AI Insights
The case involves M/s.Vizovolie Chakasang, a Nagaland-based company, and the Commercial Tax Officer (Intelligence), Vijayawada, concerning the confiscation of cloves transported from Nagaland to Delhi and Bombay via Andhra Pradesh. The goods were intercepted due to suspected tax evasion, leading to their confiscation. The Sales Tax Appellate Tribunal initially ruled in favor of the consignor, but this decision was overturned by the High Court, which found substantial evidence of clandestine sales intended to evade tax. The court emphasized the burden of proof on the consignor and transporter to demonstrate that the goods were not sold within Andhra Pradesh, which they failed to do.
Appeal Details
Counselvise Citation
[2011] 140 COUNSELVISE.COM (IT) 696834 (HC-ANDHRA_PRADESH)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
30-12-2011
Assessment Year
misc
Judgement Text
"THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION No.21428 of 2009 AND TAX REVISION CASE Nos.151, 184, 248 AND 249 of 1999 % 30.12.2011 # M/s.Vizovolie Chakasang, Nagaland represented by its Proprietrix, Smt.Vizovolie Chakhasang, W/o.K.K.Kuki ... Petitioner VERSUS $ The Commercial Tax Officer (Int.), Vijayawada ...Respondent < GIST: > HEAD NOTE: ! Counsel for Appellant: Sri M.V.J.K.Kumar ^Counsel for Respondent: Sri A.V.Krishna Kaundinya ? Cases referred 1. (1964) 15 STC 644 2. (1985) 60 STC 14 (DB) 3. (1967) 20 STC 520 4. (1970) 25 STC 57 5. (1978) 42 STC 145 (AP) 6. (1989) 8 APSTJ 50 7. (1992) 14 APSTJ 121 8. (1992) 14 APSTJ 272 9. (1999) 29 APSTJ 235 10. AIR 1992 SC 115 11. (2001) 5 SCC 30 : AIR 2001 SC 2282 12. (2009) 17 SCC 389 13. (1984) 60 STC 14 14. (1967) 19 STC 506 15. (1968) 22 STC 540 16. (2005) 242 STC 551 (AP) : 2005 (2) ALD 704 : 2005 (3) ALT 190 17. (2009) 2 SCC 681 THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION No.21428 of 2009 AND TAX REVISION CASE Nos.151, 184, 248 AND 249 of 1999 30.12.2011 Between: M/s.Vizovolie Chakasang, Nagaland represented by its Proprietrix, Smt.Vizovolie Chakhasang, W/o.K.K.Kuki ... Petitioner And The Commercial Tax Officer (Int.), Vijayawada And another ...Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION No.21428 of 2009 AND TAX REVISION CASE Nos.151, 184, 248 AND 249 of 1999 COMMON ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The four revision cases under Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 (the Act) are filed by the State against the common order dated 14.12.1998 passed by the Sales Tax Appellate Tribunal (the Tribunal). M/s.Vizovolie Chakasang of Nagaland (hereafter, the consignor) is the respondent in TRC Nos.151 and 248 of 1999. M/s.Bikaner Assam Road Lines, Vijayawada (hereafter, the transporter or BARL) is the respondent in TRC Nos.184 and 249 of 1999. By the impugned common order, the Tribunal allowed the Tax Appeals filed by the respondents and set aside the common order passed by the Appellate Deputy Commissioner (CT), Kakinada as well as the two confiscation orders passed by the Commercial Tax Officer (Intelligence), Vijayawada and Commercial Tax Officer, Kasibugga. The writ petition is filed by consignor for direction to pay the value of the goods confiscated. Background facts (i) The Special Assistant Commercial Tax Officer, Vijayawada (the Special ACTO) intercepted the lorry No.AP 16T 6489 on 07.5.1993. It was found transporting cloves allegedly sold and sent by the consignor to a purchaser at Delhi. Having found interpolations in the waybills, the Special ACTO issued notices, in response to which the transporter sent reply admitting that the transit pass is not available. Therefore the stock was seized on 21.5.1993. On the same date, the CTO (Intelligence), Vijayawada inspected godowns of the BARL and seized 2250 bags of cloves (each bag weighing 40 Kgs). The documents revealed that goods were on transport from Dimapur to Delhi to M/s.Ram Niwas and Co., (hereafter, first consignee). They were consigned by a person who is not a registered dealer. Hence, the CTO (Intelligence) proposed to confiscate the goods under Section 28(6) of the Act. He issued a show cause notice to BARL, the consignor and the first consignee. The General Power of Attorney (GPA) holder of the consignor filed objections on 08.6.1993. A contention was raised that Section 28(6) of the Act has no application as the goods are in transit and passing through the State of Andhra Pradesh. Though notice was served on the first consignee, he did not file objections but sought fifteen days time for filing a representation. The CTO, Vijayawada conducted enquiry during which he recorded statements of the owners of the lorries who transported the cloves to the godowns. An officer of the department went to Dimapur and conducted enquiry. It was found that the consignor was not available in the address given on the sale bills issued by the Nagaland Forest Officials. The CTO, therefore, on a overall consideration of the matter came to the conclusion that the consignor without any registration under the Nagaland Sales Tax Act had been clandestinely bringing the goods to the State of Andhra Pradesh, storing them in the godowns of BARL who is their agent and effecting the sales without paying sales tax. Accordingly he ordered to confiscate the entire quantity of cloves. The consignor and the transporter filed separate appeals before the Appellate Deputy Commissioner (CT), Guntur. (ii) The CTO, Kasibugga after receiving information from the superiors inspected three godowns of BARL situated at Ichchapuram and seized 1894 bags of cloves vide proceedings dated 25.9.1993. After making necessary enquiries, the CTO issued notice dated 09.6.1993 proposing confiscation of the stock. The GPA of the consignor appeared and objected. They claimed that this consignment was being transported to M/s.Babulal Omprakash at Bombay (hereinafter, second consignee). After conducting enquiry, the CTO passed a confiscation order dated 16.7.1993. The contentions and objections raised by consignor as well as transporter were the same. Aggrieved consignor and the transporter filed appeals before the Appellate Deputy Commissioner, Kakinada. (iii) The Commissioner of Commercial Taxes vide proceedings dated 02.8.1993 transferred the two sets of appeals to the Appellate Deputy Commissioner, Kakinada. The Appellate Authority heard the Counsel for the consignor and the transporter and by order dated 10.9.1993 dismissed the appeals confirming the confiscation orders. (iv) Against orders of the Appellate Deputy Commissioner, the consignor filed Tax Appeal Nos.916 and 918 of 1993 before the Tribunal. The transporter filed Tax Appeal Nos.915 and 917 of 1993. The four appeals were heard together and by common order were allowed. (v) The writ petition is filed by the consignor seeking a writ of Mandamus to give effect to the orders of the STAT and pay the amount of sale proceeds of Rs.70,07,000/- relating to 2250 bags of cloves sold in public auction on 13.07.1993 and Rs.49,63,000/- relating to 1894 bags of cloves sold on 16.07.1993. When the tax appeals were pending before STAT, the Commercial Tax Department confiscated goods. The consignor would contend that in the absence of any order under Section 33C of the Act, for withholding the refund of the amount of sale proceeds, the Department has no authority in law to retain the amount. We may mention that the grant of relief in this case would depend on the result in the tax revision cases. Submissions Special counsel for Commercial Taxes would submit that STAT was in error in holding that the confiscation of the goods is illegal on the ground that Section 28(6) would not be attracted to the facts of the case. According to the counsel, the consignor is a dealer for the purpose of the Act and if the dealer is not able to account for the goods kept in a godown or business premises, the authorized officer is entitled to seize and confiscate the goods. Allegedly, the goods seized were in transit from Nagaland to Bombay and New Delhi but the consignor as well as transporter did not prove that the goods were actually intended to pass through Andhra Pradesh. The consignees never came and claimed the goods seized and enquiries have shown that the sale transactions between the consignor and consignees are spurious and doubtful. According to him, a person transporting the goods to another State is bound to prove the goods actually moved out of the State and in the absence of any such proof, Section 28(6) is attracted whereunder goods can be confiscated. The special counsel would contend that after conducting seizure operations, the authorities at Vijayawada and Kasibugga issued notices to the consignor, transporter and consignees. This is not denied by any of them. The consignor also sent representations on three occasions denying sales in the State of Andhra Pradesh. The competent authority considered various contentions, made enquiries, recorded statements from the owners/drivers of the lorries and came to the conclusion that the consignor and the transporter were engaged in clandestine business of bringing cloves to the State and selling them without payment of sales tax. The Tribunal was, therefore, in error in holding that the principles of natural justice are violated while passing confiscation order. He relied on State of A.P. v Abdul Bakshi[1] and Transport Corporation of India v State of A.P.,[2]. The counsel for consignor and transporter made the following submissions. The goods entered Andhra Pradesh under valid entry pass. They are accompanied by documents to show that the goods were being carried to the destination through Vijayawada. Therefore, Section 28(6) is not attracted nor the goods in transit can be confiscated by the Department. Sufficient proof was produced to show that the consignor is cloves mahaldar; she paid the cost of the cloves to the Department of Forests in Nagaland; the lorries carrying the goods passed through number of check posts; the transporter was carrying necessary documents to establish this and the Revenue failed to establish by cogent and satisfactory evidence that out of 45 lorries which entered the State, only four lorries crossed the border and 41 others remained in Andhra Pradesh. It is also urged that the CTO did not give opportunity before passing the confiscation order to the consigner and consignee. The counsel relied on Deputy Commissioner, Agriculture, Income and Sales Tax v Travancore Rubber and Tea Company[3], Deputy Commissioner v Midland Rubber Producer Co., Ltd.,[4], Bandamidi Rajaiah v Board of Revenue, Commercial Taxes [5] , M/s.Seetharamanjaneya Rice Mills v State of A.P.[6], Shaik Basha v State of A.P.,[7], State of A.P., v A.P.Paper Mills[8], State of A.P., v Sri Laxmi Srinivasa Groundnut Traders[9], Ramaswamy Kalingaryar v Mathayan Padayachi[10], Hamida v Mohd.Khalil [11] and Tallam Gangadharan v U.Ismail Saheb [12] . Contentious Issues The brief background facts and submissions give rise to two broad issues for consideration. We would deal with these one after the other. Before doing so, we may repeat consignor’s version and Department’s version of chronology of events leading to passing of confiscation orders by two CTOs at Vijayawada and Kasibugga respectively to put in place the controversy in a little more detailed prospective. The consignor obtained cloves mahaldar in Kohima Division from Nagaland Forest Department for 1992-1993 after paying an amount of Rs.30,000/-. She then entered into a contract of sale with consignee No.1 at New Delhi for sale of about 2,500 bags and another contract of sale with consignee No.2 for sale of about 1,890 bags of cloves. This was in the months of March, April and May, 1993. The goods were entrusted to BARL for transportation from Dimapur to New Delhi and Bombay. The nearest route from Dimapur to these two destinations is via Bihar. But, due to serious law and order problems in that State, and also the incidents of consignor’s lorries being stopped in Bihar, BARL decided to transport them to the two destinations via Andhra Pradesh. In the first week of May, 1993, more than forty five lorries either belonging to BARL or hired by them, transporting cloves passed through the Commercial Tax Department integrated check post, Purushothapuram, near Itchapuram in Srikakulam District. Forty four lorries passed through the State of Andhra Pradesh to their respective destinations to be delivered to the consignees at Bombay and New Delhi. But the goods being transported by some lorries, due to logistic problems, were unloaded at Vijayawada and Kasibugga. They were stocked and stored in the godowns of BARL to be transhipped into other lorries for being carried to Bombay and New Delhi. These stocks were not intended to be sold in Andhra Pradesh either by the consignor, or the transporter, or any dealer, but were to be carried to the consignees. According to the petitioner, out of forty five lorries which entered Andhra Pradesh, forty four lorries passed through the State and only goods from one lorry were kept in godowns at two places and that these goods were duly accounted for by producing necessary permits, travel documents and transit passes. The version of the Revenue is as follows. A lorry coming from Dimapur with 250 bags of cloves was checked by Special ACTO at Vijayawada-Hyderabad route check post No.9, Vijayawada. As per the documents produced by the driver, the goods were being transported for delivery to the consignees. The driver made a statement that goods would be transferred to another lorry for onward journey from the godowns of BARL. The officer entertained a suspicion because it was not necessary for the lorries going from Dimapur to New Delhi or Bombay to touch Vijayawada. He also found interpolations in the waybill with regard to the date thereon. Therefore, he detained the goods and the vehicle. This was followed by an order detaining fifty five bags, the value of which is equal to tax due on the total value of the goods and three times of the amount of tax pending enquiry as security. The balance quantity of goods was released. In response to the notice, BARL submitted representation stating that the goods were not intended for sale in Andhra Pradesh but admitted that the transit passes were not available. He explained that as transit passes were not available at Itchapuram, the check post officials allowed the vehicles after being satisfied with the documents available with the lorry. As a follow up, discreet enquiries were made, when it was suspected that the first consignee had been indulging in clandestine trade by choosing BARL and storing the goods at Vijayawada. On 21.05.1993 in the presence of the Manager of BARL, the CTO (Intelligence) inspected two godowns at Vijayawada and found thousand (1,000) bags of cloves in one and 1,250 bags in another. As per the statement of the Manager, the buyer for all nine lorries was first consignee and that they were covered by transit passes issued by Purushothapuram check post. He also stated that the goods were received in godown on different dates but were stocked together. The CTO then seized the goods under Section 28(6) of the Act pending enquiry. On coming to a prima facie conclusion that the consignees were getting goods from Dimapur and effecting sales in Andhra Pradesh to evade payment of all taxes to the Government, the Joint Commissioner (Enforcement) enquired with New Delhi, CT Department and came to know that the consignee is a registered dealer under Delhi Sales Tax Act but the survey of the premises revealed that there was no stock nor any books of accounts, and the dealer’s representative was not available at the address given in the documents. The Department then deputed two officials to Dimapur. On conducting enquiry, they reported that the consignor is not a registered dealer in Nagaland Sales Tax, that she is a cloves mahaldar for 1992-1993 holding permit dated 24.11.1992 and that they could not locate the consignor at the address indicated in the sales tax documents. Then, the CTO Vijayawada issued show cause notice to BARL, consignor and first consignee proposing confiscation under Section 28(6) of the Act. The grounds for proposed confiscation, pointed out in the show cause notice are the goods need not take a circuitous route via Andhra Pradesh to go from Dimapur to Delhi; the consignor is not a registered dealer in Nagaland and she is only mahaldar; consignee was not found at the address furnished and no business activities were found going on at its registered office; and in spite of service of seizure order of BARL, the consignee (owner of the goods) did not appear before the CTO with proper explanation. In response to the show cause notice, the consignor sent a telegram dated 03.06.1993 seeking release of the goods and her husband as well as GPA holder filed a representation objecting to seizure and proposed confiscation inter alia on the ground that Section 28(6) of the Act has no application. She also submitted that transportation of the goods via Bihar and Uttar Pradesh State borders is fraught with a lot of difficulties i.e., attacks by dacoits/unknown persons on the way. The allegation of clandestine business in the State of Andhra Pradesh was denied and the transit passes under Section 29B allegedly obtained at the boader check post for eleven lorries were also offered as evidence. The Branch Manager of BARL, Vijayawada also filed an affidavit on the same lines. He denied allegation of tax evading clandestine sale in the State. He further stated that the BARL has to deliver the goods to the consignee on receipt of freight charges; the lorries were engaged upto Vijayawada where goods were unloaded in the godowns for the purpose of transshipment by engaging other lorries; it is BARL which is required to engage lorries and pay freight charges noted in the LR; and that freight charges were already paid from Nagaland to Vijayawada. The consignor also sent yet another representation on 02.06.1993 requesting for release of the goods under Rule 48 of the Rules offering to pay the applicable tax, she expressed that first consignee is unlikely to pay the price of the goods in view of the seizure and that she would pay delivery charges after paying applicable taxes. The first consignee sent a telegram seeking fifteen (15) days time for filing detailed representation. The CTO recorded the statements of owners of five lorries, as well as that of a clerk of BARL. All the owners stated that they brought cloves from Dimapur and unloaded at the godowns of BARL. One of them (Kurma Nageswara Rao) who was owner of lorry No.AIR 7387 stated that he brought cloves from Dimapur on two occasions and downloaded at Vijayawada. After considering all the material, the CTO Vijayawada passed the order on 30.06.1993 directing confiscation of all the goods seized at the godowns of BARL. The version of the Department insofar as confiscation of the goods by CTO, Vizianagaram is the same. But, in this case, the goods were consigned to both first and second consignees; the second one being M/s.Babulal Omprakash, Narsinath Road, Near Anand Bhavan, Bombay. On enquiry, it was found that the second consignee was not a registered dealer in the State of Maharashtra; the address furnished in the documents was false, and the second consignee was a bogus dealer. The second consignee or his representative did not appear claiming the goods or objecting the seizure and confiscation. The confiscation proceedings before the authorities The two Commercial Tax Officers in two jurisdictions found almost similar irregularities in the transactions. As summarized by the appellate Deputy Commissioner, Kakinada, they are as follows. (i) The consignor was not found registered with the Sales Tax Authorities in Nagaland nor any registration under CST Act was taken; (ii) The consignor was not available at the address given in the transportation document; (iii) the consignor paid only Rs.30,000 for goods worth of nearly two crores of rupees; (iv) the consignee at Delhi was found to be indulging in many irregularities including violation of the provisions of the Delhi Sales Tax Act; (v) The registration certificate of the Delhi dealer was already cancelled; (vi) The dealer in Bombay was found to be false and not present at the address given; (vii) The goods had taken a circuitous route that was three times longer than the nearest National High Way between Nagaland and Delhi or Bombay; (viii) The consignor failed to produce any evidence to show that they were capable of carrying business in several lakhs of rupees. The consignor also did not show any evidence that the transactions were made through bank; (ix) No evidence about the proper order, agreement for, sale, advance payment, freight arrangement, Bank Accounts were filed before the CTO, Vijayawada and the CTO, Kasibugga; and no evidence of insurance of the goods were produced before the authorities; and (x) at the time of seizure the goods were found stocked at the godowns of Bikaneer Assam Road Lines, Vijayawada and Itchapuram on the plea that they were waiting for transshipment; and the stocked cloves were not supported by proper documents. Both the original authorities also found that the goods kept in godowns at Ichapuram and Vijayawada were not supported by proper documents and the consignees did not even appear and claim the goods. The authorities also considered various grounds urged on behalf of the consignee to which a reference is made supra and came to the conclusion that there are sufficient indications to lead to the conclusion that the goods were being brought from Nagaland on regular basis for being sold in Andhra Pradesh evading payment of tax under the Act. Before the appellate authority, it was argued that the goods in transit in the course of inter-State trade can be seized under Section 29B only at the check post for non-production of transit pass but when they were kept in the godown for onward transmission, they cannot be seized. This was repelled by the appellate authority, who observed that Section 28(6) enables the seizure of the goods at the place of a dealer if they are not accounted for and that if the goods were intended for transshipment, they would not have kept at the godowns for three days before the seizure was effected by the officials. If BARL stocked the goods for further transshipment to the destinations, nothing prevented them to maintain proper records when huge stocks were stored in the godowns which were allegedly intended to go to Delhi and Bombay. The transporter did not produce any record, any bank accounts or agreement of sale between the consignor and consignees and no proper explanation was offered by the Manager of the transporter at the godowns, which itself is a clear pointer to the clandestine activity by the consignor and transporter. The information gathered during the enquiry to the effect that the first consignee never received any supplies from Dimapur vide Statement dated 28.06.1993, the BARL engaging lorries of private owners only upto Vijayawada weighed with the appellate authority in rejecting the plea of the respondents. The submission that Section 28(6) would be attracted only when the person involved is a dealer was rejected observing that, when the transporter acted as a bailee in Andhra Pradesh, the goods admittedly belonged to the consigner, she would become dealer attracting the provisions of the Act. It was also contended that reasonable opportunity was denied to the consignor. The seizure order dated 21.05.1993 which was served on BARL, consignor and consignees (first consignee refused to receive the seizure order), the statements issued by the consignor on 07.06.1993 and 14.06.1993, the objections filed by the GPA of the consignor influenced the appellate authority to reject this contention and to hold that the show cause notice of confiscation was duly served. After confiscation order, the goods were auctioned after giving notice to the advocate which was held to be sufficient compliance of principles of natural justice. By order dated 10.03.1993, two appeals filed by the consignor and the other two filed by BARL, were dismissed. The Order of the STAT After analyzing the factual background, the learned Tribunal framed sole point for consideration; whether the confiscation orders separately passed by the CTO, Vijayawada and CTO, Kasigugga are liable to be set aside for any of the reasons urged by the appellants. We may mention that the arguments which are raised before the Tribunal were similar to those pleaded before the Appellate Deputy Commissioner. The Tribunal dealt with two main aspects. The first one was whether the goods originated from Dimapur and reached Ichapuram and Vijayawada under valid documents, allegedly intended to be transported to the first consignee at Delhi and the second consignee at Bombay. The second aspect was whether the goods seized at two places by the respective competent authorities were actually and factually intended to be sold to the consignees or were intended for sale in Andhra Pradesh by evading tax under the Act. After considering various documents, namely, the documents issued by forest officials of Dimapur, consignment notes, LRs and other travel documents, the learned Tribunal recorded the finding as under. The above discussion based on undisputed facts clearly disclose that the entire stock confiscated by orders of the Commercial Tax Officer (Int), Vijayawada and Commercial Tax Officer, Kasibugga were accompanied by authenticated documents of permits issued by competent forest officials at Dimapur, consignment notes, LRs etc., including transit passes except for one lorry load issued by Purushothapuram check post authorities. These stocks were ultimately confiscated by the authorities concerned. ... ... We are now concerned with the validity of the orders of confiscation passed by the two authorities in question. The learned Tribunal observed as follows. There is no dispute that as per the valid permits issued by Forest Officials of Dimapur, the entire stock was shown to be transported to New Delhi for delivery to the consignor M/s.Ramnivas and Company and the route from Dimapur to reach New Delhi was shown in all the documents as proceeding through Vijayawada, Hyderabad and exit check post in Andhra Pradesh. Even in the transit permits issued by Purushothapuram Check Post, the route was shown as through Vijayawada. According to the Transporter at Dimapur, he engaged lorries upto Vijayawada and according to his arrangements those goods will be transshipped into other lorries for being carried from Vijayawada to New Delhi. Further the Tribunal was of the opinion that the Department failed to establish that as an agent of the consignor, the transporter is doing business in Andhra Pradesh and therefore, the two ingredients of Section 28(6) are not satisfied in the cases. The reasoning of the Tribunal is as under. In the present batch of appeals, the goods were detained and seized while in transit. They were not detained and seized while they were in the godowns or places of business of the consignor or the dealer and offered for sale locally. Further, as clear from the above passage as well as decisions of this Tribunal, Section 28(6) will be attracted only if the goods found in any office, establishment etc., of the dealer were not found accounted for by the dealer in his accounts registers and other documents maintained in the course of his business. The two ingredients of Section 28(6) are not at all satisfied in the present batch of appeals. The first ingredient is that the goods must be found in the place of business, shop or godown etc., of the dealer. In the present case the consignor is to be treated as a dealer. The goods were admittedly found while in transit in the godowns of the transporter and not that of the consignor. Further the transported goods are supported by valid documents. The second ground is that the goods did not find place in the accounts maintained by the dealer. There is no question of the consignor maintaining the accounts in A.P., as she is not a dealer in A.P. If one could sum up the findings of the learned Tribunal which prompted it to allow the appeals of the consignor and transporter, they are as follows. (i) the goods were being transported from Dimapur to New Delhi and Bombay through Andhra Pradesh. They were supported by valid permits, passes and travel documents. BARL engaged the lorries only upto Vijayawada and it was to make arrangements for further transport of the goods from Vijayawada to New Delhi and Bombay; (ii) the officials of the Commercial Tax Department did not detain and seize the goods while they were in godowns or places of business of the consignor or dealer and offered for local sale. The goods were detained and seized while in transit on the ground that they were not accounted for in the books of accounts maintained by the consignor; and (iii) in view of the findings 1 and 2, the two ingredients of Section 28(6) are not satisfied and thus the Department did not establish the allegation of clandestine sale of goods in Andhra Pradesh. Before we take up the substantial issues, we may point out that under Section 22(1) of the Act, the revision would lie to the High Court, “on the ground that the appellate Tribunal is either decided erroneously or failed to decide, any question of law”. Indisputably, the revision lies only when it is shown that the Tribunal decided a question of law erroneously or failed to decide such question of law. A revision would not lie on a question of fact. Hence, we are not inclined to interfere with the finding insofar as the Tribunal holds that the consignor being cloves mahaldar of Nagaland transported the same from Dimapur to Vijayawada, the goods were consigned to consignees at New Delhi and Bombay; and they were stocked at Itchapuram and Vijayawada godowns belonging to BARL (transporter) allegedly for being transshipped to destinations. This takes care of the finding No.1 as we summarized supra. Therefore, in spite of strenuous efforts by the Special Counsel for Income Tax even on the finding No.1, we are not inclined to consider the same. The next issue is whether the goods were intended to be further transported from Vijayawada and Itchapuram to their destinations where the so called consignees had business as contended by consignor/transporter or as contended by the Department they were brought to Andhra Pradesh for effecting clandestine sales in the State by evading payment of tax under the Act. These certainly throw up the questions of law regarding applicability of confiscation provision; burden of proof, nature of evidence and power of department’s officials. Applicability of Section 28(6) of the APGST Act Sections 28, 29, 29A, 29B, 30A, 31 and 32 form one group of provisions, which have to be read and understood as supplanted by the relevant provisions in Andhra Pradesh General Sales Tax Rules, 1967 (APGST Rules). They deal with measures to prevent tax evasion and the manner and method of dealing with tax evasion and attempted tax evasion. These provisions contemplate four actions, namely, (i) search of the place of business and godowns and seizure of accounts, registers and documents; (ii) seizure of goods not properly accounted for; (iii) confiscation of goods not satisfactorily accounted for; and (iv) conviction and sentence with fine. In addition to this, Section 30C authorises the designated jurisdictional officers to levy penalty if there is any default in payment of the tax, with which we are not concerned in these revisions. The provisions dealing with prevention of tax evasion have considerable bearing on the controversy raised before this Court. Hence, it is necessary to briefly refer to them. Every person licenced or registered, and every dealer who is required to get registration under the Act shall keep and maintain true and correct account (Section 24). Section 27 requires the owner or other person in charge of the goods vehicle to carry with him a bill of sale or delivery note, goods vehicle record or trip sheet and other documents with all the particulars relating to the goods under transport. These shall be submitted to the CTO having jurisdiction over the area in which the goods are delivered. Section 28 is an important machinery provision dealing with search, seizure and confiscation of goods. This is intended to prevent tax evasion and acts as deterrent. The analysis of Section 28 would show that any officer not below the rank of an Assistant Commercial Tax Officer authorized by the State Government in this behalf, may require any dealer to produce before him the accounts, registers and other documents, and to furnish any information relating to his business. Sub-section (2) requires a dealer to keep open for inspection all accounts, registers and documents maintained by a dealer in the course of his business, as also the goods in his possession, and his offices, shops, godowns, vessels or vehicles. Any officer empowered can inspect them at all reasonable times. Sub-section (3) empowers that if any such officer who has reason to suspect that any dealer is attempting to evade the payment of any tax or other amount due from him under this Act, may, seize such accounts, registers or other documents of the dealer as he may consider necessary. The records so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under the Act. Sub-section (4) enables search of any office, shop, godown, vessel, vehicle or any other place of business or any building or place where such officer has reason to believe that the dealer keeps or is keeping any goods, accounts, registers or other documents of his business, and sub-section (5) empowers to break open any box or receptacle where such things are kept. Here, we quote sub-section (6), which reads as follows: (6) Any such officer shall have power to seize and confiscate any goods which are found in any office, shop, godown, vehicle, vessel or any other place of business or any building or place of the dealer, but not accounted for by the dealer in his accounts, registers and other documents maintained in the course of his business: Provided that, before taking action for the confiscation of goods under this sub-section, the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner. Explanation.- It shall be open to the State Government to authorize different classes of officers for the purpose of taking action under sub-sections (1), (2) and (3). In Transport Corporation of India Limited v State of A.P.[13], Hon’ble Sri Justice Jeevan Reddy considered the scope of Section 28(6) as under. The power under sub-section (6) of Section 28 is not a power to be exercised at the check post or the barrier. The said power is to be exercised only with respect to, or in the case of dealers alone, but not other persons. Every dealer is expected to maintain accounts, registers and other documents relating to the goods in his possession; sub- section (6) says that, if any goods are found in possession of the dealer which are not so accounted for, they may be seized and confiscated if it is found, after holding an enquiry, as prescribed by Rule 48, that “there is an evasion or an attempt to evade the tax thereon”. As rightly pointed out in the two earlier Bench decisions of this Court in Papanna v Deputy Commercial Tax Officer, Guntakal [14] and Kalangi Krishna Murty & Company v Commercial Tax Officer, Guntur[15], this provision is meant to operate as a deterrent, and as a penalty upon tax-evaders, and is conceived in the interest of preventing the evasion of tax. The ides is to make the evasion of tax higher costly and a losing proposition. It is thus a power incidental and ancillary to the substantive power of taxation, conferred by entry 54. Sections 29, 29A and 29B are intended to check evasion of tax. When the goods ostensibly in transit through State of Andhra Pradesh to other destinations, are sold in Andhra Pradesh without being charged to the tax, these provisions empower the designated officers at the State borders or within a specified area or while the goods are in movement, to stop and detain the vehicles, seize the goods and by reason of an amendment made with effect from 30.04.2001 can even confiscate the goods which are carried without any documents or covered by fictitious documents. After reading these provisions, we may paraphrase the relevant aspects infra. Section 29 has eight sub-sections which comprehensively deals with establishment of check posts to prevent tax evasion. The Government or Commissioner are empowered to direct setting up of check posts, erection of barriers at notified places. The driver of a vehicle carrying the goods has to stop the vehicle and the officer in charge of the check post (hereafter, check post officer) would examine the contents in the vehicle and inspect all the records in relation to the goods carriage, which are in possession of the driver or the person in charge of the vehicle with a view to ascertain when the goods are taxable and whether tax is paid. If the tax is paid on the sale or purchase of the goods or properly accounted for in the documents, he may release the vehicle with the goods carried. If the tax payable has not been paid on the sale or purchase of the goods or the goods carried are not accounted for properly, the check post officer shall detain the goods and direct the driver or any other person in-charge, to pay the tax or to furnish security for an amount not exceeding five times the tax payable. If the tax is paid and security is furnished, the goods shall be released forthwith. If the tax is not paid or security is not furnished, the officer shall detain so much of the goods as are approximately equal in value to the amount of determined tax and security directed to be furnished as long as may reasonably be necessary. If the goods are to be detained for more than three days, the permission of the next higher authority shall be obtained. If the goods are subject to speedy and natural decay, the goods can be sold in open auction. If any application is made to prescribed authority, the sale proceeds can be paid to the person entitled after deducting the expenses of sale and other incidental charges as well as the amount of sales tax and the penalty due under the Act. If it is found that the goods carried are without paying tax under the Act or not properly accounted for, the check post officer shall collect the tax payable on the goods so carried and in addition levy penalty not exceeding five times amount of tax payable on such goods (Ambica Lamp House v CTO[16]). As it existed during 1993-1994, Section 29 did not contain a provision for confiscation of the seized goods. By A.P.Act No.30 of 2001, sub-section (6B) of Section 29 was inserted empowering the check post officer, “to seize and confiscate any goods where such goods are carried in the goods vehicle without any documents or covered by fictitious documents”. It may also be necessary to notice that the power to seize and confiscate the goods is one of several powers to check evasion of tax. It is intended to take all necessary steps for a proper assessment and collection of tax. It is a power to inspect any premises of dealer to seize or confiscate if the tax is not paid or the goods are not accounted for. Rule 48 of the Rules contains procedure contemplated by the proviso to sub-section (6). Rule 48(4) is important and reads as below. 48(4) Any such officer, after making such enquiry as he deems fit and after giving the owner of the goods, if he is ascertained, an opportunity of being heard, may confiscate the whole or any part of the goods seized, if he is satisfied that there is evasion or an attempt to evade tax thereon in any manner whatsoever. If the owner is not ascertained even after the enquiry, the officer shall order confiscation of the goods. A copy of the order of confiscation shall be served on the owner of the goods if he is ascertainable. Thus, the confiscation of the goods would be necessitated if there is evasion of tax, if there is an attempt to evade the tax, and if the owner of the goods is not ascertainable. In case confiscation is not warranted, as per sub-rule (6), the officer who seized the goods shall return the goods to the owner or any person authorized by him if they had not been sold in public auction. If the goods are already sold in public auction, the proceeds of the sale less expenses incurred on the sale, if any, shall be refunded to the owner of the goods or any person authorized by him. The same procedure would be followed even where the order of confiscation is set aside or modified on appeal or revision. A reference may also be made to sub-rule (7) which provides for an opportunity to the owner of the goods to appear before the officer who ordered confiscation, satisfy him with relevant records regarding the bonafides of the goods in question and regarding the reasons for his non-appearance. If the concerned officer is satisfied that there has been no evasion or attempt to evasion, he may release the goods confiscated or refund the money realized in auction, as the case may be. This takes us to the tax evasion preventive measures under the Act with reference to the goods entering the State or ostensibly passing through the State. Section 29A has two sub-sections. Sub-section (2) which was inserted by AP.Act No.30 of 2001 with effect from 01.04.2001 empowers an officer to seize and confiscate any goods found in office when such goods are not covered or covered by fictitious documents. As this provision was not in existence during 1993-94, this has no application to this case. Section 29A(1) empowers an officer empowered by the Government to enter into and search office, shop, godown, vessel, receptacle, vehicle or any other place where the goods are kept by a carrier or bailee to whom goods are delivered for transmission and before transmission, such carrier or bailee keeps them in a place or places. During the search, the carrier or bailee or person in charge of the goods shall produce bill of sale or delivery note or other prescribed documents regarding the goods and give the name and address and of the carrier or the bailee and the consignee. Whether failure to do so would again attract Section 28(6)? This is the issue, which we may have to deal with a little while later. Next, relevant provision, deals with transit pass to be obtained by the driver of the vehicle and the consequence of failure. Section 29B is relevant and reads as under. 29-B Transit of goods by road through the State and issue of transit pass:- Where a vehicle, carrying goods, coming from any place outside the State and bound for any other place outside the State, pass through the State, the driver or other person-in-charge of such vehicle shall obtain in the prescribed manner a transit pass from the officer-in- charge of the first check post or barrier after his entry into the State and deliver it to the officer-in-charge of the last check post or barrier before his exit from the State, failing which it shall be presumed that the goods carried thereby have been sold within the State by the owner or person in charge of the vehicle and accordingly the tax is assessed and penalty, if any levied in accordance with the provisions of this Act: Provided that where the goods carried by such vehicle are, after their entry into the State, transported outside the State by any other vehicle or conveyance, the burden of proving that the goods have actually moved out of the State shall be on the owner or person-in-charge of the vehicle. Explanation:- If a vehicle is hired for transportation of goods by any person, the hirer of that vehicle shall, for the purposes of this section, be deemed to be the owner of the vehicle. (emphasis supplied) Rule 46 of the Rules deals with the procedure to be followed at check posts and Rule 46A which was inserted by G.O.Ms.No.1165 dated 22.11.1993 stipulates the conditions to be complied with by the driver or person in charge of the goods vehicle to obtain transit pass under Section 29B. Rule 47 is a special provision which empowers any officer of the Department not below the rank of Assistant Commercial Tax Officer to stop the vehicle carrying the goods at any place other than check post and exempt the contents of the vehicle and inspect all the records. If on such inspection, it is found that any dealer is transporting goods in a vehicle not covered by a way bill issued by the person who signed the goods, the action contemplated under Rule 46 can be taken which is similar to the action to be taken under Section 29 at the check post when the driver or person in charge of the vehicle carrying the goods is not able to produce the documents, produce fictitious documents or fails to prove that the applicable taxes have been paid. The conspectus of Sections 28, 29, 29A and 29B and the corresponding Rules, namely, Rules 46, 46A, 47 and 48 may be summed up as follows. These provisions indisputably are intended to check tax evasion or attempted tax evasion. Such tax evasion or attempted tax evasion could occur in respect of sales transactions within the tax territory and/or at the check post or even while the goods are in transmission to other tax territory. The tax evasion in the tax territory may be at the instance of a dealer, an agent, a transporter involved in the sale of goods. The basic difference between Sections 28 and 29 of the Act is that the former is concerned with the power of seizure and confiscation of goods at the premises of the dealer or at any other place of the dealer carrying the goods, whereas the latter is concerned with inspection of goods at check post while in transit. Indisputably after 01.04.2001 by reason of Section 29A(2) when the goods in transit are kept in godown, shop, office or vessel by the carrier or bailee, and they are not covered by the documents or covered by fictitious documents even those goods can be confiscated. Of course, under Section 29(3)(b)(ii), at the check post, if the goods are not properly accounted for for the purpose of payment of tax, the check post officer can demand the tax payable as well as furnish security for an amount exceeding five times the tax payable. As per Section 29(6) if the tax demanded is not paid or the security is not furnished, the goods can be detained and can be sold. It is also indisputable that with effect from 01.04.2001 by reason of insertion of sub-section (6B) of Section 29, check post officer is empowered to seize and confiscate the goods where such goods are carried without any documents or covered by fictitious documents. Similarly, by reason of insertion of Section 29A(2) by the said amendment, an officer inspecting the office, shop or godown can seize and confiscate the goods which are stored while in transit if such goods are not covered by the valid documents. It is clear that before 01.04.2001 no power is vested in the officer concerned to confiscate the goods either at the check post or the goods kept in a godown during the transit. Even in these two situations, confiscation could be done only when the goods are not covered by documents or covered by fictitious documents. What would be the position when the goods stored in godowns ostensibly intended to be transshipped to a consignee in a different State but in fact the goods are intended to be sold in State of Andhra Pradesh by evading payment of tax? Whether Section 28(6) is not attracted? Section 28(6) read with Rule 48(4) will come into operation and there is no bar in law to seize and confiscate the goods which are kept in the godown ostensibly for the purpose of further transshipment if the owner is unascertainable. For ready reference, we may extract Section 28(6) and Rule 48(4) of the Act. 28(6) Any such officer shall have power to seize and confiscate any goods which are found in any office, shop, godown, vehicle, vessel or any other place of business or any building or place of the dealer, but not accounted for by the dealer in his accounts, registers and other documents maintained in the course of his business: Provided that before taking action for the confiscation of goods under this sub-section, the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner : Explanation:- It shall be open to the State Government to authorize different classes of officers for the purpose of taking action under sub-sections (1), (2) and (3). 48(4) Any such officer, after making such enquiry as he deems fit and after giving the owner of the goods, if he is ascertained, an opportunity of being heard, may confiscate the whole or any part of the goods seized, if he is satisfied that there is evasion or an attempt to evade tax thereon in any manner whatsoever. If the owner is not ascertained even after the enquiry, the officer shall order confiscation of the goods. A copy of the order of confiscation shall be served on the owner of the goods if he is ascertainable. The learned Tribunal came to the conclusion that confiscation cannot be ordered as Section 28(6) has no application. According to the Tribunal, Section 28(6) will be attracted only if the goods found in any office, establishment etc., of the dealer were not found accounted for by the dealer in his accounts and other documents maintained in the course of business and that the revenue failed to establish that as an agent of the consignor, the transporter was doing business in Andhra Pradesh. This conclusion in our considered view, suffers from misdirection in law. The learned Tribunal ignored the relevant provisions dealing with burden of proof; failed to appreciate the true scope of Section 28(6) and drew inferences from the facts which are not warranted. Misdirection is improper understanding of facts and law. It is certainly a ground to fault a decision impugned before the revisional Court. If the Court or Tribunal addresses a wrong question and not the right question, whether the jurisdiction is exercised lawfully or not, such approach would amount to misdirection in law. It is certainly a grave error of law which warrants interference by the reviewing Courts, or the appellate Court (APSRTC v Jayaram Reddy [17]). We may also mention that under Section 22(1), a revision against the order of the Tribunal would lie if the Tribunal decides a question of law erroneously. When the findings of facts are perverse or the issue addressed is wrong, it would be certainly an erroneous decision on question of law. Whether consignor and transporter are ‘dealers’ The facts which are not disputed would show that the consignor at the relevant time was not registered as a dealer in Nagaland. She allegedly entered into an agreement – which did not see the light any time, anywhere during the proceeding - to sell the goods to the first consignee at Delhi and second consignee at Bombay. She engaged BARL to transport the goods. Instead of taking the nearest highway to Delhi and Bombay, the transporters chose a circuitous route three times longer than the normal route (see Revised Memorandum of Grounds). A large convoy of lorries numbering more than 45 – entered Andhra Pradesh at Purushothapuram border check post of the Department. All of them are not covered by transit passes as required under Section 29B of the Act. A large quantity of goods was unloaded at Kasibugga and was stored in the godowns of BARL. Some more lorries travelled all the way to Vijayawada at distance of about 400 KMs and another consignment of large quantity of goods found way to the godowns of BARL. At both the places, concerned officials seized the stock and after conducting enquiry confiscated the goods. The fact that the goods were seized in the godowns situated far away from the check post stands proved. Section 29 and Rule 46 empowering check post officer to detain and seize the goods and also sell the goods if necessary, however are not applicable. The two provisions which immediately spring into action are Section 29A and 29B. As already noticed, Section 29A deals with the power of the empowered officer to inspect goods delivered to a carrier or a bailee, which are kept in the godown, vessel, receptacle, vehicle or any other place. In such a case it shall be the obligation of the carrier or bailee or the person in-charge of the goods, to produce the records and accounts as well as the documents supporting the claim that the goods inspected were for the purpose of transmission. If the goods are alleged to be in transit and only kept in the godown for further transshipment, Section 29B has to be satisfied. This Section provides that any vehicle carrying the goods coming from any place outside the State shall obtain transit pass from the check post officer and deliver it to the check post officer at the exit/last check post while passing through the State of Andhra Pradesh. The proviso to Section 29B casts burden of proving that the goods have actually moved out of the State shall be on the owner or person in charge of the vehicle. If the burden is not discharged by producing proper documents, it shall be presumed that the goods carried are sold in the State by the owner or the person in charge of the vehicle and accordingly tax is assessed and penalty levied in accordance with the provisions of the Act. Thus, as per Section 29B, if the owner or the person in charge of the goods, fails to discharge the burden of proving that the goods have actually moved out of the State, the law presumes that the goods carried are sold in the State of Andhra Pradesh. In such an event, there cannot be any bar for seizing and confiscating the goods under Section 28(6). A submission is made by the counsel for the consignor and BARL that Section 28(6) would be attracted only when the owner of the goods is a dealer. According to them, the goods were stored in the godowns of BARL (transporter) who are not registered in the State of Andhra Pradesh; the consignor or consignee are not registered in the State, and therefore, Section 28(6) would not be attracted. We are afraid the submission is devoid of any merit. Section 2(e) of the Act defines ‘dealer’. To the extent necessary, the same is quoted as below. 2(e) ‘dealer’ means any person who carries on the business of buying, selling, supplying or distributing goods or delivering goods on hire purchase or on any system of payment by instalments, or carries on or executes any works contract instalments, or carries on or executes any works contract involving supply or use of material directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes- (i) local authority, a company, a Hindu undivided family or any society (including a cooperative society), club, firm or association which carries on such business; (ii) a society (including a cooperative society), club, firm or association which buys goods from or sells, supplies or distributes goods to its members; (iii) a casual trader, as hereinbefore defined; (iii-a) any person, who may, in the course of business of running a restaurant or an eating house or a hotel (by whatever name called), supply by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating); (iii-b) Any person, who may transfer the right to the use of any goods for any purpose whatsoever (whether or not for a specified period) in the course of business to any other person; (iv) A commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal or principals. Explanation I:- Every person who acts as an ‘agent of a non- resident dealer’, that is, as an agent on behalf of a dealer residing outside the State, and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as- (i) a mercantile agent as defined in the Indian Sale of Goods Act, 1930 (Central Act III of 1930); or (ii) an agent for handling goods or documents of title relating to goods; or (iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment and every local branch of a firm or company situated outside the State, shall be deemed to be a dealer for the purpose of this Act. Whether a person be it a consignor or agent of consignor or consignee, who is not registered under the Act, as a dealer can also be subjected to the extreme action of confiscation of goods on which tax was not paid or an attempt was made to evade payment of tax in the State of Andhra Pradesh? The answer must necessarily depend on construing Section 2(e) which defines “dealer”. As is usually done, the Legislature defined term “dealer” as “means” and also “including other aspects”. The main definition part defines dealer as to mean any person who carries on the business of buying, selling, supplying or distributing goods or delivering goods or executes a works contract. The Explanation I specifically deals with “agent of a non-resident dealer”, on behalf of the dealer residing outside the State, who buys, sells, supplies and distributes goods in the State of Andhra Pradesh or acts on behalf of such dealer residing outside the State. Section 2 (m) defines “registered dealer” as to mean “the dealer registered under the Act”. The procedure for registration of dealers is contained in Section 12 of the Act and Rule 28 of the Rules. A perusal of these provisions would show that a person who carries on business in all or any of the goods or executes works contracts is a dealer. He is under law required to get registered under the Act irrespective of the quantum of his turnover (Section 12(2)). Thus, every registered dealer is certainly dealer within the meaning of Section 2(e), but that does not lead to an inference or conclusion that the person who is not registered as required under the relevant provisions ceases to be dealer if he carries on business of buying, selling the goods or executes works contracts or involved in any deemed sale either as the seller or as purchaser, as the case may be. The view as above is supported by decision of three Judge Bench of Supreme Court, in Abdul Bakshi, which is a case involving the construction of Section 2(e) of the Hyderabad General Sales Tax Act, 1950, which is similar to the definition of dealer in APGST Act. Therein the dealer was engaged in the business of tanning and selling hides and skins. He disputed the levy of tax on purchase turnover of tanning bark required in their business. Their contention that the bark was purchased for consumption in the tannery not for sale found favour and the High Court held that if the person buys any commodity for consumption in his business but not for sale, cannot be regarded as a dealer. This view was turned down by the Supreme Court observing as follows. A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression ‘business’ though extensively used is a word of indefinite import. In taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profit motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer. The Legislature has not made sale of the very article bought by a person a condition for treating him as a dealer : the definition merely requires that the buying of the commodity mentioned in rule 5(2) must be in the course of business, i.e., must be for sale or use with a view to make profit out of the integrated activity of buying and disposal. The commodity may itself be converted into another stable commodity, or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such salable commodity. In Travancore Rubber Company, reiterating the view in Abdul Bakshi that, “a person to be dealer must be engaged in the business of buying, selling or supplying of goods”, the Supreme also held that, “to infer from a course of transactions that it is intended thereby to carry on business, ordinarily, the characteristics, volume, frequency, continuity and regularity indicating the intention to continue the activity of carrying of transactions must exceed: but no test is decisive of the intention to carry on the business”. All the circumstances just mentioned might lead to an inference that a person, who carries on business of selling goods is dealer. It is beneficial to excerpt the following observations. The expression ‘business’ though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit motive. By the use of the expression ‘profit motive’ it is not intended that profit must in fact be earned. Nor does not expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity. In actual practice, the profit motive may be easily discernible in some transactions: in others it would have to be inferred from a review of the circumstances attendant upon the transaction. ... ... ... To infer from a course of transactions that it is intended thereby to carry on business ordinarily the characteristics of volume, frequency, continuity and regularity indicating an intention to continue the activity of carrying on the transactions must exist. But no test is decisive of the intention to carry on the business: in the light of all the circumstances an inference that a person, desires to carry on the business of selling goods may be raised. Giving plain meaning of Section 2(e), it becomes clear that irrespective of the fact that whether a person is a registered dealer or not as defined under Section 2(m) of the Act, any person who carry on the business of buying and selling of goods shall be dealer as defined in Section 2(e) for the purpose of Section 28(6) of the Act. The charging Section i.e., Section 5 of the Act mandates that, “… every dealer shall pay a tax under this Act for each year on every rupee of his turnover of sales or purchases of goods in each year irrespective of the quantum of his turnover at the rates of tax and at the points of levy specified in the Schedules”. The words “registered dealer” are very conspicuous by its absence in Section 5 as well as Section 28(6) of the Act and we cannot read Section 28(6) as empowering the officer of the Department to seize the goods not accounted for only by the registered dealer. The word ‘dealer’ used in Section 28(6) cannot be given such a narrow meaning, especially when the said provision is intended to act as a deterrent measure to prevent evasion of tax by any person whether registered dealer or dealer who carries on business of buying and selling of goods in the State of Andhra Pradesh. Before the original/appellate authority as well as the Tribunal, the consignor admitted that the provisions of Sections 29, 29A and 29B of the Act apply to the seizure of stocks and collection of revenue at the border check post. They, however, contend that Section 28(6) would not have any application as the goods were being transported from Dimapur to Delhi and Bombay. This argument is also pressed before this Bench. After giving due consideration, we cannot countenance the submission on the non- applicability of Section 28(6). The reasons for this conclusion are as follows. Indisputably, huge quantities of cloves were seized from the transporter’s godowns at Vijayawada and Kasibugga/ Ichapuram. Section 28(6) empowers the officer to seize and confiscate the goods found in any office, shop, godown, vehicle of the dealer. Therefore, insofar as seizure is concerned, there cannot be any objection. Even at the check post, if the goods being transported are not properly accounted for, the goods can be detained under Section 29(3)(b)(ii) of the Act and Rule 46 of the Rules. Further in case of absence of proof of movement of the goods outside the State, the law presumes that the goods have been sold in the State. This is dealt with by Section 29B of the Act which is quoted under. 29-B Transit of goods by road through the State and issue of transit pass:- Where a vehicle, carrying goods, coming from any place outside the State and bound for any other place outside the State, pass through the State, the driver or other person-in-charge of such vehicle shall obtain in the prescribed manner a transit pass from the officer-in- charge of the first check post or barrier after his entry into the State and deliver it to the officer-in-charge of the last check post or barrier before his exit from the State, failing which it shall be presumed that the goods carried thereby have been sold within the State by the owner or person-in- charge of the vehicle and accordingly the tax is assessed and penalty, if any levied in accordance with the provisions of this Act: Provided that where the goods carried by such vehicle are, after their entry into the State, transported outside the State by any other vehicle or conveyance, the burden of proving that the goods have actually moved out of the State shall be on the owner or person-in-charge of the vehicle. Explanation:- If a vehicle is hired for transportation of goods by any person, the hirer of that vehicle shall, for the purposes of this section, be deemed to be the owner of the vehicle. (emphasis supplied) The driver or any person in charge of the vehicle carrying goods coming from any place outside the State shall have to obtain a transit pass from the check post officer. The driver or the person in charge of the vehicle shall have to carry the transit pass while passing through the State and shall have to deliver it to the check post officer at the exit check post i.e., the last check post of barrier before exit from the State of Andhra Pradesh. If transit pass is not obtained or the transit pass is not delivered at the exit check post, the legal consequence is that it shall be presumed that the goods carried by the vehicle have been sold within the State by the owner or the person in charge of the vehicle. In such a deemed sale, the goods are exigible to tax and penalty can always be levied in accordance with the provisions of the Act. In every case of non-delivery of transit pass, at exit check post or while passing through the State of Andhra Pradesh, the burden of proving that the goods actually moved out of the State shall be on the owner or person in charge of the vehicle. In such a situation, it is rather difficult to accept the plea that Section 28(6) of the Act has no application. Even where the goods seized from the godown are allegedly in the process of inter-State movement to the place of consignee, if the proof is not offered as required under proviso to Section 29B, the officer can always seize and confiscate the goods allegedly in transit under Section 28(6) of the Act. Therefore, we are convinced that the Tribunal decided the question of law erroneously by misdirecting itself. Burden of Proof Section 7A of the Act casts the burden of proving that any sale or purchase effected by the dealer is not liable to any tax or liable to be taxed at the reduced rate on the dealer. This is a general rule of burden of proof insofar as the levy of tax on sales and purchase of goods as well as exemptions claimed under Section 9 of the Act. Section 29B of the Act is a special rule of burden of proof which requires the owner or person in charge of the vehicle carrying goods coming from outside the State and pass through the State, to show that the goods have actually moved out of the State. In case of failure to do so, the law presumes that the goods carried by vehicle from outside the States have been sold in the State and are exigible to tax and penalty. When the language of the provision is plain, it is not permissible to give any different meaning. The Tribunal, however, ignored the presumption under the proviso to Section 29B and cancelled the confiscation order observing that, “the Department of the Commercial Taxes failed to prove that the goods seized from the godowns of the BARL did not cross the borders of Andhra Pradesh after reaching Vijayawada”. The Tribunal was certainly in error when it considered the law of burden of proof and went wrong in observing that the Revenue failed to establish by cogent and satisfactory evidence, that the goods have not crossed the borders of Andhra Pradesh. Having noticed that even according to the consignor and transporter, Sections 29, 29A and 29B of the Act would be attracted to the facts of the case, casting burden of proof on the department would amount to erroneous decision on a question of law and as held by this Court in Jayaram Reddy is misdirection in law, warranting interference. Validity of Confiscation Orders The confiscation order was passed by the jurisdictional CTOs drawing inferences and applying the presumption of sale in the State from the following undisputed facts. The consignor is not registered under the Nagaland Sales Tax – the consignor was not available at the address given in the travel documents; the transport vehicles took a circuitous route avoiding nearest route to the place of consignees; the first consignee was indulging in doubtful activities without carrying any business from the registered premises at Delhi; the second consignee was not even registered with the Maharashtra Sales Tax authorities and he had given a wrong address. Examining these aspects with reference to the material and records collected and gathered by the Department, the learned Tribunal sought to justify the lacuna pointed out by the confiscating authorities in invalidating the confiscation proceedings. Relying on Seetharamanjaneya Rice Mills, Shaik Basha and A.P.Paper Mills as well as the two decisions of the Supreme Court, dealing with the scope of Section 100 of Code of Civil Procedure, 1908, the counsel for the consignor and transporter vehemently urge that these revisions do not involve any question of law. The legal position is not disputed nor can be denied that a revision under Section 22(1) of the Act would lie to the High Court only when a question of law is decided erroneously by the Tribunal or failed to decide such question of law. This case, however, clearly raised the questions of law. If the Tribunal misdirected itself in addressing a wrong question of law either with reference to the contentious factual issues or debatable and arguable legal issue, it would certainly give rise to a question of law. If the appreciation of facts is perverse or the inference drawn from the evidence on record is a surmise than a conclusion after objective consideration of the matter, it would certainly a case warranting the exercise of revisional jurisdiction by the High Court. There is no dispute that the consignor and second consignee were not even registered at the relevant time. In our considered opinion, even if the consignor at Dimapur got herself registered under the Nagaland Sales Tax Act with effect from 01.04.1993 having regard to the admitted fact that she entered into the alleged sale contracts with the consignees in March itself would not lend any support to the case of the consignee. There is no dispute that the first consignee gave a statement to Delhi Sales Tax officials admitting that he never received any supplies from Dimapur. This was thrown away by the Tribunal observing that the details as to which authority obtained the statement are not coming forth and that it does not contain a signature. Even according to the Tribunal, the fax message sent by the Deputy Commissioner (Enforcement) contained english translation of the Statement given by the first consignee, one cannot doubt the same. Further, burden of proof was shifted to department which is not proper. It may be reiterated that when the goods are in transit from any other State, the burden of proving that those goods were not sold in Andhra Pradesh but actually moved out of tax territory is always on the person – be it owner or person in charge of the vehicle carrying the goods or else the presumption would spring into action. It shall have to be concluded that the goods brought to Andhra Pradesh ostensibly for the purpose of moving out were actually sold within the State without payment of tax. When the credibility of the consignor and the consignees is doubtful and when no written contract of sale is produced with regard to the payment, delivery etc., and based on the statement made by the consignor and the transporter, the presumption under Section 29B does not get dislodged. The finding that there was no proper notice or opportunity prior to seizure and confiscation are belied by the very fact that during the seizure, the manager or concerned person employed by BARL was present, notices were issued, consignor sent three representations and all were considered by the confiscating authorities. It is very curious that during the proceedings either before the CTO, Vijayawada or CTO, Kasibugga, consignees never appeared claiming the goods. The Tribunal in our considered opinion also lost sight of the provisions of Sections 29A, 29B and Rules 46, 47 and 48 and failed to see that admittedly the transporter did not produce all the duplicate copies of the transit passes when all the 45 lorries entered via the border check post at Kasibugga passed through Vijayawada and allegedly moved out of Andhra Pradesh. According to the consignor, she agreed to sell huge quantities of cloves to the consignees at New Delhi and Bombay for the purpose of transporting the goods from Dimapur to those destinations she entrusted the goods to BARL. The authorities in Nagaland, Delhi and Maharashtra found that the consignees are either not registered, and even if they are registered dealers, they were not carrying on any business. This itself would lead to a suspicion about the transaction. Secondly, as per Section 20 of the Sale of Goods Act in the absence of any contract to the contrary, the property in the goods will pass to the buyer the moment when the goods are put in motion to a transporter to a place where the consignee desires the goods to be delivered. Curiously, when the proceedings for seizure and confiscation were going on and the related enquiries were being conducted by the authorities in the three States, the consignees did not even turn up once. It is always the consignor and/or the transporter who were appearing before the authorities and defending the cases against confiscation of the goods. When statedly the consignor entered into contract with the consignees, and in law the property in goods passed to the latter, it is curious that consignees did not even file any application for release of the goods. As noticed supra, when the owner of the goods seized at the check post or the owner of the goods seized in godown, ostensibly waiting to be transported to other State is not known, it is always open to the authorities under the Act to initiate appropriate procedure. If the owner (if he is available), the driver or the person in charge of the vehicle carrying goods is not able to prove that the goods statedly in transit through the State of Andhra Pradesh to another State actually passed out of the State, it has to be presumed that they were sold in the State of Andhra Pradesh. This is a strong militating circumstance against the respondents. No explanation is forthcoming from any of them as to why the consignor sold the goods even without obtaining registration to a dealer in Maharashtra who did not have any registration or to dealer in New Delhi who was not actually engaged in any business of cloves. It is also not properly explained by the respondents as to why the circuitous and longer route is chosen when the goods could have been transported by taking a shorter route saving a lot of cost to the consignor as well as consignees. Even the conduct of the consignor militates against her. Initially having taken a plea that the goods were sold to the consignees at Delhi and Bombay, subsequently she came forward offering to pay the tax component on the goods seized. The respondent thus failed to discharge the burden which lies on them under Section 7A and the proviso to Section 29B in which event it shall be presumed that the goods have been sold in the State which attracts Section 28(6) when there is a tax evasion. In our considered opinion, the Tribunal ignored the relevant provisions regarding the burden of proof and proceeded in a manner which is not appropriate to the facts and circumstances of the case. The Tribunal also decided the questions of law erroneously requiring interference in these revisions. In the result, for the above reasons, these revisions must succeed. Accordingly the tax revision cases are allowed and the order of the Sales Tax Appellate Tribunal is set aside confirming the orders of the confiscation passed by the CTO (Intelligence), Vijayawada and Kasibugga. The writ petition is dismissed. There shall be no order as to costs. _______________ (V.V.S. RAO, J) _____________________ (SANJAY KUMAR, J) 30.12.2011 Pln Note: LR copy be marked. (By order) pln [1] (1964) 15 STC 644 [2] (1985) 60 STC 14 (DB) [3] (1967) 20 STC 520 [4] (1970) 25 STC 57 [5] (1978) 42 STC 145 (AP) [6] (1989) 8 APSTJ 50 [7] (1992) 14 APSTJ 121 [8] (1992) 14 APSTJ 272 [9] (1999) 29 APSTJ 235 [10] AIR 1992 SC 115 [11] (2001) 5 SCC 30 : AIR 2001 SC 2282 [12] (2009) 17 SCC 389 [13] (1984) 60 STC 14 [14] (1967) 19 STC 506 [15] (1968) 22 STC 540 [16] (2005) 242 STC 551 (AP) : 2005 (2) ALD 704 : 2005 (3) ALT 190 [17] (2009) 2 SCC 681 "
Other Referred Cases
State of A.P. v Abdul Bakshi, Transport Corporation of India v State of A.P., Deputy Commissioner, Agriculture, Income and Sales Tax v Travancore Rubber and Tea Company, Deputy Commissioner v Midland Rubber Producer Co., Ltd., Bandamidi Rajaiah v Board of Revenue, Commercial Taxes, M/s.Seetharamanjaneya Rice Mills v State of A.P., Shaik Basha v State of A.P., State of A.P. v A.P.Paper Mills, State of A.P. v Sri Laxmi Srinivasa Groundnut Traders, Ramaswamy Kalingaryar v Mathayan Padayachi, Hamida v Mohd.Khalil, Tallam Gangadharan v U.Ismail Saheb, Ambica Lamp House v CTO, APSRTC v Jayaram Reddy
Laws Referred To
Andhra Pradesh General Sales Tax Act, 1957
1:1 Consultation on Business Development
₹1
1:1 Consultation on Legal Requirements
₹1
1:1 Consultation on Salary Structuring
₹1
No Objection Letter for Use of Property – Partnership Firm
₹0
Sales Forecasting Sheet
₹100
Residency Rules: Income Tax Act, 1961 vs Income Tax Bill, 2025 — A Subtle Yet Significant Shift!
Team Counselvise - February 18, 2026
Budget 2026: 5 Major Personal Tax Changes Every Taxpayer Must Know
Team Counselvise - February 05, 2026
Minimum Alternate Tax (MAT): Comprehensive Overview and Key Changes under Finance Bill, 2026
Team Counselvise - February 06, 2026