2011 (5) TMI 874 - HC - VAT and Sales Tax

Whether Section 50 of the U.P. Value Added Tax Act does not permit seizure of a consignment being imported into the State of U. P. on the ground of undervaluation; the entire proceedings suffer from an inherent lack of jurisdiction and are void ab initio? Whether the importer/ transporter, has a remedy under the U.P. Value Added Tax Act by way of appeal and/or revision? Held that - No hesitation in holding that the power to seize goods imported into the State without proper or genuine document is located in section 50(4). In our opinion, as the petitioner has an adequate alternative remedy, the present case would not be a fit case for this court to exercise its extraordinary jurisdiction. Appeal dismissed.

Issues Involved:
1. Jurisdiction under Section 50 of the U.P. Value Added Tax Act for seizure based on undervaluation.
2. Validity and specificity of the show-cause notice.
3. Fulfillment of preconditions for concluding undervaluation.
4. Availability of remedy under the U.P. Value Added Tax Act by way of appeal or revision.

Detailed Analysis:

1. Jurisdiction under Section 50 of the U.P. Value Added Tax Act for Seizure Based on Undervaluation:
The petitioner argued that Section 50 of the U.P. VAT Act does not permit the seizure of goods on the grounds of undervaluation, rendering the proceedings void ab initio. The court examined sub-sections (1), (4), and (5) of Section 50, which deal with the import of goods into the state and the conditions under which goods can be detained. Sub-section (4) allows for the detention of goods if they are transported without proper and genuine documents, which include accurate valuation. The court concluded that the power to seize goods for undervaluation is inherent in ensuring that documents reflect true value, thus upholding the jurisdiction under Section 50(4).

2. Validity and Specificity of the Show-Cause Notice:
The petitioner contended that the show-cause notice issued on May 2, 2011, was vague and did not provide a sufficient basis for alleging undervaluation. The court noted that the notice must specify the basis for such allegations to give the petitioner a fair opportunity to respond. However, the court did not find a detailed discussion or conclusion on this point within the judgment, focusing instead on the broader issue of jurisdiction and remedy.

3. Fulfillment of Preconditions for Concluding Undervaluation:
The petitioner argued that the order dated May 7, 2011, was passed without fulfilling necessary preconditions and that the state had not discharged its burden of proving undervaluation. The court reiterated that the documents accompanying the goods must be proper and genuine, including accurate valuation. The court upheld the seizure, indicating that the petitioner failed to prove that the valuation was correct and that the documents were genuine.

4. Availability of Remedy Under the U.P. Value Added Tax Act by Way of Appeal or Revision:
The petitioner claimed there was no remedy available by way of appeal or revision, justifying the invocation of the court's extraordinary jurisdiction. The court examined Sections 48(7), 55, 56, and 57(4) of the U.P. VAT Act. It concluded that a person aggrieved by an order of seizure has remedies under the Act, specifically under Section 57(4), which allows for an appeal to the Tribunal. The court referred to previous judgments, including Rida International v. State of U.P., which supported the view that the validity of the seizure order could be examined by the Commissioner or Tribunal under the Act.

Conclusion:
The court dismissed the petition, holding that the power to seize goods for undervaluation is valid under Section 50(4) of the U.P. VAT Act. It also determined that adequate remedies are available under the Act, making the invocation of the court's extraordinary jurisdiction unnecessary. The petitioner's failure to utilize these remedies rendered the case unfit for extraordinary relief.

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