1994 (8) TMI 277 - HC - VAT and Sales Tax

Summary

Issues:
Challenging the legality of the order seizing goods and imposing penalty under Bihar Finance Act, 1981.

Analysis:
The petitioner, a transporter, challenged the order seizing goods and imposing penalties under sections 31(2a), (2b), and (3) of the Bihar Finance Act, 1981. The petitioner's counsel argued against the vires of section 31, specifically 31(2a). The High Court found that the show cause notice preceding the order of seizure and penalty did not comply with the requirements of Rule 19 of the Rules under the Act. The orders seizing goods and imposing penalties also did not conform with section 31(2b) and (3) of the Act. The impugned orders were based on a driver not properly filling the declaration form, and the show cause notice did not provide the necessary information for a satisfactory response. Additionally, the time given to reply to the notice was inadequate, violating the fair hearing principles outlined in Rule 19.

The prescribed authority must verify that the transportation of goods contravenes section 31(2a) objectively before seizing goods. In this case, such verification was lacking. Furthermore, before levying a penalty under section 31(3), the authority must find that the contravention is likely to lead to tax evasion, which was not done here. Rule 19 mandates providing the gist of accusation and a reasonable time for response, which was not adhered to in this case. The Advocate-General's arguments in support of the challenged provisions failed to address these factual deficiencies.

The petitioner requested the release of the refrigerators, subject to furnishing security as per the Act and Rules, with the Advocate-General not opposing this request. The High Court quashed the impugned orders and directed the release of the goods upon the petitioner furnishing security. The authorities were granted the liberty to issue fresh orders in compliance with the law and the court's observations. The writ petition was allowed accordingly, and the petition was granted.

This judgment highlights the importance of procedural fairness, adherence to statutory requirements, and the objective assessment of contraventions before imposing penalties under the Bihar Finance Act, 1981. The High Court's decision emphasizes the need for authorities to comply with legal provisions and ensure a fair hearing for individuals subject to penalty or seizure orders.