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2016 (2) TMI 895 - DELHI HIGH COURT

2016 (2) TMI 895 - DELHI HIGH COURT - [2016] 89 VST 35 (Del) - Invokation of power under Section 60 of the Delhi Value Added Tax Act, 2004 - Three premises of the petitioner sealed for non production of documents on time - Held that:- there is nothing in the file which shows what reasons weighed with the Commissioner to order a survey under Section 59 of the DVAT Act and subsequently order sealing of the premises under Section 60 of the DVAT Act. The Petitioner was at the time of inspection not .....

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g to indicate that the VATO was authorised to do so by an order issued in Form DVAT 50 as on 15th March 2013. With the sealing 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 del .....

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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 2009-10 to 2012-13 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 .....

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petitioner - W.P.(C) 1820/2013, CM No.3490/2013 (for stay), W.P.(C) 1821/2013, CM No.3491/2013 (for stay), W.P.(C) 1822/2013, CM No.3492/2013 (for stay) - Dated:- 3-2-2016 - S. MURALIDHAR AND VIBHU BAKHRU, JJ. For The Petitioner : Mr. Rajesh Jain with Mr. Virag Tiwari, Mr. K.J. Bhat and Mr. V.K. Jain, Advocates For The Respondent : Mr. Gautam Narayan and Mr. Naushad Ahmed Khan, ASCs for GNCTD with Mr. P.R. Meena, Special Commissioner (L&J) and Mr.Manish Verma, Assistant Commissioner (Spl. Z .....

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;These writ petitions are directed against the order dated 16.03.2013 purportedly issued under Section 60 of the Delhi Value Added Tax Act, 2004 whereby the three separate premises of the petitioner at Nehru Place, Moti Nagar and Peera Garhi were sealed by the Value Added Tax Officer (Special Zone). It may be pointed out that the survey was conducted on 15.03.2013 (Friday) when the Value Added Tax Officer arrived at the said premises of the petitioner at about 5.30 p.m. in the evening and demand .....

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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, th .....

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77; 600 crores. The learned Senior Counsel for the petitioner pointed out that the demand for ₹ 600 crores was preposterous and cannot be sustained in law. Prima facie, we agree with the submission made by the learned senior counsel for the petitioner, the security that is required for de-sealing in terms of Section 60(4) has, prima facie, no reference to the expected tax demand. We are told that the petitioner pays between ₹ 25 to 30 crores by way of value added tax annually. This y .....

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Senior Counsel appearing on behalf of the respondent. Taking a prima facie view of the matter and considering the balance of convenience, we feel that the premises belonging to the petitioner ought to be de-sealed immediately. The petitioner shall, however, deposit a sum of ₹ 5 crores within two days with the Registrar General of this Court who shall keep the same in a fixed deposit for a period of 60 days initially. The respondents are directed to de-seal the said three premises of the pe .....

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ollowing order was passed: "1. The Court is today informed by Mr D.R. Meena, Special Commissioner Trade & Tax Department who is present in court that the files of the present case are not traceable. He will file an affidavit by the next date explaining the circumstances under which the files 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 3r .....

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cted 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. What .....

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ting. There is no file number as such. The file contains the pleadings of this case, copies of some correspondence between the DT&T and its counsel, photocopy of a handwritten order passed by the VATO (Special Zone) at 1.35 am on 15th/16th March 2013 sealing the premises under Section 60 of the Delhi Value Added Tax Act, 2004 ( DVAT Act ), the representation dated 16th March 2013 of the Petitioner for de-sealing and the desealing memo dated 19th March 2013. The last document in the file is a .....

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g out the 'Grant of Authority by the Commissioner' authorising several officers of the DT&T for carrying out 'audit, investigation and enforcement functions' under the DVAT Act. The said order does not answer the question whether such a specific authorisation in Form DVAT 50 existed at the time the sealing action under Section 60, and the preceding survey action under Section 59 of the DVAT Act was undertaken by the Joint Commissioner (Special Zone). In any event it does not .....

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nted 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 .....

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vey conducted on the Petitioner under Section 59 of the DVAT Act followed by the sealing action under Section 60 of the DVAT Act. If the Commissioner finds that the relevant files are indeed untraceable, he should immediately register a first information report in the concerned police station for a proper investigation to be undertaken into the matter which will be carried to its logical end. Simultaneously, the Commissioner will, if he considers appropriate, have a vigilance enquiry ordered so .....

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maintained for every Assessee/Dealer; whether there is a register maintained for the movement of files and the instructions issued (copies to be enclosed) for preparing and maintaining files. The Court hardly need impress on the Commissioner that this is a matter of grave concern and the Court will take a strict view of the lapses of the DT&T if the explanation furnished is not convincing. 10. The other aspect of the matter is the validity of the sealing order dated 16th March 2013. The Cou .....

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etitioner was only on account of the failure to produce the records as demanded by the notice dated 15th March 2013 issued under Section 59 of the DVAT Act. This certainly was not in accordance with the requirements of Section 60 of the DVAT Act. 12. Recently this Court had in Shree Ashtvinayak Gems & Stone Pvt. Ltd. v. Commissioner, Trade & Taxes, Delhi (order dated 27th January 2016 in W.P.(C) No. 714/2016) referred to the basic jurisdictional requirement for exercising the powers unde .....

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o 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 revea .....

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ocuments at once it was attempting to avoid or evade tax or was concealing its tax liability. 13. As far as the present case is concerned, there is nothing in the file which shows what reasons weighed with the Commissioner to order a survey under Section 59 of the DVAT Act and subsequently order sealing of the premises under Section 60 of the DVAT Act. The deployment order sets out three addresses of the Petitioner: at Shivaji Marg, at Okhla Estate and at H-45 Udyog Vihar. The Petitioner was at .....

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not by the Commissioner but by the VATO. There is nothing to indicate that the VATO was authorised to do so by an order issued in Form DVAT 50 as on 15th March 2013. 15. With the sealing 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 requir .....

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pproximately ₹ 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 20009-10 to 21012-13 and arrives at a figure of approximately ₹ 2190.44 crores! It is on .....

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