upon him. [188-H; 189-A-C)
B
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8921of1994.

From the Judgment and Order dated 13.5.94 of the High Court of M.P.,
Bench at Indore in M.P. No. 71/94.

WITH c
C.A. Nos. 9458/94, 9195 and 168/98.
,.. S.K. Agnihotri and Niraj Sharma for the appearing parties.

The Judgment of the Court was delivered by
D
BHARUCHA, J. These appeals raise a common question pertaining to
the power conferred by Section 29-A of the Madhya Pradesh General Sales
Tax Act, 1958.

The facts that we narrate relate to the first appeal (Civil Appeal No. 8921
of 1994). E
A truck carrying 120 bags of 'supari' belonging to the respondent was
checked by the Sales Tax Authorities on 10th January, 1994 near Bijalpur
when it crossed the barrier into Madhya Pradesh. It was found by these
authorities that the value of the 'supari' as shown in the declaration form, was
less than what it should really have been. Accordingly, the authorities issued F
to the respondent a notice under Section 29-A ( 11) of the said Act. The notice
required the respondent to show cause why it should not be held that the
truck was carrying the goods without paying sales tax with the intention of
evading sales tax and why penalty in the sum of Rs. 31, 472 should not be
imposed. The respondent filed a writ petition in the High Court of Madhya
Pradesh to quash the notice. By the order under challenge, thP writ petition G
was allowed. The High Court held that the provisions of Section 29-A did not
"authorise the authorities to question the value of the goods as contained
in the documents with reference to market value ...... ".

Section 29-A empowers the State government or the Commissioner of
Sales Tax to set up checkposts or barriers "with a view to prevent or check H
188 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A evasion of tax ..... " Under sub-section (4) thereof, every person transporting
goods notified by the State Govemment'must carry with him an invoice, bill
or challan or any other document, by whatever name called, issued by the
consignor of the goods giving such particulars as may be prescribed. Under ·
sub-section (6) the transporter is oblige~ to stop his vehicle at every checkpost
or barrier and keep it stationery for as long as may be reasonably necessary
B to allow the checkpost officer to verify and check the declaratio~s and
documents mentioned above, to search the vehicle and inspect the goods and
all documents relating thereto which are in the possession of the tran:;porter.
Sub-section (8), so far as is relevant here, states :

"(8) If the check post officer finds after searching the vehicle and
c verifying the declaration of other documents relating to the goods,
that--

xxx xxx xxx

(b) the declaration filed in respect of any goods is false or incorrect,
D either in respect of the kind of goods or the quantity of goods
transported, or the value thereof; or

xxx xxx xxx

such officer may presume, until the contrary is proved, that an attempt
E was being made to facilitate the evasion of tax in respect of sl1ch
goods and he may, after recording his reasons therefore in writing a
copy of which shall be forthwith supplied to the transporter seize
such goods in such manner as may be prescribed."

Sub-section (II) reads thus :
F
"( 11 ). If the check post officer is not so satisfied, he shall record his
findings accordingly giving reasons therefore and he shall serve on
the transporter a notice in writing requiring him to show cause,
ordinarily within fifteen days of the service of the notice, why a
penalty as specified in the notice, which shall be equal to three times
G the amount of tax which would have been payable if the goods were
sold within the State on the date of such seizure, should not be
imposed upon him for the attempt made to facilitate the evasion of tax
on such goods."
(Emphasis supplied)
H It is, therefore, clear that every person who transports goods of the kind
COMMISSIONER OF SALES TAX v. P.T. ENTERPRISES [BHARUCHA, J.) 189

notified by the State Government, and it is not disputed that 'supari' is A
notified, must carry with him an invoice, bill or challan or any other document
issued by the consignor of the goods that gives particulars relative to the
goods. The transporter is obliged to stop the vehicle carrying the goods
when required to do so to allow the Sales Tax authority to verify and check
the declarations and documents aforestated and to search the vehicle and
inspect the goods. If such search and verification shows that the declaration B
that has been filed in respect of the goods is false or incorrect in respect of,
inter alia, the value thereof, the authority may presume until the contrary is
proved that an attempt is being made to evade sales tax. He must then record
his reasons in this behalf and supply a copy thereof to the transporter. If after
considering the transporter's explanation, the authority remains unsatisfied, C
he is required so to record and to serve on the transporter a notice to show
cause why a penalty should not be imposed upon him. In the premises, the
High Court was plainly in error when it held that the aforesaid provision does
not authorise the authorities to question the value of the goods as contained
in the documents with reference to market value. The provision clearly does.
D.
The civil appeals are allowed. The orders under appeal are set aside.

No order as to costs.

S.VK Appeals allowed.
E