1990 (9) TMI 309 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of seizure.
2. Requirement of a permit for transportation.
3. Imposition of penalty and its quantum.
4. Validity of the seizure and penalty process.

Detailed Analysis:

1. Jurisdiction of Seizure:
The petitioners challenged the seizure of 40 television sets out of 143 by the Inspector of Commercial Taxes at Duburdih Check-post on October 22, 1985. The seizure was made due to the alleged non-production of a sales tax permit. The petitioners argued that the seizure was without jurisdiction as the truck had not crossed the "notified area" of the check-post, which is a requirement under section 6 of the West Bengal Sales Tax Act, 1954. The court concluded that since the consignment had not crossed the border of the check-post, no offence was committed, and thus, the seizure was made without jurisdiction.

2. Requirement of a Permit for Transportation:
The petitioners contended that they were not given adequate time to produce the necessary sales tax permit. The consignment arrived during the Durga Puja festival when their Asansol branch office was closed. They obtained the permit on October 29, 1985, after the office reopened. The court noted that the seizure was made without considering the petitioners' request for reasonable time to produce the permit, and the permit obtained post-seizure was deemed of no value by the authorities.

3. Imposition of Penalty and Its Quantum:
The Commercial Tax Officer imposed a penalty of Rs. 97,000 based on the notional value of 143 television sets, although only 40 sets were seized. The petitioners argued that the penalty should have been calculated based on the value of the seized 40 television sets. The court found the penalty assessment arbitrary and without jurisdiction, as it was based on the value of 143 sets instead of the 40 sets actually seized.

4. Validity of the Seizure and Penalty Process:
The court examined whether the seizure and penalty process followed the legal provisions. It was argued that the seizure list and show cause notice contained inconsistencies and overwriting. The court held that the seizure and penalty were conducted with a closed mind and without proper jurisdiction. The court also referenced the Supreme Court's interpretation of "reason to believe" in similar cases, emphasizing that reasons must be bona fide and rationally connected to the belief of contravention.

Conclusion:
The court concluded that the seizure and penalty imposed were without jurisdiction and arbitrary. The impugned seizure and penalty were set aside, and the petitioners were discharged from the bank guarantee. The court reiterated that unless a consignment crosses the border of a check-post, no offence is committed under rule 15(ii) of the West Bengal Sales Tax Rules, 1954. The writ petitions were allowed, and the petitioners were granted relief from the imposed penalties and seizures.