2013 (7) TMI 864 - HC - VAT and Sales Tax

Seizure of goods - Demand of security - columns of form XXXVIII had remained blank and as such there appears to be an attempt to evade tax. - Held that - It is important to note that for the purposes of seizing the goods brought inside the State of U. P. in exercise of power under section 50 of the U. P. Value Added Tax Act, 2008 an attempt to evade tax is a necessary condition and that would be fulfilled if the goods brought inside the State of U. P. are not taxable. It was therefore incumbent upon the authorities to examine as to whether the goods were taxable items or not before seizing the goods which aspect has been completely overlooked in the present case. - The authorities have also not assigned any reason as to how form XXXVIII accompanying the goods would have been reused leading to evasion of tax when the columns in the form were marked X all through and no new figure could be filled therein. - with the consent of the parties the impugned order of the Tribunal dated June 19, 2013 is set aside and the matter is remanded to it for reconsideration - Decided in favour of assessee.

Summary

Issues:
1. Seizure of goods under the U.P. Value Added Tax Act, 2008.
2. Allegation of tax evasion by the revisionist.
3. Compliance with form requirements for goods transportation.
4. Judicial review of Tribunal's order.

Analysis:
The judgment by the Allahabad High Court pertains to a revision against the Tribunal's order upholding the seizure of goods and directing their release upon furnishing security. The revisionist, a registered dealer in U.P. engaged in establishing a thermal power station, had ordered a high pressure flash tank for the project. The tank was seized during transportation into U.P. due to alleged blank columns in form XXXVIII, suggesting a tax evasion attempt. The revisionist argued that the flash tank was tax-exempt under a notification and the form was correctly filled, with all columns crossed out to prevent reuse.

The Court highlighted that seizing goods under the U.P. VAT Act requires a condition of an attempt to evade tax, which is negated if the goods are non-taxable. It criticized the authorities for overlooking the taxability assessment before seizure. Additionally, the Court noted the absence of reasons on how the form could be reused for tax evasion when properly marked. Consequently, the Tribunal's order was set aside, and the matter remanded for reconsideration, emphasizing a thorough review of taxability and form compliance.

The Court directed the Tribunal to expedite the decision within two months, ordering the immediate release of the seized flash tank upon providing non-cash security as per the appellate authority's requirement. Ultimately, the revision was allowed, granting relief to the revisionist and emphasizing the importance of proper assessment before seizing goods under tax laws.