2006 (10) TMI 387 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the seizure of goods.
2. Jurisdiction of the Check-post Officer.
3. Compliance with Section 28B and Rule 87 of the U.P. Trade Tax Act, 1948.
4. Entitlement to costs and damages.

Summary:

1. Legality of the Seizure of Goods:
The Tribunal confirmed the seizure of 99 drums of agro-chemicals and the demand for security at Rs. 15 lacs. The Check-post Officer detained the goods on the grounds that they did not tally with the goods mentioned in invoice No. 33 and delivery note No. 34. The applicant contended that these documents did not relate to the impugned goods and that the seizure was illegal and a result of harassment.

2. Jurisdiction of the Check-post Officer:
The applicant argued that the Check-post Officer exceeded his jurisdiction by connecting the goods with invoice No. 33 and delivery note No. 34, which did not relate to the impugned goods. The officer should have verified the goods only with reference to the transit pass and the G.R. mentioned in it. The court found that the Check-post Officer illegally connected the goods with the said documents, which did not match the descriptions of the impugned goods.

3. Compliance with Section 28B and Rule 87 of the U.P. Trade Tax Act, 1948:
Section 28B and Rule 87 are machinery provisions to check tax evasion and ensure that goods transported through the state are not sold within the state. The court noted that the goods found on physical verification at the exit check-post matched those mentioned in the transit pass, and there was no discrepancy. The court cited the Supreme Court's ruling in Sodhi Transport Co. v. State of U.P., which upheld the validity of Section 28B as a machinery provision and not a charging section.

4. Entitlement to Costs and Damages:
The court concluded that the detention and seizure of the goods were erroneous and a result of harassment by the Check-post Officer. The Tribunal's decision was based on irrelevant considerations. The revision was allowed, and the orders of the Tribunal and authorities below were set aside. The Check-post Officer was directed to release the goods without any security within three days. The applicant was awarded costs of Rs. 20,000 and was entitled to take appropriate action for the losses suffered.

Conclusion:
The revision was allowed, and the orders seizing the goods were set aside. The Check-post Officer was directed to release the goods without security, and the applicant was awarded costs and entitled to seek damages for losses suffered.