2011 (4) TMI 1306 - HC - VAT and Sales Tax

Release of seized goods - deposit of twice the tax leviable on the goods so seized - Held that - it is only if the goods passing through the State of U.P. are not accompanied by the documents prescribed that a presumption of sale within the State would arise and not otherwise - It is not the case of the department that the goods were not accounted for or that they were not accompanied by the necessary documents prescribed or that the documents were not in order or not properly filled. It is not even the case that the goods were undervalued or that they were being loaded or unloaded in the State of U.P. which may have give a legitimate presumption of their being sold in U.P. It is also pertinent to note that the goods were detained prior to the expiry of the time of exit of the goods from U.P. as declared in the transit declaration form. The order of seizure dated 10.2.2011, the order dated 22.2.2011 rejecting the representation under Section 48(7) of the Act and that of the tribunal dated 30.3.2011 to be illegal and without jurisdiction - Once the seizure is held invalid, the issue as to whether the tribunal was justified in directing for release of the goods on deposit of cash security twice the amount of tax leviable in place of 40% of the estimated value of the goods, as provided under the Act, fails into oblivion and, as such, need not be addressed - revision allowed - decided in favor of revisionist.

Summary

Issues Involved:
Seizure of goods under Section 50/52 of the U.P. Value Added Tax Act; Jurisdictional errors in upholding the seizure; Interpretation of Section 52 and Rule 58; Compliance with necessary documents for goods passing through U.P.; Grounds for seizure under Section 48 of the Act; Revisional jurisdiction to interfere with seizure orders.

Detailed Analysis:

Seizure of Goods under Section 50/52:
The case involved the joint filing of a revision challenging the seizure of goods under Section 50/52 of the U.P. Value Added Tax Act. The tribunal had directed the release of goods on deposit of twice the tax leviable on the seized goods. Both revisions were related to the same transaction of seizure, leading to a joint hearing and disposal.

Interpretation of Section 52 and Rule 58:
Section 52 of the Act pertains to goods passing through U.P., requiring prescribed documents for goods in transit to avoid the presumption of being meant for sale within the state. Rule 58 similarly imposes obligations on the driver or person in charge of the vehicle. The circular issued by the Commissioner emphasized the necessity of a new transit declaration form for vehicles passing through U.P.

Compliance with Necessary Documents:
The argument presented by the department highlighted discrepancies in the vehicle's prior transit declaration forms, the order of document preparation, weight discrepancies in the consignment, and the dealer's registration status for dealing in footwear. These factors led the department to suspect that the goods were not genuinely intended for transit but likely for sale within U.P.

Grounds for Seizure under Section 48:
Section 48 empowers authorities to seize goods under specific conditions, such as unaccounted goods, absence of necessary documents, undervaluation, or loading/unloading in U.P. The department failed to establish any of these grounds for seizure in this case, as the goods were duly accompanied by required documents and there was no evidence of loading/unloading in U.P.

Jurisdictional Errors and Revisional Jurisdiction:
The court emphasized that the seizure was unjustified as no grounds for seizure were established. The past conduct of the transporter and doubts raised by the department were deemed irrelevant without concrete evidence of wrongdoing. The court held that the authorities erred in upholding the seizure, warranting the set-aside of the seizure order.

Conclusion:
The court invalidated the seizure order and subsequent decisions, citing jurisdictional errors and lack of grounds for seizure. The revision challenging the seizure was allowed, setting aside the orders related to the seizure and dismissing the opposing revision. The issue of cash security for the release of goods became irrelevant post the invalidation of the seizure, concluding the judgment in favor of the revisionists.