2000 (5) TMI 1048 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of the seizure of skimmed milk powder (SMP).
2. Imposition of penalty under section 70 of the West Bengal Sales Tax Act, 1994.
3. Constitutional validity of section 69(b) of the 1994 Act.
4. Determination of whether the goods were locally purchased or imported.
5. Ownership and possession of the seized goods.

Issue-wise Detailed Analysis:

1. Validity of the Seizure of Skimmed Milk Powder (SMP):
The applicants challenged the validity of the seizure conducted by Revenue officials on April 28, 1999, at various shops, alleging it was arbitrary, illegal, and without jurisdiction. The seizure was executed on the grounds of contravention of section 68 of the 1994 Act. Despite the production of relevant documents by the applicants, the goods were seized, and a single receipt was issued in the name of one firm, M/s. Fair Traders. The Tribunal noted that factual issues regarding the local purchase of goods and the ownership of the shops were not yet examined by the fact-finding authorities below.

2. Imposition of Penalty under Section 70 of the West Bengal Sales Tax Act, 1994:
The firm was served with a notice initiating a penalty proceeding and a penalty of Rs. 16,08,450 was imposed after determining the value of the goods to be Rs. 64,33,800. The applicants contended that the penalty was imposed without proper verification of documents proving local purchase. The Tribunal emphasized that factual issues must be probed by the seizing officer before imposing a penalty and subsequently by other fact-finding authorities.

3. Constitutional Validity of Section 69(b) of the 1994 Act:
The applicants argued that section 69(b) was unconstitutional as it conferred uncontrolled and arbitrary power on authorities without requiring them to form an opinion or record reasons before conducting a search. The Tribunal rejected this contention, stating that section 69(b) provides for search based on information to verify whether goods are being transported in contravention of section 68. The Tribunal held that search itself does not amount to deprivation of rights under article 19(1)(g) and that adequate safeguards are provided under section 70 for seizure.

4. Determination of Whether the Goods Were Locally Purchased or Imported:
The Tribunal highlighted that whether the goods were locally purchased or imported is a question of fact that depends on the production of supporting documents by the applicants. This issue had not been settled by the fact-finding authorities below and needed to be examined.

5. Ownership and Possession of the Seized Goods:
The ownership of shop Nos. A-18 and A-19 was disputed, with the respondents contending that the godown in-charge could not produce documents to support the claim of ownership by the applicant in RN-122 of 1999. The Tribunal noted that the factual issue of ownership and possession of the goods needs to be resolved by the fact-finding authorities.

Conclusion:
The Tribunal dismissed the applications, stating there was no ground to hold section 69(b) of the 1994 Act as ultra vires the Constitution. The applicants were advised to approach the appropriate forum regarding factual issues. The period during which the applicants pursued the constitutional issue would not be counted towards the limitation period for moving the appropriate forum. The securities furnished would abide by the ultimate decision in the penalty matter, and the authorities were directed to provide a reasoned finding on the factual disputes regarding the seized goods.

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