Sri C. Girish, M/s Jai Gurudev Road Carriers v. Additional Commissioner of Commercial Taxes (Zone-II), Bengaluru

What happened

The appellant, proprietor of Jai Gurudev Road Carriers, was transporting electrical appliances from Mumbai to Salem through Karnataka. On 1 August 2010 the Koganahalli entry check-post issued three transit passes under section 54 for three vehicles. The appellant said the vehicles lacked valid permits to enter Tamil Nadu, so the goods were moved to another vehicle, and on 3 August 2010 he asked the exit check-post to accept the earlier passes. He said the passes were surrendered at Attibele and the vehicle went towards Hosur but returned to Bengaluru because the registration documents had been left behind. On 3 August 2010 the mobile check-post near HSR Layout intercepted it, suspecting delivery within Karnataka, and found that although the passes related to twenty-one lorry receipts only fourteen were available, with shortages against the documents. The Deputy Commissioner (Enforcement), by order of 26 August 2010, imposed a penalty under section 53(12), which the appellant paid under protest; the First Appellate Authority set it aside on 20 August 2015, and the Additional Commissioner in suo motu revision under section 64 restored it on 27 January 2018. The appeal was admitted on 1 July 2024 on four questions of law, (A) to (D).

Questions before the court

• Can a penalty under section 53(12) be imposed after the transit pass was surrendered, and must the authorities first prove that goods were unloaded in the State?

Why the court ruled this way

A transit pass under section 54 is a relevant circumstance showing the declared movement but its issue and surrender does not conclusively establish that the goods were taken to the declared destination, and where the authorities notice discrepancies in the documents, shortages and other circumstances raising a reasonable inference of attempted evasion, jurisdiction under section 53(12) is not excluded (paragraph 22; question A). The authorities are not obliged to prove by direct evidence that the goods were unloaded or sold in the State before starting proceedings, which rest on verification of goods in transit, accompanying records and attendant circumstances; direct proof of unloading is not the only mode (paragraph 23; question B). The First Appellate Authority had proceeded on the sole premise that surrender of the passes negated evasion and overlooked the discrepancies, shortages and the vehicle's movement towards Bengaluru after surrender, so the revisional authority was justified in exercising section 64 (paragraph 24; question C). The revisional authority gave cogent reasons on relevant material and its findings were findings of fact with no perversity (paragraph 25; question D).

Controlling point

All four questions were answered against the appellant and the revisional order stood.

Order and next steps

The appeal was dismissed, the order of 27 January 2018 affirmed, the penalty under section 53(12) restored, and there was no order as to costs.

Practical implications

A carrier in transit through a State should keep a complete set of lorry receipts and records matching the goods on the vehicle, because a surrendered transit pass alone will not answer a suspicion of diversion.

Limits of this ruling

• The Court treated the revisional findings as findings of fact on the discrepancies and shortages in this case; it did not hold that every deviation after a transit pass is surrendered attracts a penalty.