1997 (7) TMI 631 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the seizure of 26 packages of utensils by the Sales Tax Officer.
2. Whether the goods were in the custody of the railway at the time of seizure.
3. Whether the city booking agencies fall within the definition of "railway" under the Railways Act, 1890 and 1989.
4. Whether the Deputy Commissioner was correct in his finding that the delivery of the goods had been taken by the consignee.

Issue-wise Detailed Analysis:

1. Legality of the Seizure of 26 Packages of Utensils:
The writ petition sought a writ of mandamus directing the respondent to release the consignment of 26 packages of utensils seized by the Sales Tax Officer under section 13-A of the U.P. Sales Tax Act, 1948. The goods were seized on the ground that they were not accompanied by the prescribed documents. The Deputy Commissioner initiated proceedings under section 13-A(6) of the Act and issued a show cause notice to Matloob Ahmad. The Deputy Commissioner held that the goods had been delivered to the consignee, making the seizure lawful under section 13-A(6). The High Court initially quashed this order, but the Supreme Court later set aside the High Court's judgment and remitted the matter for fresh consideration.

2. Custody of the Goods:
The central issue was whether the goods were still in the custody of the railway when seized. The railway argued that the goods remained in its custody until delivered to the consignee, invoking section 28-A(8) of the Act. The Deputy Commissioner, however, concluded that the goods were no longer in the railway's custody, as evidenced by the payment of octroi by Raj Kumar and the transportation by Matloob Ahmad. The High Court initially found that the goods were still in the railway's custody, but the Supreme Court disagreed, emphasizing that this was a factual determination best left to the statutory appeal process.

3. Definition of "Railway" under the Railways Act:
The Supreme Court remitted the question of whether city booking agencies fall within the definition of "railway" under sections 3(4) of the Railways Act, 1890, and 2(31) of the Railways Act, 1989. The High Court examined the Indian Railway Commercial Manual and the agreement between the railway and the city booking agency, concluding that city booking agencies are an extended hand of the railway. Therefore, they fall within the definition of "railway" under both Acts. The manual and agreement indicated that city booking agencies function similarly to railway stations, booking and transporting goods under the same procedures and controls.

4. Deputy Commissioner's Finding on Delivery:
The Supreme Court noted that the Deputy Commissioner's finding that the goods had been delivered to the consignee was a factual determination. This finding was based on the payment of octroi by Raj Kumar and the lack of proper documentation for the transport by Matloob Ahmad. The Supreme Court emphasized that this factual finding should have been challenged through the statutory appeal process rather than directly in the High Court. The High Court, upon remand, refrained from re-evaluating this factual finding, directing the petitioners to pursue an appeal if they had not already done so.

Conclusion:
The High Court ultimately dismissed the writ petition, affirming that the city booking agency is part of the railway and that the goods, while in transit to the city booking agency, should be considered under the railway's custody. However, the factual determination of whether the goods had been delivered to the consignee was left to the statutory appeal process. The court advised that before seizing goods allegedly in transit to a city booking agency, sales tax authorities should verify the version from the railway administration's records to avoid unnecessary litigation.