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The Commissioner Trade Tax U.P. Lucknow v. M/S Shalimar Roadways - SALES/TRADE TAX REVISION No. 146 of 2005  RD-AH 594 (1 March 2005)
TRADE TAX REVISION NO.146 OF 2005
The Commissioner, Trade Tax, U.P., Lucknow. ....Applicant
M/s Shalimar Roadways, Jahanabad. ....Opp.party
Hon'ble Rajes Kumar, J.
Present revision under section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 15.02.2005 for the assessment year 2004-05, by which Tribunal has set aside the seizure order and directed the release of the seized goods without any security.
Brief facts of the case are that the dealer/opposite party (hereinafter referred to as "Dealer") was found importing 100 bags of goods claimed as Agarbatti in vehicle no.BR-24M/3101 from outside the State of U.P. At the check post goods were declared as Agarbatti in trip sheets and the declaration for import as contemplated under section 28-A of the Act has not been given on the ground that Agarbatti was exempted from tax. At the check post goods were verified and it was found that it was raw material of Agarbatti without any perfume and therefore, it was held that it was no Agarbatti. Goods valued at Rs.86,000/-was accordingly, seized and a sum of Rs.34,400/- was demanded towards security and further a sum of Rs.8,600/- had been demanded towards advance tax for the release of the goods. Application under the Proviso to section 13-A (6) of the Act was dismissed. Applicant filed appeal before the Tribunal. Tribunal vide impugned order allowed the appeal and set aside the seizure and directed the release of seized goods without any security. Tribunal relied upon the decision of the Tribunal, Varanasi dated 15.07.2002 in appeal no.585 of 2002 and held that the claim of the department can not be accepted that the stick pasted with material was the raw material, without scent because no further manufacturing process was involved.
Heard learned Standing Counsel, appearing on behalf of applicant and Sri M.N. Rai, Advocate appearing on behalf of the opposite party.
Learned Standing Counsel submitted that in trip sheets Agarbatti was declared, which is exempted from tax under the U.P. Trade Tax Act while on verification goods found was unscented Agarbatti, which was not Agarbatti. He submitted that perfume is essential ingredients of Agarbatti and without perfume or scent the stick with a paste can not be said to be Agarbatti. Learned counsel for the dealer submitted that in the present case voluntarily declaration was made at the check post and in the trip sheets goods was declared as Agarbatti, which was also mentioned in the invoice. He submitted that the goods found on verification was the stick pasted with material and it was final product known as Agarbatti and exempted from tax and there was no case of an attempt to evade the tax and the seizure of the goods were unjustified.
I have perused the order of Tribunal and the authorities below.
In the case of CST Vs. Indian Herbs Research and Supply Co., reported in 25 STC, 151. Question for consideration was whether "Dhoop" and "Dhoop- Batti" falls within the category of perfume. Apex Court held as follows:
"We are accordingly of the opinion that the word "perfume' in item No.37 of the Government notification should be construed in its ordinary sense, i.e., any substance natural or prepared which emits or is capable of emitting an agreeable odour either when burned or by the application of some foreign matter to induce any chemical reaction which results in fragrant odour being released from that substance. If we are right in taking this view dhoop and dhoop-battis manufactured by the respondent fall within the category of "perfume" under item 37 of the Government notification and are liable to tax imposed therein. We should like to add that in M/s Prahalad Das Gupta, Rajadarwaza, Varanasi v. Sri C.S. Saxena, Sales Tax Officer, Varanasi in Civil Misc. Writ Petition NO.1878 of 1962 decided on 17.10.1962, the Division Bench of the Allahabad High Court has taken the view that agarbattis fall within the dictionary meaning of "perfume" as it was a kind of incense which gave out agreeable odour when burned and therefore fell within item No.37 of the Government notification. This decision supports the opinion that we have expressed that dhoop and dhoop-battis fall within the category of "perfume" and are liable to tax under item No.37 of the Government notification."
In view of the above decision in my opinion, scent or perfume is an essential ingredient of the Agarbatti. In the absence of scent or perfume the stick with a paste is not a Agarbatti. Essential characteristic of the Agarbatti is that when it is burnt it produces aggreable odour. In the absence of scent or perfume aggreable odour can not be obtained on heating.
However, on the facts and circumstances of the present case, in my opinion, disputed question of fact is involved, which requires further investigation, which can appropriately be examined in the penalty proceeding. Seizure proceeding is a summary proceeding. However, on the basis of the material available on record, prima-facie it can not be said that seizure of the goods was unjustified. It will be open to the dealer to adduce the relevant evidence in support of his contention in the penalty proceedings, which may be investigated and be finally decided. However, looking to the facts and circumstances of the case dealer being a registered dealer, in my view nature of the security is liable to be modified. Authority concerned is directed to release the goods on furnishing of security other than cash or bank guarantee to the extent of Rs.34,400/- only. On furnishing of security to the extent of Rs.34,400/- seized goods may be released forthwith. Authority concerned may also take the sample of the seized goods for the purpose of adjudication of the issue in the penalty proceeding. Authority concerned is also directed to complete the penalty proceeding or any other proceeding in pursuance of the said seizure within a period of two months without prejudice to the observation made in the seizure proceedings.
With the aforesaid observation, revision stands disposed of.
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