2009 (2) TMI 850 - HC - VAT and Sales Tax

Seizure of goods - the declaration form was not duly filled and some of the columns were left blank deliberately

Summary

Issues Involved:
1. Legality of the seizure order.
2. Adverse inference due to incomplete Form-38.
3. Justification of the security amount demanded.

Issue-wise Detailed Analysis:

1. Legality of the Seizure Order:
The primary issue was whether the Tribunal was legally justified in confirming the seizure order despite the appellant's claim of no intention to evade tax. The appellant argued that the absence of a complete Form-38 should not be a basis for seizure under Section 50 of the VAT Act. The court referenced the Division Bench Judgment in Jain Sudh Vanaspathi Ltd. vs. State of U.P., which stated that mere absence of documents does not justify seizure unless there is an attempt to evade tax. However, the court noted that the law had since been amended to require Form-38, and the use of the word "shall" in Section 50(1) of the VAT Act indicated that carrying the form is mandatory. The court concluded that the seizure was justified as the incomplete Form-38 suggested an attempt to evade tax.

2. Adverse Inference Due to Incomplete Form-38:
The appellant contended that the incomplete Form-38 should not lead to adverse inferences, especially since other documents like the cash memo and invoice were present. The court examined the Form-38 and noted that it is divided into three parts, all of which are material and must be filled out completely. The court emphasized that the purpose of Form-38 is to prevent tax evasion and protect honest dealers. The incomplete form indicated a deliberate attempt to evade tax, as essential columns like weight, quantity, and bill number were left blank. The court referenced the Apex Court's decisions in Guljag Industries vs. CTO and Assistant Commercial Tax Officer vs. Bajaj Electricals Limited, which upheld penalties for incomplete forms under similar circumstances.

3. Justification of the Security Amount Demanded:
The appellant argued that the security amount of Rs. 2,20,000/- was excessive. The court noted that the security amount is meant to cover potential penalties and ensure compliance. The court found no merit in the argument as the appellant was not a registered dealer in U.P., and there was no material to suggest that the amount was excessive. The court emphasized that the security amount is a preliminary measure, and the actual penalty would be determined in subsequent proceedings.

Conclusion:
The court dismissed the revision, upholding the seizure and the security amount demanded. It emphasized that the incomplete Form-38 indicated an intention to evade tax, justifying the seizure under Section 50(4) of the VAT Act. The court also noted that the appellant's arguments regarding the absence of mens rea were premature and would be considered in penalty proceedings. The decision was based on the findings of fact by the authorities below, which were not deemed perverse or unreasonable.