1986 (3) TMI 307 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the seizure order dated 4th December 1985 and the order dated 21st December 1985.
2. Applicability of Sections 13-A and 28-A of the U.P. Sales Tax Act, 1948.
3. Validity of the demand for security to the tune of 40% of the value of the goods.
4. Definition and scope of "business" under the U.P. Sales Tax Act.
5. Validity of Section 28-A of the U.P. Sales Tax Act.
6. Adequacy of reasons provided in the order dated 21st December 1985.
7. Appropriateness of the 40% security imposition.

Detailed Analysis:

1. Legality of the Seizure Orders:
The petitioner challenged the seizure order dated 4th December 1985 and the subsequent order dated 21st December 1985, arguing that no sale was made within the State of U.P. and the goods were meant for export outside India. The court found that the seizure was made for violation of Sections 13-A and 28-A of the U.P. Sales Tax Act, 1948. The petitioner's contention that seizure power cannot be exercised without proof of sale was deemed misconceived in law.

2. Applicability of Sections 13-A and 28-A:
Section 28-A(1) mandates that any person who brings, imports, or receives goods liable to tax under the Act must obtain the prescribed form of declaration. The court noted that the petitioner did not obtain the prescribed form when the goods were brought into U.P. The court emphasized that the seizure provision under Section 28-A(6) is to prevent tax evasion, even if the goods are merely transported with a view to evade tax.

3. Validity of the Demand for Security:
The petitioner argued that the demand for security to the tune of 40% of the goods' value was arbitrary. The court held that the security demand was in accordance with Section 13-A(6), which empowers the officer to fix an amount sufficient to cover the penalty likely to be imposed. Section 15-A(1)(o) allows for a penalty not exceeding 40% of the goods' value in case of contravention of Section 28-A.

4. Definition and Scope of "Business":
The petitioner contended that the goods were brought into U.P. only for storage, not for business. The court referred to the definition of "business" under Section 2(aa) of the Act, which includes any trade, commerce, or manufacture, irrespective of profit motive. The court concluded that the petitioner's activities fell within the scope of "business" as defined, thus making the goods subject to Section 28-A.

5. Validity of Section 28-A:
The petitioner challenged the validity of Section 28-A, arguing it was beyond the legislative power of the State Government and violated Articles 14 and 19(1)(g) of the Constitution. The court referred to a previous judgment in Jain Shudh Vanaspati Ltd. v. State of U.P., which upheld the validity of Section 28-A. The court ruled that the petitioner could not reopen the question of validity, as it had already been settled by a Division Bench.

6. Adequacy of Reasons in the Order:
The petitioner argued that the order dated 21st December 1985 lacked sufficient reasons for demanding security. The court found that the order provided cogent reasons, including the petitioner's failure to inform the sales tax department, lack of registration, and absence of necessary documents. The court held that the order was neither without reason nor without proper consideration.

7. Appropriateness of the 40% Security Imposition:
The petitioner argued that the 40% security imposition was excessive and should be reduced to 6%, citing previous decisions. The court noted that no relevant circular was presented by the petitioner to support this claim. Without such evidence, the court could not sustain the argument for reducing the security demand.

Conclusion:
The court dismissed the writ petition, finding no sustainable grounds for interference with the impugned orders. The petitioner's arguments on all issues were found to be without merit. The court upheld the legality of the seizure, the applicability of the relevant sections of the U.P. Sales Tax Act, the validity of the security demand, and the adequacy of reasons provided in the order. The petition was dismissed with costs on parties.

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