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MADHYA PRADESH VALUE ADDED TAX ACT, 2002
CHAPTER - XI : Detection and prevention of tax evasion

Body 57. Establishment of check posts and inspection of goods while in movement

(1) The State Government or the Commissioner may, with a view to prevent or check evasion of tax under this Act, set up or erect in such manner as may be prescribed, check posts or barriers at such places in the State, as may be notified in the official gazette and an officer, not below the rank of Assistant Commercial Tax Officer shall be in-charge of the check post (hereinafter referred to as the check post officer) and he shall be assisted by other category of officials or officials of an agency authorised by the Commissioner.

Provided that the Commissioner shall not set up a check post or erect a barrier for a period exceeding six months at a time.

Provided further that in any case, the amount of penalty shall not be more than fifty percent of the value of goods.

(2) The driver or the person in-charge of a vehicle or carrier or of goods in movement (hereinafter referred to as the transporter) shall -

    (a) carry with him an invoice, bill or challan or any other document and prescribed declaration forms issued by the consignor or consignee of the goods in movement and challan, bilties or any other document issued by the transporter;

    (b) stop the vehicle or carrier at every check-post or bring and stop the vehicle or carrier at the nearest check-post, while entering and leaving the limits of the State, set up under sub-section (1);

    (c) furnish all the documents including prescribed declaration forms relating to the goods before the check post officer;

    (d) give all the information relating to the goods; and

    (e) allow the inspection of the goods by the check post officer or any other person authorised by the check post officer.

Provided that the documents including prescribed declaration forms shall be required to be carried and / or furnished only in respect of the goods as may be notified by the State Government.

Provided further that if the transporter transporting goods by a road on which check post or barrier is not established, furnishes the documents including declaration form specified in clause (a) at the nearest Commercial Tax Office, immediately after entry into the State of Madhya Pradesh or before exit from the State, he shall be deemed to have complied with the requirement made under clause (b).

Provided also that if the transporter transporting goods carries with him an electronically issued declaration form specified in clause (a), particulars of which including date and approximate time of entering, the State of Madhya Pradesh, have been uploaded completely on the official web portal of the department before entering, the State of Madhya Pradesh, along with the documents, he shall be deemed to have complied with the requirement made under clause (b).

(3) The form of declaration specified in sub-section (2) shall be obtained by a registered dealer in the prescribed manner.

(4) The documents required to be furnished under sub-section (2), may be furnished by means of such electronic devices, and may be accompanied by such processing fee, as may be prescribed.

(5) Where any goods are in movement within the territory of the State of Madhya Pradesh, any officer, not below the rank of an Assistant Commercial Tax Officer, as may be authorised by the Commissioner, may for the purposes of this Act, stop the vehicle or the carrier or the person carrying such goods, for inspection, at any place or inspect such goods and the documents relating to the goods which are in the possession or control of a transporting agency or person or other such bailee and the provisions of sub-section (2) shall mutatis mutandis apply.

(6) Where any goods in movement are not supported by documents as referred to in sub-section (2), or documents produced appear false or forged, the check post officer or the officer empowered under sub-section (5), for reasons to be recorded in writing may -

    (a) direct the transporter not to part with the goods in any manner including re-transporting or rebooking, till a verification is done or an enquiry is made, which shall not take more than seven days;

    (b) detain or seize the goods or the vehicle or carrier along with the goods and shall give a receipt of the goods or the vehicle or carrier along with the goods, if seized, to the person from whose possession or control they are seized;

    (c) release the goods or the vehicle or carrier along with the goods seized in clause (b) in favour of the transporter, during the pendency of the proceeding if adequate security in the form of cash security or irrevocable bank guarantee of the amount equal to the penalty leviable under sub-section (8) or (10) is furnished.

(7) The officer empowered under sub-section (5), who stops the vehicle or carrier, may direct the transporter to take the vehicle or carrier along with the goods and the documents to the nearest check post or any Commercial Tax Office to be named by him and stop it and keep it stationary there till such time as may be required for action in accordance with the provisions of this section, and the officer shall reach such check post or such Commercial Tax Office at the earliest and immediately on reaching there initiate action for seizure of goods or the vehicle or carrier along with the goods and impose penalty in accordance with the provisions of this section.

(8) The check post officer or the officer empowered under sub-section (5), after having given the transporter a reasonable opportunity of being heard and after having held such enquiry as he may deem fit, shall,-

    (i) release the goods or the vehicle or carrier along with the goods in favour of the transporter, if he is satisfied that no violation of the provisions of sub-section (2) has taken place; or

    (ii) impose, if he is not satisfied, on him for possession or movement of goods, whether seized or not, in violation of the provisions of sub-section (2) or for submission of false or forged documents or declaration, a penalty equal to maximum five times of the amount of tax which would have been payable if the goods were sold within the State on the date of inspection.

Provided that the amount of penalty shall not be less than three times of the amount of tax.

Provided further that in any case, the amount of penalty shall not be more than fifty percent of the value of goods.

Explanation.- Where the explanation submitted lead to the conclusion that there is no possibility of sale of goods within the State of Madhya Pradesh or there was no attempt to evade tax in respect of the goods, it shall be deemed that no violation of the provision of sub-section (2) has taken place.

(9) Where a transporter, in possession or control of goods, is found to be in collusion with a dealer involved in avoidance or evasion of tax, the check post officer or the officer empowered under sub-section (5) shall detain the vehicle or carrier of such transporter and after affording him an opportunity of being heard and with the prior approval in writing of the Deputy Commissioner having jurisdiction, may confiscate such vehicle or carrier.

(10) Notwithstanding anything contained in this section, where the transporter abstains from bringing or stopping the vehicle or carrier at the check post as provided under clause (b) of sub-section (2), the check post officer or the officer empowered under sub-section (5) may detain such vehicle or carrier and, after affording an opportunity of being heard to the transporter, may impose, in addition to a penalty which may be imposed under sub-section (8), a penalty equal to maximum twice the amount of tax which would have been payable if the goods were sold within the State on the date of detention.

(11) The check post officer or the officer empowered under sub-section (5) may release the goods in favour of the transporter, if seized and not already released under clause (c) of sub-section (6), on payment of the penalty imposed under sub-section (8) or (10).

(11A) (a) Notwithstanding anything to the contrary contained in this Section, the check post officer or the officer empowered under sub-section (5) may release the goods or the vehicle or carrier along with the goods seized in favour of the transporter, if seized and not already released under clause (c) of sub-section (6), if adequate security in the form of cash security or irrevocable bank guarantee of the amount equal to the penalty levied under sub-section (8) or (10) is furnished.

(b) If an appeal against the order passed under sub-section (8) or (10) is filed under sub-section (1) of Section 46, the cash security or irrevocable bank guarantee furnished under clause (c) of sub-section (6) or clause (a) above shall not be appropriated towards the penalty levied under sub-section (8) or (10) till the decision in the first appeal.

(12) If the amount of penalty specified in the order passed under sub-section (8) or (10) is not paid within fifteen days of the service of the order, the check post officer or the officer empowered under sub-section (5) shall, notwithstanding anything to the contrary provided in this Act or in any law for the time being in force, cause the goods to be sold in such manner as may be prescribed and apply the sale proceeds thereof towards the penalty and refund the balance, if any, to the transporter and if the sale proceeds of the goods are not sufficient to cover the amount of penalty or the goods can not be sold despite the efforts made for the same, the said officer shall cause the vehicle or carrier to be sold in the aforesaid manner and apply the sale proceeds thereof towards the balance of penalty and refund the balance of such sale proceeds, if any, to the transporter.

(13) Where the officer seizing the goods, at any time during the pendency of the proceeding under sub-section (8) or (10), is of the opinion that the goods are subject to speedy and natural decay or when the expenses of keeping them in custody are likely to exceed their value, he may cause them to be sold in such manner as may be prescribed without waiting for the completion of the proceedings relating to the imposition of penalty and keep the sale proceeds thereof in deposit till the completion of said proceedings and the amount so kept in deposit shall be applied towards such penalty, if any, as may be imposed and the balance, if any, shall be refunded to the transporter according to the provisions of sub-section (12).

(14) The transporter may authorise, in such manner as may be prescribed, the consignor or consignee of the goods or the vehicle or carrier along with the goods seized under this section, to appear before the check post officer or the officer empowered under sub-section (5) in the proceedings under sub-section (8) or (10) and such consignor or consignee shall be deemed to be the transporter for all purposes mentioned in the aforesaid sub-sections and the provisions of Section 31 shall apply to proceedings under this section as if the transporter is a dealer.

(15) Notwithstanding anything to the contrary contained in any other provision of this Act, if a transporter fails to give information as required from him under clause (d) of sub-section (2) about the consignor, consignee or the goods within such time as may be specified or transports the goods with forged documents, it shall be presumed that the goods so transported have been sold in the State of Madhya Pradesh by him and he shall be deemed to be a dealer liable to pay tax for those goods under this Act, and the check post officer or the officer empowered under sub-section (5), as the case may be, shall levy the tax for those goods, besides imposing the penalty under this section.

(16) The provisions of this Act shall, for the purpose of levy, collection and assessment of tax, payment and recovery of tax and interest, appeal and revision, apply to the transporter deemed to be a dealer under sub-section (15).

(17) Subject to such restrictions and conditions and in such manner as may be prescribed, a transporter, on whom a penalty has been imposed under sub-section (8), may opt to pay in lieu of penalty a lump sum amount, which shall be twice the amount of tax referred to in sub-section (8) and once the transporter has exercised the option he shall not have any right to challenge the order of penalty in any forum.

Explanation - For the purposes of this Section -

    (i) Vehicle or carrier means any means of transportation including railway to carry goods from one place to another place; and

    (ii) 'transporter' shall include the owner of the vehicle carrying the goods, whether an individual, a firm, association, society or company, and the manager, if any, of such owner; and

    (iii) Goods in movement means,-

      (a) the goods which are in the possession or control of a transporting agency or person or other such bailee;

      (b) the goods which are being carried in a vehicle or carrier belonging to the owner of such goods; and

      (c) the goods which are being carried by a person.