1993 (8) TMI 273 - HC - VAT and Sales Tax

Summary

Issues:
Detention of goods based on alleged defects in the way bill, legality of detention, scope of detention under Orissa Sales Tax Act, power of sales tax authorities to seize and confiscate goods, limitations on seizure and confiscation, rights and obligations of registered dealers.

Analysis:
The case involves the detention of goods at a check-gate due to alleged defects in the accompanying way bill. The petitioner, a registered dealer, contended that the detention was unjustified as there were no actual defects. The goods were detained by the officer-in-charge of the unified check-gate, leading to a legal dispute. The petitioner argued that if any defects were found, only the goods should be detained, not the carrier vehicle. On the other hand, the Revenue's counsel justified the detention based on the satisfaction of the Sales Tax Officer regarding the alleged defects in the way bill.

To determine the legality of the detention, the court referred to Section 16-A of the Orissa Sales Tax Act, 1947, and Rule 94 of the Orissa Sales Tax Rules, 1947. Section 16-A empowers the officer-in-charge of a check-post to seize and confiscate goods not covered by a proper way bill. The rule specifies that if goods are perishable, they shall be sold accordingly. Rule 94(4)(b) states that if the owner fails to rectify defects or pay taxes, the goods can be seized and confiscated after following due procedure. Notably, the power of sales tax authorities is limited to seizing and confiscating goods and not the carrier vehicle.

As the petitioner was a registered dealer, the court directed that upon filing an undertaking before the Sales Tax Officer regarding the incorporation of goods' particulars in their accounts, no further action would be taken at the check-gate. The petitioner was also instructed to provide details of the goods to the assessing officer for verification. The bank guarantee furnished by the petitioner would remain in operation until the assessment was completed, with the option to renew it if directed by the assessing officer.

In conclusion, the writ application was disposed of in favor of the petitioner, emphasizing the rights and obligations of registered dealers and the limitations on the power of sales tax authorities to seize and confiscate goods. The judgment was agreed upon by both judges, and the detention of goods based on alleged defects in the way bill was deemed unjustified.