2008 (7) TMI 869 - HC - VAT and Sales Tax

Seizures of the books of account and goods - Held that - In the present case, the conditions precedent for assumption of jurisdiction to issue show-cause notice under clause (b) of section 74(5) being non-existent, the impugned notice cannot be sustained. It is hereby held and clarified that the seizure of the goods, in question, was without jurisdiction and must be set aside and, in consequence thereof, the notice to show cause, which stands impugned in the present writ petition, cannot survive and must fail.

Summary

Issues Involved:
1. Legality of the seizure of goods under Section 74(5)(a)(ii) of the Assam Value Added Tax Act, 2003.
2. Validity of the subsequent show-cause notice issued under Section 74(5)(b) of the Assam Value Added Tax Act, 2003.
3. Scope and parameters of the High Court's power of review under Order 47, Rule 1 of the Code of Civil Procedure, 1908.

Detailed Analysis:

1. Legality of the Seizure of Goods:
The petitioner-company challenged the seizure of goods by the tax authorities on the grounds that the seizure was without jurisdiction and authority of law. The seizure was conducted under Section 74(5)(a)(ii) of the Assam Value Added Tax Act, 2003, which allows seizure if the goods are not accounted for in the dealer's books of account. The petitioner argued that the goods were accounted for, albeit misclassified, and thus the seizure was illegal. The court initially upheld the seizure, based on the respondents' submission that the goods did not tally with the invoices produced, implying no entries existed in the books of account.

2. Validity of the Subsequent Show-Cause Notice:
Following the court's direction, a show-cause notice was issued to the petitioner alleging misclassification of goods and evasion of tax. The petitioner sought a review of the court's earlier judgment, arguing that the seizure was upheld based on incorrect submissions by the respondents. The respondents had abandoned the ground of non-tallying invoices in the show-cause notice, which focused solely on misclassification. The court found that the seizure was indeed based on misclassification, not non-tallying invoices, and thus was without jurisdiction. Consequently, the show-cause notice, being an extension of the illegal seizure, was also held to be without jurisdiction.

3. Scope and Parameters of the High Court's Power of Review:
The court discussed the scope of its power of review under Order 47, Rule 1 of the Code of Civil Procedure, 1908, which allows review on grounds of discovery of new evidence, error apparent on the face of the record, or any other sufficient reason. The court emphasized that while the power of review is limited, it can be exercised to correct an error that has resulted in miscarriage of justice. The court referred to several Supreme Court judgments, including Board of Control for Cricket, India v. Netaji Cricket Club, to elucidate that review is permissible if the court's decision was based on an erroneous assumption of fact or law, leading to a miscarriage of justice.

Conclusion:
The court allowed the review petition, setting aside the seizure of goods and the subsequent show-cause notice. It clarified that the seizure was illegal as it was based on misclassification, not on the absence of entries in the books of account. The court directed the respondents to release the seized goods immediately. The judgment underscores the High Court's power to review its orders to prevent miscarriage of justice and correct errors apparent on the face of the record.