1986 (5) TMI 255 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the seizure of goods and vehicle.
2. Requirement of transport permits under the Bengal Finance (Sales Tax) Act, 1941, and the West Bengal Sales Tax Act, 1954.
3. Restrictions on inter-State transport of goods.
4. Legislative competence of the State regarding inter-State transactions.

Detailed Analysis:

1. Legality of the Seizure of Goods and Vehicle
The petitioner company, engaged in the business of transport agents and common carriers, had its goods seized at Chichira Check Post, District Midnapore, on 9th November 1985. The goods, consisting of 97 bags of black pepper and 300 tins of coconut oil, were being transported from Cochin, Kerala, to Bhagalpur, Bihar. The seizure was due to the lack of a transport permit as required under the Bengal Finance (Sales Tax) Act, 1941, and the West Bengal Sales Tax Act, 1954. The court noted that there was no allegation of fraudulent conduct against the petitioner and that the documents produced at the check post showed the consignment was meant for Bhagalpur.

2. Requirement of Transport Permits
The court examined the relevant provisions of the Bengal Finance (Sales Tax) Act, 1941, specifically Section 4B, which restricts the transport of notified goods without a permit. Rules 89, 89A, 90, and 91 of the Bengal Sales Tax Rules, 1941, were analyzed. Rule 89(1) prohibits the transport of notified goods by persons other than registered or certified dealers, except in the manner prescribed. Rule 89A(1) requires a permit for transporting goods by registered or certified dealers. Rule 91 allows the Commissioner to authorize transport without a permit for good and sufficient reasons. The court found no provision requiring a person who is not a dealer to obtain a permit for transporting goods through West Bengal.

3. Restrictions on Inter-State Transport of Goods
The court held that the rules should be given a restricted interpretation to avoid being ultra vires the Constitution. It was argued on behalf of the petitioners that the rules could not apply to inter-State sales or goods merely passing through West Bengal. The court agreed, stating that imposing such restrictions would be unconstitutional and an unreasonable restriction on the rights guaranteed under Article 19 and Article 301 of the Constitution.

4. Legislative Competence of the State
The court referred to Supreme Court judgments in Check Post Officer, Coimbatore v. K.P. Abdulla and Brothers and Hansraj Bagrecha v. State of Bihar. These cases established that State legislation could not impose restrictions on inter-State transactions, as it would be beyond the legislative competence of the State. The court found that the Bengal Finance (Sales Tax) Act, 1941, and the West Bengal Sales Tax Act, 1954, did not authorize the imposition of restrictions on inter-State transport of goods.

Conclusion
The writ petition was allowed. The court ordered the release of the vehicle and goods and quashed the penalty proceedings against the petitioner. The court directed the refund of the security deposit of Rs. 30,000 to the petitioner. The judgment emphasized that no permit was required for transporting goods through West Bengal by a person who is not a registered or certified dealer, and any such requirement would be unconstitutional.