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2000 (11) TMI 1199 - HC - VAT and Sales Tax
Issues:
- Legality of the impugned action of the Sales Tax Officer stopping delivery of goods for export. - Validity of the general instructions issued by the sales tax authorities regarding the delivery of castor oil for export. Analysis: 1. The petitioner, an exporter of castor oil, challenged the order issued by the Sales Tax Officer stopping the delivery of cargo stored at Kandla Port for export. The Sales Tax Officer justified the action under section 59(5A) of the Gujarat Sales Tax Act, 1969, to verify accounts and prevent tax evasion. The petitioner contended that no sales tax was leviable on exports and that the action was illegal and arbitrary, causing financial loss and inconvenience. 2. The Sales Tax Officer's reply affidavit revealed that the action aimed to investigate potential tax evasion on castor seeds by oil millers, not the petitioner. The Court noted that the petitioner was not a "dealer" under the Act, and there was no evidence of tax evasion by the petitioner. The action to stop delivery for inspection must be based on reasonable grounds and comply with principles of natural justice, including notice and an opportunity to be heard. 3. The Court found legal infirmities in the Sales Tax Officer's actions, emphasizing the need for a bona fide belief of tax evasion before stopping delivery. The petitioner's status as an exporter exempt from sales tax was crucial, and the action taken against them was unwarranted. The Court highlighted the serious financial consequences of such actions and the importance of following due process. 4. The Court also criticized the lack of notice and opportunity for the petitioner to be heard before stopping the delivery, a violation of natural justice principles. The impugned order dated August 7, 2000, was quashed as unsustainable. The general instructions issued on September 26, 2000, were deemed beyond the Sales Tax Officer's power under section 59(4) and were also quashed. 5. Consequently, the petition was allowed, and both the impugned order and general instructions were quashed. The petitioner was awarded costs, and the rule was made absolute. The Court emphasized the importance of adhering to legal provisions and principles of natural justice in administrative actions to prevent undue hardship on parties involved in such cases.
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