Allahabad High Court Refuses To Reopen Deemed Dealer Status Of Railway Container Contractors

The court held, “Once a finding stood recorded against the revisionist that the revisionists are deemed to be dealers and the said judgement has attained finality, then it is not open for the revisionist to question the said finding which is against them before the coordinate of equal strength without assailing the said findings before higher forum. Even otherwise, once the finding relating to holding the revisionist as dealer is intact then by no stretch of imagination, a contrary view can be taken.”

The revisionists are railway container contractors who carry goods between railway stations under an agreement with the Railways. For the assessment year 2010-11, the Special Investigation Branch of the Commercial Tax Department acted on information from the Chief Parcel Supervisor, Bareilly Railway Junction, that packages of PVC goods, electrical goods, motor parts, stationery, cosmetics and hardware had been brought from Delhi to Bareilly.

Ex parte assessment orders followed on 31.03.2014, the goods being valued at Rs. 1.76 crores in the leading revision with tax of Rs. 20,02,000, and at Rs. 1 crore and Rs. 4.10 crores in the connected revisions, with tax of Rs. 10,10,000 and Rs. 46,63,750.

The first appellate authority set aside the assessments on 16.04.2015 and remanded the matters. The Commercial Tax Tribunal, Ghaziabad allowed the second appeals on 04.03.2016. On the Revenue's revisions, the High Court set aside the Tribunal's orders on 31.03.2022, holding the contractors to be deemed dealers, and remitted the matters. After remand, the Tribunal rejected the second appeals on 27.01.2026, giving rise to the present revisions under Section 58 of the Act.

Counsel for the revisionists argued that they do not answer the description of a dealer under Section 2(h)(ix) and that it was for the Revenue to show that taxable goods were in their possession. Relying on Clause 11.8 of the agreement with the Railways, which deals with the manifest, and on Rule 54 of the U.P. Value Added Tax Rules, 2008, which provides for check posts and the documents to be carried with the goods, it was argued that the obligation lay with the Revenue, and that the judgment of 31.03.2022 was misconceived for not having considered Rule 54.

Additional Chief Standing Counsel B.K. Pandey submitted that the deemed dealer status of the revisionists was no longer res integra, the 2022 judgment being binding between the parties, and that even after remand they had produced no document giving the particulars of the consignors and consignees.

Rejecting the argument built on Rule 54, the Court held

“Though the revisionist may canvass the argument that Rule 54 creates an exception and it may help the revisionist in wriggling out from the obligations as set forth as a dealer but the said argument is not available, particularly, when there happens to be a judicial precedent that too in the case of the revisionist binding upon it holding it to be a deemed dealer.”

The Court also noted the Tribunal's categorical finding that the revisionists had failed to furnish the documents on the details of the consignor and consignee despite being asked for them. Holding that none of the six questions of law framed warranted entertaining the revisions, the Court rejected them.