2011 (4) TMI 1271 - HC - VAT and Sales Tax

Release of goods on deposit of twice the tax leviable on the goods so seized - Held that - True it is that the revisional jurisdiction is quite limited and may not be exercised for interfering with the finding of fact but in the present case it is not the finding recorded by the authorities below which is wrong rather it is the jurisdictional error committed by the authorities in seizing the goods as no case for seizure of the goods was made out. Accordingly the seizure order is liable to be set aside in exercise of revisional jurisdiction. Thus the order of seizure dated February 10 2011 the order dated February 22 2011 rejecting the representation under section 48(7) of the Act and that of the Tribunal dated March 30 2011 to be illegal and without jurisdiction. Once the seizure is held invalid the issue as to whether the Tribunal was justified in directing for release of the goods on deposit of cash security twice the amount of tax leviable in place of 40 per cent of the estimated value of the goods as provided under the Act fails into oblivion and as such need not be addressed. Revision of the Department does not survive.

Summary

Issues:
1. Seizure of goods under sections 50 and 52 of the U. P. Value Added Tax Act.
2. Legality of the seizure order.
3. Compliance with necessary documents for goods in transit.
4. Jurisdictional errors in upholding the seizure.
5. Interpretation of Section 52 and Rule 58 of the Act.
6. Applicability of past conduct in determining likelihood of goods being sold in U. P.
7. Revisional jurisdiction to set aside the seizure order.

The High Court of Allahabad heard Commercial Tax Revision No. 272 of 2011, where M/s. RBBRL contractors and Shree Krishna Trading Company challenged the seizure of goods under sections 50 and 52 of the U. P. Value Added Tax Act. The Revenue also filed a revision challenging the Tribunal's order directing the release of goods on deposit of twice the tax leviable on the seized goods. Both revisions were related to the same transaction and were taken together for disposal. The dispute arose when a consignment of footwear was detained in Uttar Pradesh while in transit from Delhi to Patna. The seizure was based on suspicions that the goods were meant for sale in U. P. rather than being transported to Bihar.

The revisionists argued that no grounds for seizure were established and that all necessary documents accompanied the goods in transit, thus challenging the jurisdictional errors in upholding the seizure. On the other hand, the Department contended that past actions of the vehicle and discrepancies in documentation raised doubts about the intended destination of the goods. Section 52 of the Act and Rule 58 require specific documents for goods passing through U. P., failing which a presumption of intended sale within the state arises. The court highlighted that seizure can only occur if goods lack proper documentation, are undervalued, or if there is evidence of loading/unloading in U. P., none of which were proven in this case.

Citing precedents, the court emphasized that goods cannot be seized without concrete evidence of intended sale within U. P. or violations of prescribed procedures. The court noted that the seizure was premature and lacked legal basis. The revisional jurisdiction was invoked to set aside the seizure order due to jurisdictional errors. The court held that the seizure and subsequent orders were illegal and without jurisdiction, leading to the allowance of the revision and dismissal of the Department's case. Consequently, the orders for seizure and subsequent actions were set aside, and the revision was allowed.

In conclusion, the judgment clarified the legal requirements for seizing goods under the U. P. Value Added Tax Act, emphasizing the necessity of concrete evidence and proper documentation to justify seizure. The court's decision highlighted the importance of adherence to statutory provisions and the lack of grounds for seizure in this particular case, ultimately leading to the setting aside of the seizure order and related decisions.