Jhoomarmal Dhanraj versus Assistant Commercial Taxes Officer

http://courtnic.nic.in/jodh/judfile.asp?ID=CR&nID=42&yID=2007&doj=7/1/2008


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SALES TAX REVISION PETITION NO.42/2007
M/s. Jhoomarmal Dhanraj
Vs.
ACTO, Ward-III, Circle -C, Jodhpur


Date of Order :: 1st July 2008

HON'BLE MR. JUSTICE DINESH MAHESHWARI

Mr.Dinesh Mehta for the petitioner
Mr.Rishabh Sancheti for
Mr.V.K.Mathur for the respondent

....

BY THE COURT:

By way of this revision petition, the petitioner-dealer
seeks to question the order dated 28.03.2006 as passed by
the Rajasthan Tax Board, Ajmer in Appeal No.700/2005
whereby, while setting aside the order dated 24.02.2005 as
passed by the Dy. Commissioner (Appeals), Bikaner, the order
dated 14.10.2003 as passed by the Assessing Authority under
Section 78 (5) of the Rajasthan Sales Tax Act, 1994 ('the Act
of 1994') has been restored.

Briefly put, the background facts and relevant aspects of
the matter are that on 11.10.2003 a truck bearing registration
No.RJ 19 G 2026 coming from Nokha to Jodhpur was checked
at Nagaur road by the empowered authorities under the Act of
1994 and upon demanding the documents, a bilti of M/s.
Kamal Road Lines, Nokha dated 11.10.2003 and a bill issued


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particulars of the goods were stated in the bill as '....
.
.
.S.T.F.(.....)'. The authorities checked the vehicle
and found it carrying damaged Moong and Urad; and
observed that the goods in question were liable to tax as pulse
but were wrongly sold as tax free goods in the name of ‘cattle
feed’. Hence, a notice under Section 78(4) (a) of the Act of
1994 was issued.

On 12.10.2003, the owner of dealer firm produced three
purchase bills dated 24.12.2002, 28.01.2003, and 31.01.2003
wherefrom it was noticed that earlier the dealer was
purchasing the goods in the name 'Moong Dal Damage' but
later on got it stated as 'Moong Dal Cattle Feed'. The
authorities formed the opinion that there had been a false
declaration where the goods in question were stated tax free
goods; and issued notice under Section 78(5) of the Act of
1994. The dealer submitted a reply to the notice that he had
dispatched ‘damaged Moong Dal (Cattle Feed)’ and to his
impression, it were sales tax free; and prayed that the matter
be decided immediately.


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The aforesaid order passed by the Assessing Authority
was, however, reversed by the Dy. Commissioner (Appeals)
on 24.02.2005 while accepting the appeal filed by the dealer
with the observations that the commodity in question had been
‘wastage of Moong Dal’, which is not used for human
consumption and is used as cattle feed; and remains exempt
from tax as such. The learned Dy. Commissioner (Appeals)
also observed that the Assessing Authority had not stated any
reason wherefor it were treated to be a case of the goods
meant for human consumption.

The matter was taken in appeal by the Department to
the Tax Board against the order so passed by the Dy.
Commissioner (Appeals). The dealer-petitioner did not appear


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Seeking to assail the order aforesaid, learned counsel
for the petitioner strenuously contended that the consignment
in question had admittedly been of damaged Moong Dal; and
such damaged Moong Dal being not fit for human
consumption, its natural use remains that of cattle feed and
was rightly dealt with as such by the petitioner-dealer. Learned
counsel submitted that when nothing was concealed by the
dealer and description of goods as damaged Moong Dal was
not found incorrect, the Assessing Authority could not have
levied tax and inflicted penalty merely because of his different
opinion about the description of the goods. Learned counsel
further submitted that in the proceedings under Section 78 of
the Act of 1994, the authority concerned could not have
decided on the question of taxability or rate of tax applicable
on the goods for the scope of enquiry being limited to consider
if the requisite documents were not furnished or if the
documents were false. According to the learned counsel, all
the requisite documents were furnished complete in all


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Learned counsel appearing for the Department
vehemently opposed with the submissions that the likely use
of the commodity cannot be decisive on its liability for taxation
and it is the classification of the goods that matters; that goods
in question being pulse, Moong Dal, were subject to sales tax
as such and merely by suggesting the consignment in
question to be of damaged pulse, the dealer could not have
declared it to be a cattle feed so as to evade tax. In support,
learned counsel referred to the decision of this Court in Gotilal
Bhonrilal (supra). Learned counsel further submitted that it is
very much within the domain of the authority concerned to
check the correctness of the documents and in the given case,
also to examine the question of taxability of goods. Learned


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Learned counsel for the petitioner rejoined with the
submissions that if the contentions as urged on behalf of the
Department were to be accepted, it would lead to an
unacceptable result that all the exercise of regular assessment
would be undertaken in the proceedings under Section 78 of
the Act of 1994, something not contemplated by the statute.
Learned counsel submitted that the said provision being
essentially meant to check evasion of tax during
transportation, any dispute about taxability of goods, by its
very nature, has to be left to be determined during regular
assessment proceedings.

Having considered the rival submissions, this Court is
clearly of opinion that this revision petition remains bereft of
substance. The observations and findings of the Rajasthan
Tax Board as reproduced hereinbefore remain


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The main plank of the submissions on behalf of the
dealer is that the goods in question being damaged pulse,
named 'Moong Dal Damaged', were purchased as cattle feed
and were sold as cattle feed, therefore, there had been no
false declaration in the documents in question. The
submission is fundamentally incorrect. The commodity
concerned had been nothing but a pulse, Moong Dal. Its
quality, be it excellent, or good, or average, or bad, or
damaged, in any event, would not alter its character as that of
a pulse. Even if it be assumed that the goods in question had
been ‘damaged Moong Dal’, it does not ipso facto lead to the
result that the so-called damage had changed the character of
the commodity from pulse to cattle feed. It cannot be assumed
that as soon as Moong Dal is damaged, it gets reduced to, or
turns into, a cattle feed and cannot be used for human
consumption at all.

In the case of Gotilal Bhonrilal (supra) this Court
rejected the contention that Urad and Gram be treated as
cattle feed and exempt from tax; and this Court held that the
Board was right, with reference to the fact that Urad and Gram
are primarily used for human consumption and it is only
incidental that these commodities are also used as the


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The entire case of the present petitioner is founded on
incorrect premise where the petitioner makes assumptive
submission that natural use of damaged Moong Dal is that of
cattle feed. This Court is unable to find any basis for such
assumption and any rationale behind such submission. The
natural and primary use of Moong Dal being for human
consumption, its incidental or alternative use, say because of
some qualitative change, has no bearing on its classification
for the purpose of taxability; and in any case, it cannot be
classified as cattle feed merely with reference to the so-called
damage. Thus, the description of the goods in the bill and bilti
accompanying the consignment was incorrect where a taxable
commodity (Moong Dal) was described as a non-taxable one
(Cattle Feed).

Once it was found that the goods were not correctly
described in the documents that stated a taxable commodity
as a non-taxable one, such documents were incorrect on the
relevant facts and material particulars; and could only have
been termed as false. The present one was clearly a case of
submission of false documents and the goods in movement
being not accompanied by true and faithful documents. The


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Assessing Authority has not committed any error in imposing
penalty in this case.

The decision in M/s Maheshwari Minerals & Chemicals
(supra) has no co-relation with the case at hands. Therein, the
Assessing Authority held the assessee liable to pay tax on his
products, which, as per the order of Assessing Authority were
stone powder and chips and which, according to the assessee,
were poultry feed, ‘murgidana’. The Dy. Commissioner
(Appeals), however, held that the assessee was not given
opportunity of hearing and proceeded to remand the matter
but with certain observations that if it be found that the product
of the assessee is used as poultry feed either independently or
by mixing in other poultry feed, then the assessee be given
benefit under the relevant notification. Aggrieved with such
observations, the department preferred appeal to the Tax
Board; and the Tax Board proceeded to allow the appeal with
the finding that the product in question was not a poultry feed.

In the revision petition as preferred by the assessee, this
Court did not approve of the decision of the Tax Board where,
even without setting aside the finding of the Dy. Commissioner
that the assessee was denied opportunity of hearing before
the Assessing Authority, the order of remand as made by the
Dy. Commissioner (Appeal) was interfered with and the Tax
Board decided the question itself that the product in question


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was poultry feed or not. This court held that entire issue should
have been sent to the Assessing Authority for deciding after
opportunity of hearing to both the parties; and this Court
observed that opportunity of hearing having not been extended
to the assessee, there was no factual foundation with the
Assessing Authority and the department too had no
opportunity to meet with the grounds whereupon the assessee
claimed his product to be the poultry feed. This Court set aside
the order passed by the Tax Board; and directed that the
Assessing Authority shall decide the issue in accordance with
law after opportunity of hearing to both the parties and
uninfluenced by any of the observations made by the Dy.
Commissioner (Appeals) or by the Tax Board.

In the aforesaid order, this Court has never decided that
use of the product by the particular purchaser would be
decisive of its nature and classification; and it was left to be
determined by the Assessing Authority as to whether the
product was ‘poultry feed’ as claimed by the assessee without
being influenced by the observations made by the appellate
authorities including those of the Dy. Commissioner (Appeals).
It is noticeable that in the said case, the tenor of the
observations of the Dy. Commissioner (Appeals) had been as
if the end use of product by the particular purchaser would be
decisive of the nature of the product in question but those


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observations were not approved as such by this Court; and
this Court only observed that in the given situation the Dy.
Commissioner (Appeals) ‘rightly held that the product of the
assessee, if is found as poultry feed, then the assessee is
entitled the benefit’. This Court has not said that the finding as
to whether it were a poultry feed would be reached with
reference to the end use of the product. The question of
classification of the product was left to be determined by the
Assessing Authority, and to be determined without being
influenced by what was said by the Dy. Commissioner
(Appeals). The said decision in M/s Maheshwari Minerals‘s
case has no bearing on the question at hands nor supports the
case of the present petitioner.

The arguments relating to the scope of proceedings
under Section 78(5), in the fact situation of the present case,
do not carry even a technical value what to say of substance.
Apart from other aspects that the goods in movement should
be supported by the requisite documents, and such
documents should be produced at the time of checking, the
requirement further remains that the concerned documents
should not be false; and for submission of false document or
declaration, one incurs the liability for penalty. The documents
produced in the present case declared a commodity liable to
taxation (Moong Dal) as something not liable to taxation


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(Cattle Feed). The declaration and thereby the documents
were, therefore, false and the petitioner having knowingly and
deliberately drawn such documents cannot escape the liability
under Section 78 (5) of the Act of 1994. The submission that
such enquiry as to determine the question of taxability of
goods in question cannot be made in the proceedings under
Section 78 is not correct. Whether a declaration is correct or
not is definitely within the domain of the Authority concerned to
examine while proceeding under Section 78 of the Act of 1994.
A declaration stating a taxable commodity as non-taxable one
by giving a different name to the commodity is the mischief
very much within the ambit of Section 78 of the Act of 1994;
and enquiry into the correctness of the particulars of the goods
as stated in the documents and, as a necessary corollary, into
the aspect of taxability of such goods, is squarely within the
ambit and scope of the proceedings under Section 78 of the
Act of 1994.

It is noticed that the learned Dy. Commissioner
(Appeals) had gone even farther than the case of dealer and
termed the goods in question as ‘wastage of Moong Dal’
without appreciating that there is essential difference in the
two terms, ‘wastage’ and ‘damaged’. A damaged material
does not, by the damage itself, become wastage. The dealer
himself never claimed it to be the ‘wastage of Moong Dal’. The


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learned Dy. Commissioner (Appeals) further proceeded on
unwarranted and baseless assumption that the goods in
question were not meant for human consumption and were
used as cattle feed. The Tax Board has not committed any
error in reversing the order passed by the Dy. Commissioner
(Appeals) that proceeded on fundamentally incorrect premise.

It may in the passing be observed that apart from the
facts as noticed by the Assessing Authority that in the two bills
dated 24.12.2002 and 28.01.2003 the petitioner purchased the
commodity in question as 'Moong Dal Damage' and the
expression ‘cattle feed’ got inserted only in the later bill dated
31.01.2003, noticeable further it is that the goods in question
were sold by the petitioner dealer only on 11.10.2003. It is
difficult to even co-relate the said purchase bills of the month
of December 2002 and January 2003 with the sale effected as
late as in the month of October 2003, of the goods said to be
‘damaged’ Moong Dal.

Viewed from any angle, there appears no reason to

consider any interference in this case.
The revision petition fails and is, therefore, dismissed.

No costs.

(DINESH MAHESHWARI), J.

MK