1972 (5) TMI 51 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the seizure of goods under Section 14-B of the Punjab General Sales Tax Act, 1948.
2. Constitutionality of the power of seizure under Section 14-B(8) of the Punjab General Sales Tax Act.
3. Allegation of tax evasion by the petitioner-company.
4. Jurisdiction of the officer-in-charge of the check post to seize goods and impose penalties.

Detailed Analysis:

1. Legality of the Seizure of Goods Under Section 14-B of the Punjab General Sales Tax Act, 1948:
The petitioner-company transported tyres and tubes from West Bengal to Jullundur, but the vehicle was stopped at the Shamboo Barrier in Patiala District. The driver presented a declaration form (ST XXIV) indicating a value of Rs. 50,000, while the original invoices showed a value of Rs. 1,15,518.25. The Taxation Inspector concluded that the driver filed a false declaration to evade sales tax. Despite explanations from the petitioner-company's representatives that the incorrect figure was a clerical error, the officer-in-charge seized the goods and demanded Rs. 7,000 for their release. The petitioner-company paid under protest and later sought a refund, which was denied, prompting the present petition.

2. Constitutionality of the Power of Seizure Under Section 14-B(8) of the Punjab General Sales Tax Act:
The petitioner challenged the constitutionality of the seizure power under Section 14-B(8), citing the Supreme Court judgment in The Check Post Officer, Coimbatore, and Others v. K.P. Abdulla and Brothers, which declared similar provisions in the Madras General Sales Tax Act as unconstitutional. The court held that the power to seize and confiscate goods was not ancillary or incidental to the power to levy sales tax, and thus, the seizure power under Section 14-B(8) of the Punjab Act was also ultra vires the State Legislature's powers.

3. Allegation of Tax Evasion by the Petitioner-Company:
The court noted that the purpose of Section 14-B was to prevent tax evasion. However, the officer-in-charge did not establish that the goods were liable to sales tax in Punjab. The petitioner argued that the goods were being transported to its sub-depot and not sold, and the assessing authority had not determined any sales tax liability. Therefore, the incorrect declaration did not necessarily indicate an attempt to evade tax.

4. Jurisdiction of the Officer-in-Charge of the Check Post to Seize Goods and Impose Penalties:
The court found that the officer-in-charge lacked jurisdiction to seize the goods or impose penalties without establishing that the goods were subject to sales tax. The seizure and the demand for Rs. 7,000 were deemed unauthorized and without legal basis.

Conclusion:
The petition was accepted with costs, and the order of the officer-in-charge seizing the goods and charging Rs. 7,000 was quashed. The respondents were directed to refund the amount to the petitioner-company. The court awarded counsel's fee of Rs. 200 to the petitioner.

Petition allowed.