2007 (12) TMI 427 - HC - VAT and Sales Tax

Non-release of certain goods seized by the officials of the Commercial Taxes Department, while the goods were in transit - Held that - In the present case, as of now, only ground on which the respondent is still holding on to the goods is for the realisation of the tax liability of the consignee for the months of April and May 2006. While for realising such amount, the subject-matter goods can definitely be put to auction sale in accordance with the procedure under the very enactment and Rules framed thereunder, if it is found there is surplus left over after such realisation of tax, that amount the State cannot retain as its own, but should necessarily return to the person to whom the goods belong. In the present case, if no one else should come forward to claim the proceeds of such sale, which if found to be in surplus of the tax liability and the petitioner alone should put forth a claim, it is only proper that the respondents be directed to pay such surplus amount to the petitioner. In the result, this writ petition is disposed of directing the respondent to pay to the petitioner the surplus amount if any that remains after the subject goods are sold and the tax liability for which it had been detained is adjusted

Issues Involved:
1. Non-release of seized goods.
2. Legitimacy of the petitioner's claim.
3. Authority of the Commercial Taxes Department.
4. Actions against erring officials.
5. Realisation of tax dues.
6. Issuance of a writ of mandamus.

Issue-wise Detailed Analysis:

1. Non-release of Seized Goods:
The core issue in this writ petition is the non-release of certain goods seized by the officials of the Commercial Taxes Department while in transit. The petitioner, claiming to be the manager of M/s. Shree Vinayak Roadways, sought a writ of mandamus for the immediate release of the goods attached under proceedings dated July 24, 2004, and also sought costs of the writ petition.

2. Legitimacy of the Petitioner's Claim:
The petitioner claimed that the goods were attached to realize a penalty of Rs. 1,52,466 under section 53(12) of the Karnataka Value Added Tax Act, 2003, due to insufficient transit documents. Despite paying the penalty, the goods were not released because the consignee had tax arrears for April and May 2006. The petitioner appealed under section 62(1) of the Act, and the Joint Commissioner of Commercial Taxes allowed the appeal, setting aside the attachment order and notice for recovery of arrears from the consignee.

3. Authority of the Commercial Taxes Department:
The respondent argued that the petitioner had no locus standi to seek the release of goods or a writ of mandamus, as the petitioner was not an authorized representative of the consignee or transport company. They also stated that the Commissioner's revision under section 64 of the Act was pending, which justified the continued detention of goods.

4. Actions Against Erring Officials:
The court took a serious view of the Commissioner's exercise of power and noted the erratic registration of the consignee firm without proper verification. The Commissioner was directed to take necessary action against the erring officials and to place an affidavit before the court detailing the steps taken to enhance the security deposit required for dealer registration.

5. Realisation of Tax Dues:
The respondent maintained that the goods were detained to realize the tax liability of Rs. 2,12,484 for the months of April and May 2006. The petitioner was found to have misled the court regarding his representation, and neither the transport company nor the consignor acknowledged him as their representative. The court noted that while the goods could be detained and sold to realize tax dues, any surplus from the sale should be returned to the rightful owner.

6. Issuance of a Writ of Mandamus:
The court hesitated to issue a writ of mandamus due to doubts about the petitioner's bona fides. However, it acknowledged that if the goods were sold and the tax liability met, any surplus should be returned to the petitioner in the absence of other claimants. The writ petition was disposed of with a direction to the respondent to pay the surplus amount, if any, to the petitioner after adjusting the tax liability from the sale proceeds of the goods.

← Previous Next →