TMI Blog2016 (2) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... order bristling with so many illegalities, there can be no manner of doubt that the sealing action was undertaken mechanically and only for the reason of failure to produce records as sought by the notice under Section 59 of the Act. There was no satisfaction arrived at by the Commissioner, as mandatorily required by Section 60 (1) of the DVAT Act, that there was any deliberate attempt by the Petitioner to avoid or evade tax or to conceal its tax liability in any manner. Therefore, the sealing order is set aside. Validity of condition of de-sealing - Demand of ₹ 600 crores - Held that:- VATO simply totals up the turnover figures for 2011-12 and 2012-13, deducts 25% therefrom in terms of Rule 3 (2) of the DVAT Rules 2005 and arrives at a figure of ₹ 124.11 crores towards tax and approximately ₹ 31.02 crores as penalty. It then adverts to the assessment order for 2008-09 and the challenge thereto by the Petitioner in the Supreme Court and this Court (which is pending as of date) and in terms of the rectified assessment and penalty orders the demand created worked out to ₹ 614.60 crores. Then it seeks to create a demand "on the basis of same proportions" for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be presented to the department. It was also pointed out that the office of the petitioner had shifted from Okhla Industrial Estate to Nehru Place and that the bulk of documents were lying in boxes. The photographs of the said office were also shown to us which indicate that the process of shifting was going on. Further, the computer systems had also not been connected to their main server in Chennai in order to enable them to collect all the details. The learned Senior Counsel for the petitioner submitted that they would fully cooperate with the respondent in providing any information that they require which they are entitled to seek under the law. For this purpose, they only sought time which the VATO was not willing to grant them. It is, as a consequence of this, that the sealing order dated 16.03.2013 came to be passed in respect of each of the three premises. The petitioner moved applications for de-sealing of the said premises on 18.03.2013 (Monday), which was the next working day. Apparently those applications have been disposed of by an order dated 18.03.2013 itself by the said VATO in which he has permitted de-sealing but as a precondition to de-sealing under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this case which is sub judice could have gone missing. The Special Commissioner shall remain present on the next date. In the meanwhile every effort will be made to trace the files. 2. List on 3rd February, 2016. 3. Pursuant to the order dated 22nd January 2016, an additional affidavit has been filed by Mr. P.R. Meena, Special Commissioner (Special Zone), DT T, GNCTD. He states that efforts were made to trace the other related file in this case and that despite best efforts the said file could not be traced, although the main survey file and court case file was always available with the Department. It is then stated that in this regard the then Officer-in-charge was also contacted and as per his statement each and every deployment for survey was made with the consent of and on the directions of the then Commissioner VAT. Formal approval on a case to case basis was not being taken so as to maintain the secrecy of the survey while the file being in the movement for approval of Commissioner, VAT as well as it being not required as already a delegated power. As such there was no file other than the main survey file and court case as available with the Department. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant file. As it transpires, the relevant file itself is unable to be traced. 6. In response to a pointed question posed by the Court, the two officers who present in Court viz., Mr. P.R. Meena, Special Commissioner (Special Zone) and Mr. Manish Verma, Assistant Commissioner (Special Zone), state that apart from the file produced today before the Court, there is no other file concerning this case. 7. The Court is at a loss to understand how the files in respect of the present case which is sub judice, could go missing. Despite the Court requiring the DT T to explain the circumstances under which the files went missing, the affidavit filed is silent on this aspect. The DT T officers present in Court are also unable to explain the circumstances. 8. The Court is, in the circumstances, constrained to direct the Commissioner, DT T, GNCTD to himself personally enquire into the matter of the relevant files of the case going missing and fix responsibility on the officers who may have been entrusted with the task of preparing and maintaining the relevant files in respect of the survey conducted on the Petitioner under Section 59 of the DVAT Act followed by the sealing action under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DVAT Act. The relevant portion of the said order reads as under: 5. Section 60 of the Act sets out the jurisdictional requirement for invocation of the power under Section 60(2)(f). It mandates that the Commissioner must have reasonable grounds to believe that any person or dealer is attempting to avoid or evade tax or is concealing his tax liability in any manner . This satisfaction of the Commissioner has to be based on materials that are available on record. It ought not to be mechanically exercised, using a cyclostyled form, as has been done in the present case. The notice dated 19th January 2016, the date of the sealing, sets out only one the ground, in a pre-printed form, that the dealer failed to produce the books of accounts till 7:30 PM in spite of issue of notice under Section 59 of the DVAT Act 2004 . This obviously does not satisfy the statutory requirement under Section 60(2)(f) of the Act. 6. The facts as set out in the petition that the decision reveal that the decision to invoke the powers under Section 60(2)(f) of the Act was taken in undue haste virtually in continuation of invocation of the power under Section 59 of the Act to search the premises for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the challenge thereto by the Petitioner in the Supreme Court and this Court (which is pending as of date) and in terms of the rectified assessment and penalty orders the demand created worked out to ₹ 614.60 crores. Then it seeks to create a demand on the basis of same proportions for 20009-10 to 21012-13 and arrives at a figure of approximately ₹ 2190.44 crores! It is on this basis that the VATO has ordered that as a condition for de-sealing the Petitioners three premises, it should deposit ₹ 600 crores. This figure is therefore based entirely on guess work and 'projections' without any adjudication. The only description that can fit such a de-sealing order is that it is 'preposterous'. The Court is of the view that on the face of it the de-sealing order which requires the Petitioner to deposit ₹ 600 crores as a condition for de-sealing is an abuse of the powers under Section 60 (4) of the DVAT Act and is unsustainable in law. 17. The Court also notes that the entire action was taken in the background of challenge by the Petitioner to assessment proceedings for the year 2008-09 and a challenge to the validity of Section 5(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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