TMI Blog2015 (8) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... d on no evidence and was totally illegal. Auction of Seized goods – Whether seized goods were liable to be auctioned – Held that:- Rules of natural justice says that action which affects rights of any party cannot be taken unless notice has been issued to said party – Therefore, before selling goods, officer-in- charge of check-post must issue notice to consignor or consignee – Though Act and Rules do not provide for issuance of notice(s), but no penal action can be taken without notice to affected party – Rule 71(5) clearly lays down that auction has to be conducted by Superintendent with previous sanction of Commissioner – From records we could not find any material to indicate that sanction of Commissioner had been taken before putting goods to auction – Therefore, auction was conducted without any proper sanction. Calculation of Reserve price – Auction – Whether amount, at which authorities auction seized goods, was justifiable – Held that:- According to petitioner, value of goods was ₹ 4,80,000 whereas officer-in-charge assessed value at ₹ 11,52,000 – Formula that was used to discern reserve price was fixed by fixing three times rate of tax payable on price es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 720 and the cost of 1,600 cartons worked out to ₹ 11,52,000 and on this ground, the goods were seized. The seizure order was handed over to Pinku Das the driver of the vehicle. It would also be pertinent to mention that the truck in question was also owned by the petitioner-company. 5. Against the order of seizure dated December 18, 2012, the petitioner-company filed a revision petition before the Commissioner of Taxes, Agartala, within the period of limitation and the said petition was received in the office of the Commissioner on March 9, 2009. On may 19, 2009 notice of this petition was issued for May 23, 2009. The matter was finally listed on July 23, 2009 when it was pointed out that the entire seized goods had been auctioned and sold in a public auction held on February 25, 2009 for a sum of ₹ 1,76,000 only. Since the auction had been completed the revision petition was disposed of. Against this order the petitioner has filed the present revision petition. 6. The civil revision petition was filed on September 22, 2009 but no reply was filed. On February 17, 2014 we had passed a detailed order which reads as follows : February 17, 2014 No reply ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (2) of section 67 requires that the driver or person-in-charge of a vehicle shall carry with him the records of the goods including challans, bills of sale or dispatch memos signed by the consignee or transporter of the goods. He is also required to co-operate with the officers of the Excise Department. Sub-section (3) of section 67 entitles the officers empowered by the State Government to stop the vehicle carrying the goods for inspection. 9. Sub-sections (4), (5), (6) and (7) of section 67 deal with the seizure of goods and read as follows : 67. (4) Where any goods in movement are without documents, or are not supported by documents as referred to in sub-section (2), or documents produced appeared to be false or forged, the officer-in- charge of the check-post or the officer empowered under sub-section (3), may- (a) direct the driver or the person in-charge of the vehicle or carrier or of the goods not to part with the goods in any manner including by transporting or re-booking, till a verification is done or an enquiry is made, which shall not take more than seven days ; (b) seize the goods for reasons to be recorded in writing and shall give receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not produced or the documents produced appear to be false or forged. Sub-section (5) of section 67 empowers the officer-in-charge of the check-post or the officer specifically empowered in this behalf to impose tax and penalty. 12. Section 68 deals with the disposal of seized goods and reads as follows: 68. (1) The Commissioner may, subject to the provisions of section 80, dispose of by public auction any taxable goods seized under clause (b) of sub-section (4) of section 67 in such manner as may be prescribed, and so much of the sale proceeds of the auction, after deducting the cost of conducting the auction, as may be required for payment of the dues on account of tax and penalty, shall be appropriated towards the same and the balance, if any, should be paid to the person from whom the goods were seized or to the owner of such goods. (2) Notwithstanding anything contained elsewhere in this Act, for the purpose of this section, the amount of tax payable for the taxable goods sold by auction, shall be determined on the basis of the sale proceeds of the goods sold by public auction under sub-section (1) and the penalty leviable thereon may extend to one hundred and fifty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was proper or not. As discussed earlier the power to seize is granted only when the goods are without documents or are not supported by documents mentioned in sub-section (2) or the officer-in-charge of the check-post is of the view that the documents are false or forged. In the present case the documents were there. Admittedly, the documents were not forged but according to the State, the value of the goods given in the documents was incorrect. The reason given by the officer-in-charge of the check-post is that since the maximum retail price was shown to be ₹ 72 per liter the value of the goods worked out to ₹ 11,52,000 as against ₹ 4,80,000. The officer did not at all consider the fact that the petitioner was the manufacturer of the goods and this was in a sense a case of stock transfer. The goods would have been sold to the stockist, then to the wholesaler and then to the retailer. Each of these would be entitled to some profit. We do not understand how the officer-in-charge of the check post could say with certainty that the goods were undervalued. 17. The Act empowers the officer to take two actions. The first action is, to direct the driver or person-in- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue notice to the consignor or the consignee. It is true that Act and the Rules do not specifically provide for issuance of such notice(s), but we are clearly of the view that no penal action can be taken without notice to the affected party and therefore, the requirement of issuing notice must be read into section 67 of the Act. 20. Once the goods are seized, the officer who has seized the goods must issue notice to the consignor and consignee. If the person to whom the notice has been given does not appear within one month then the goods can be auctioned. This auction must be conducted in accordance with the Act and the Rules. Sub-rule (5) of rule 71 clearly lays down that such auction has to be conducted by the Superintendent with the previous sanction of the Commissioner. Under section 2(7) of the Tripura VAT Act, the Commissioner has been defined to mean any person appointed by the State Government to be the Commissioner of Taxes. Section 18(1) of the Act permits the State Government to appoint a Commissioner of Taxes and such other persons to assist him. 21. From the records we could not find any material to indicate that the sanction of the Commissioner had been taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timated by the officer seizing the goods plus five per cent. for overhead cost. Copy of this communication, dated 26.9.2003, reads as follows : No. F.l-6(37)-TAX/96(P-l)/15577 Government of Tripura, Office of the Commissioner of Taxes. Dated, Agartala, the 26th Sept., 2003. To The Superintendents of Taxes, Choraibari Check-post, North Tripura. Sub : Proposal for re-auction. Ref: Letter NO.V-6/ST/CRB/522 dated September 3, 2003. Sir, With reference to the subject noted above, I am directed to inform you that the proposal dated September 3, 2003 for reauction of unclaimed seized goods has been considered. You are requested to process the matter afresh after fixing the date for re-auction and send the copy of proclamation issued by you to this office for publication at the earliest. But from the next time, for other seized goods, you are directed to initiate the proposal for auction fixing the reserve price of seized goods as per the following formula. [(3 rate of tax as per schedule on seized items) (for overhead cost)] + 5% (for overhead cost) Price estimated by CRB in seizure list for seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arming it with effective measures to realise the arrears. But the simplicity of the language is not an index of the enormous power stored in it. From notice to pay the arrears, it extends to taking over management and even possession with a right to transfer it by sale. Every wide power, the exercise of which has far reaching repercussions, has inherent limitation on it. It should be exercised to effectuate the purpose of the Act. In legislations enacted for general benefit and common good, the responsibility is far graver. It demands a purposeful approach. The exercise of discretion should be objective. The test of reasonableness is more strict. The public functionaries should be duty conscious rather than power charged. Its actions and decisions which touch the common man have to be tested on the touchstone of fairness and justice. That which is not fair and just is unreasonable. And what is unreasonable is arbitrary. An arbitrary action is ultra vires. It does not become bona fide and in good faith merely because no personal gain or benefit to the person exercising discretion should be established. An action is mala fide if it is contrary to the purpose for which it was authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n should be a bona fide action. First is universally recognized to be the best and most fair method. It is expected to fetch the best competitive price and is beyond reproach.... 27. As far as the present auction is concerned, it does not comply either with the provisions of the Act or the Rules or even with any reasonable view which can be taken in such a matter. The rate at which the oil was auctioned clearly indicates that the officer who seized the goods was not aware of the market value of the oil. How could he hold that the market value of the oil was ₹ 72 per litre but while fixing the reserved price of the oil fixed it at little more than ₹ 10 per litre ? This by itself shows that the auction is totally arbitrary and unconscionable. The procedure followed is so arbitrary that it shocks the judicial conscience of this court and as such is liable to be set aside in exercise of the writ jurisdiction. In this view of the matter, we are of the considered view that the entire action of the State is highly irresponsible, arbitrary and unconscionable and is, therefore, liable to be struck down. The same is, accordingly, struck down. 28. The petitioner has been de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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