2005 (2) TMI 857 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the seizure of goods.
2. Validity of the demand for security for the release of goods.
3. Proper application of Section 28-B of the U.P. Trade Tax Act.
4. Relevance of the discrepancies in documentation.
5. Authority of the check post officer to seize goods at the entry check post.

Detailed Analysis:

1. Legality of the Seizure of Goods:
The Tribunal confirmed the seizure of goods based on discrepancies in the vehicle transfer and the nature of the goods. The initial vehicle from Rajasthan (HR-47-9203) was changed to another vehicle (UA-12/4513) without proper mention in the invoice. The Tribunal noted that the goods declared as "Cereal Based Blended Food (Sattu)" were found to contain wheat, soyabean, rice, sugar, vitamin, and mineral upon physical verification. Additionally, the builty lacked specific details about the destination in Uttaranchal and had a seal from the Commercial Tax Officer, Alwar, Rajasthan, without a serial number, leading to suspicions of forgery.

2. Validity of the Demand for Security for the Release of Goods:
The authorities demanded Rs. 1,20,000/- as security for the release of the seized goods. This demand was upheld by the Tribunal, which also noted the discrepancies in the documentation and the nature of the goods. However, the revision argued that these grounds were irrelevant and the seizure was an act of harassment and arbitrariness.

3. Proper Application of Section 28-B of the U.P. Trade Tax Act:
Section 28-B and Rule 87 of the U.P. Trade Tax Act are machinery provisions designed to prevent tax evasion during the transit of goods through the state. The law requires the issuance of a transit pass at the entry check post and its surrender at the exit check post. The Supreme Court in Sodhi Transport Company v. State of U.P. upheld the validity of these provisions, stating they are necessary to ensure goods are not sold within the state and are merely passing through.

4. Relevance of the Discrepancies in Documentation:
The Tribunal and authorities focused on the discrepancies in the documentation, such as the vehicle transfer and the nature of the goods. However, the judgment noted that these discrepancies were irrelevant. The goods were correctly described as "Cereal Based Blended Food (Sattu)" in the invoice, and the constituents listed (wheat, soyabean, rice, sugar, vitamin, and mineral) matched the description. The term "Sattu" might be understood differently in different regions, but this did not imply any intent to evade tax.

5. Authority of the Check Post Officer to Seize Goods at the Entry Check Post:
The judgment clarified that under Section 28-B, the power to seize goods is only available at the exit check post if it is found that the transporter is trying to import different goods. At the entry check post, the officer should verify the goods and issue the transit pass, noting the correct name and quantity of the goods. The refusal to issue the transit pass and the subsequent seizure of goods at the entry check post were deemed improper and based on irrelevant considerations.

Conclusion:
The revision was allowed, and the order of the Tribunal dated 04.02.2005 and the seizure order were quashed. The check post officer was directed to release the goods and issue the transit pass immediately. Additionally, the check post officer was held liable for the arbitrary seizure, causing harassment and financial loss, and was ordered to pay Rs. 10,000/- as costs to the applicant within one month. The compliance report was to be listed on 14.03.2005.