2008 (12) TMI 691 - HC - VAT and Sales Tax

Annulment of the seizure and the imposition of penalty - Held that - The records produced before this court do not contain either the documents/records seized from the petitioner on July 10, 2003 or the railway receipts or the form B in question. In fact, the learned Standing Counsel for the Revenue in course of the arguments conceded that the form B involved is presently untraceable. The observation of the revisional authority that the seized exhibits included the RRs is not borne out by the records produced before this court. As it is, it has been contended on behalf of the petitioner that the RRs could not have been seized as the same along with the copy of form B duly countersigned by the concerned Revenue authority have been produced before the railway authority for release of the consignment. Be that as it may, the records do not contain any material to support the findings recorded by the revisional authority. Thus Remand the issue to the Commissioner of Taxes, Assam, for a fresh disposal thereof on the merits after affording due opportunity of hearing to the parties. Ordered accordingly. The recovery proceeding initiated against the petitioner would remain stayed till the disposal of the matter as directed.

Issues Involved:
1. Invocation of Article 226 of the Constitution of India.
2. Seizure of documents by the Inspector of Taxes.
3. Imposition of penalty under Section 23(1)(h) of the Assam General Sales Tax Act, 1993.
4. Alleged violation of Section 46 of the Assam General Sales Tax Act, 1993.
5. Procedural fairness and principles of natural justice.
6. Adequacy of alternative remedies.

Detailed Analysis:

1. Invocation of Article 226 of the Constitution of India:
The petitioner sought to invoke the extraordinary jurisdiction of the High Court under Article 226 to quash the order dated December 20, 2007, passed by the Additional Commissioner of Taxes, Assam. The petitioner challenged the seizure of its documents and the imposition of a penalty of Rs. 2,14,735 under Section 23(1)(h) of the Assam General Sales Tax Act, 1993.

2. Seizure of Documents by the Inspector of Taxes:
The petitioner, a registered dealer, imported consignments of soybean refined oil and approached the Inspector of Taxes for delivery. Due to a discrepancy in the number of tins mentioned in Form B and the railway receipts, the Inspector did not grant permission and seized the petitioner's documents, suspecting an attempt to evade tax.

3. Imposition of Penalty under Section 23(1)(h) of the Assam General Sales Tax Act, 1993:
The Superintendent of Taxes imposed a penalty on the petitioner for allegedly concealing the actual quantity of imported goods, thereby evading taxes. The petitioner argued that the penalty was imposed without proper consideration of the facts and without providing a reasonable opportunity to represent against the charges.

4. Alleged Violation of Section 46 of the Assam General Sales Tax Act, 1993:
Section 46 imposes restrictions on the movement of goods to prevent tax evasion. The petitioner contended that there was no contravention of Section 46 and that the discrepancy in the number of tins was due to the unavailability of supporting documents at the time of submission. The petitioner later provided the necessary documents and obtained the required permissions.

5. Procedural Fairness and Principles of Natural Justice:
The petitioner argued that the penalty was imposed without furnishing a copy of the verification report relied upon by the Inspector of Taxes. The court observed that it was incumbent on the assessing officer to provide a copy of the verification report to the petitioner before imposing the penalty. The court also noted that the revisional authority failed to consider the petitioner's application pointing out the inadvertent mistake in the documents submitted.

6. Adequacy of Alternative Remedies:
The Revenue argued that the petition should be dismissed for non-exhaustion of alternative remedies, specifically an appeal under Section 5A of the Act. However, the court decided to entertain the petition considering the grounds of challenge and the failure of the Revenue to file a counter.

Conclusion:
The High Court quashed the impugned order dated December 20, 2007, and remanded the issue to the Commissioner of Taxes, Assam, for fresh disposal on merits after affording due opportunity of hearing to the parties. The court stayed the recovery proceedings until the matter was disposed of as directed. The petition was allowed with no costs.

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