2007 (12) TMI 435 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the certificate proceeding for tax recovery.
2. Legality of sealing the business premises.
3. Claim for damages due to the sealing.

Issue-wise Detailed Analysis:

1. Legality of the Certificate Proceeding for Tax Recovery:
The applicants challenged the initiation and continuation of the certificate proceeding for the realization of assessed tax and interest under the Bengal Finance (Sales Tax) Act, 1941. They argued that the recovery proceeding was initiated in contravention of section 11(4) of the Bengal Finance (Sales Tax) Act, 1941, as the amount demanded could not be recoverable under this section. They also contended that the appeals and stay applications were pending against the demands within the knowledge of the Certificate Officer, making the act illegal.

2. Legality of Sealing the Business Premises:
The applicants claimed that the sealing of their business premises was illegal. They argued that neither the Bengal Finance (Sales Tax) Act, 1941 nor the Bengal Public Demands Recovery Act, 1913 empowers the Certificate Officer to seal any business place. The Tribunal found that the act of sealing the business premises in execution of the certificate of demand was bad in law. The Tribunal observed that the Certificate Officer could not take custody of the immovable properties by sealing them. The mode of attachment of immovable property is provided in rule 54 of Order 21 of the Code of Civil Procedure (CPC), which does not permit sealing as a method of attachment.

3. Claim for Damages Due to the Sealing:
The applicants sought damages of Rs. 50 lakh for the illegal sealing of their business premises. The Tribunal noted that the applicants did not furnish particulars of the loss or assessment of the damages claimed. The Tribunal considered whether it had the jurisdiction to award damages under article 226 of the Constitution of India. It concluded that it had the power to award token or interim damages or exemplary damages in aggravating circumstances, as it enjoys the power of the High Court with its original civil jurisdiction excluding its power under article 227 and of judicial review of the Constitution of India as supplemental to the High Court of the State in respect of the State Acts specified in section 5 of the WBTT Act, 1987.

The Tribunal found that the act of sealing the business premises prevented the applicants' access to their books of accounts and other movable properties inside their business place, which caused financial loss and lowered their prestige in society. The Tribunal awarded exemplary damages of Rs. 1,000 to the applicants, to be paid by the State of West Bengal within three months. The Tribunal emphasized that the State must repair the damage done by its officers to the applicants' rights.

Conclusion:
The Tribunal held that the certificate proceeding and the sealing of the business premises were illegal. It awarded exemplary damages of Rs. 1,000 to the applicants, to be paid by the State of West Bengal, for the wrongful act of sealing the business premises. The Tribunal asserted its jurisdiction to award damages under article 226 of the Constitution of India, emphasizing the need to uphold the fundamental rights guaranteed by the Constitution.