2012 (4) TMI 549 - HC - VAT and Sales Tax

Seizure order - rejection of representation by the transporter of the goods under section 48(7) of the Act by the Joint Commissioner (SIB/Enforcement) - Held that - Seizure of the goods in the case at hand on the ground that the dealers are nonexisting is bad in law. Admittedly, in the present case the goods were seized immediately on their entry in the State of U.P. without allowing the time for its exit to expire. In such situation, it is wrong to presume that the goods have been retained in U.P. for the purposes of sale. Apart from the above, as the goods were duly accompanied by the requisite documents, no presumption arises under law that they were likely to be sold within the State of U.P. Appeal allowed. The authorities were not justified in passing the order of seizure and the higher authorities committed jurisdictional error in rejecting the representation and appeal of the revisionist.

Summary

Issues:
1. Seizure of goods in transit under the U.P. Value Added Tax Act, 2008.
2. Rejection of representation under section 48(7) of the Act.
3. Dismissal of appeal by the Commissioner, Commercial Tax, Tribunal.

Analysis:
1. The judgment dealt with the seizure of goods in transit under the U.P. Value Added Tax Act, 2008. The transporter challenged the seizure order dated March 5, 2012, based on discrepancies found by the Revenue authorities during interception. The transporter had followed the prescribed procedures, including downloading a transit declaration form and duly filling it before entering the State of U.P. The goods were seized on the grounds that sellers and purchasers were deemed non-genuine and that the goods did not match the description in the transit declaration form or accompanying documents.

2. The Court considered the argument presented by the transporter's counsel, emphasizing that the goods seized were covered by the invoice bilties and the transit declaration form. The counsel contended that any discrepancies were due to verification methods and not actual discrepancies. It was argued that the genuineness of dealers is irrelevant for passing a seizure order unless there is positive evidence of unloading goods in U.P. The Court noted that the seizure of goods in transit through U.P. can only be made based on specific grounds mentioned in the Act, and the presumption that goods are meant for sale in U.P. only applies when relevant documents are absent, which was not the case here.

3. The judgment referenced previous court decisions to support the argument that the genuineness of consignors and consignees is not a valid ground for seizing goods in transit. It was highlighted that the purpose of safeguards like the transit declaration form is to ensure goods pass through the state without being sold to evade taxes. The Court found that the seizure of goods based on non-existing dealers was legally incorrect. Additionally, discrepancies in the description of goods were clarified, emphasizing that the goods were covered by the relevant documents and that seizure before the expiry of the exit time disclosed in the transit declaration form was unjustified.

4. The Court concluded that the authorities were not justified in passing the seizure order and that higher authorities erred in rejecting the representation and appeal of the transporter. Consequently, the Court allowed the revision, set aside the previous orders, and directed the release of the goods without any security, with no costs imposed on either party.