1995 (8) TMI 290 - HC - VAT and Sales Tax

Issues Involved:
1. Imposition of penalty under section 33(5)(b) of the Bihar Finance Act.
2. Rejection of the petitioner's application for release of seized goods.
3. Alleged violation of principles of natural justice.
4. Adequacy of the opportunity to show cause.
5. Alternative remedies available to the petitioner.

Detailed Analysis:

1. Imposition of Penalty under Section 33(5)(b) of the Bihar Finance Act
The petitioner challenged the order dated May 24, 1995, by the Commercial Tax Officer, which imposed a penalty of Rs. 1,48,300.29 under section 33(5)(b) of the Bihar Finance Act. The petitioner argued that the penalty was imposed arbitrarily and without reasonable opportunity to show cause, violating natural justice principles. The court found that the petitioner was given only a few minutes to show cause, which was inadequate and violated the principles of natural justice. The court noted that the opportunity to show cause should be meaningful, reasonable, and fair, and the term "forthwith" in the context of rule 19(2) should not be taken literally but should allow reasonable time based on circumstances.

2. Rejection of the Petitioner's Application for Release of Seized Goods
The petitioner also challenged the order dated May 29, 1995, rejecting his application for the release of goods seized on May 24, 1995. The petitioner had offered to furnish security as per the Bihar Finance Act and Bihar Sales Tax Rules. The court found that under section 33(5)(c) of the Act, the authorities are bound to release the seized goods upon furnishing security equivalent to three times the amount of tax payable on the value of the goods. Therefore, the rejection of the petitioner's application for release of the goods was deemed arbitrary and illegal.

3. Alleged Violation of Principles of Natural Justice
The petitioner contended that the impugned order was passed without giving him a reasonable opportunity to show cause and to be heard, thus violating the principles of natural justice. The court agreed, stating that the opportunity of hearing is not an empty formality but must be meaningful and reasonable. The petitioner was not given sufficient time to bring relevant documents from his residence to support his case, which constituted a denial of reasonable opportunity.

4. Adequacy of the Opportunity to Show Cause
The court examined whether the time given to the petitioner to show cause was adequate. It was found that the petitioner was asked to show cause by 2 p.m. on the same day the goods were seized, which provided only a few minutes for compliance. The court referenced the case of East India Transport Agency v. State of Bihar, where even a one-day notice was deemed insufficient for a fair and reasonable opportunity. Therefore, the few minutes given to the petitioner were inadequate and rendered the penalty order unsustainable.

5. Alternative Remedies Available to the Petitioner
The respondents argued that the petition was premature as the petitioner had an adequate alternative remedy by way of appeal under the provisions of the Act. However, the court focused on the procedural improprieties and the denial of natural justice, which justified the petitioner's direct approach to the court.

Conclusion:
The petition was allowed, and the impugned order dated May 24, 1995, imposing the penalty was set aside. The respondents were granted liberty to pass a fresh order in accordance with the law after providing a reasonable opportunity for the petitioner to show cause. The court also directed the respondents to release the seized goods upon the petitioner furnishing security as per rule 39 of the Rules.

← Previous Next →