2008 (7) TMI 939 - HC - VAT and Sales Tax

Seizure order - Held that - The Tribunal itself has found that the goods are traceable to bona fide dealer but are not duly account for by the dealer in the account books. Whether the applicant is dealer or not is required to be find out first. There being no such finding, the order of seizure cannot be sustained. Viewed as above, sufficient force find in the revision. There was absolutely no justification for the Department to seize the goods in question. The seizure order is therefore, illegal and contrary to law. Revision succeeds and is allowed.

Summary

Issues:
Seizure of goods under section 13A(4) of the U.P. Trade Tax Act, 1948 without proper justification.

Detailed Analysis:

The judgment by the Allahabad High Court dealt with the issue of the seizure of goods under section 13A(4) of the U.P. Trade Tax Act, 1948 without proper justification. The case involved a private limited company that decided to close down a manufacturing unit in Kanpur and shift office equipment to its sister concern in Uttaranchal. The goods were intercepted by the Assistant Commissioner, Mobile Squad, Trade Tax, Kanpur, on the grounds of incomplete documentation. A show-cause notice was issued, demanding security for the goods. The company's application under section 13A(6) was dismissed by the Deputy Commissioner and the Tribunal upheld the decision.

The company argued that the seizure order and security demand were arbitrary and illegal, contending that section 13A(4) allows seizure only when goods are untraceable to a bona fide dealer or not properly accounted for. The company's counsel emphasized that the goods were not meant for sale, as indicated by the nature of items being transported and the mention on the challan. The Tribunal's observation that the issue of tax liability would be considered later suggested uncertainty about any tax evasion.

The High Court analyzed the definition of "dealer" under section 2(c) of the Act, highlighting that the power of seizure under section 13A(4) could only be exercised if there was evidence of the person being a dealer engaged in business activities. Since there was no proof of the company conducting business in U.P., the seizure order was deemed arbitrary and unjustified. The Tribunal's reliance on form 16 from the Uttaranchal Trade Tax Department to infer goods were meant for sale was dismissed, as suspicion alone cannot justify seizure under section 13A(4).

The Court concluded that without establishing the company as a dealer, the seizure order lacked legal basis and was set aside. The Department was directed to release the goods promptly, and the company was awarded costs. The judgment emphasized the necessity of concrete evidence to support seizure actions under tax laws, ensuring fairness and legality in enforcement proceedings.