2015 (3) TMI 1245 - HC - VAT and Sales Tax

Valuation - seizure of goods on account of undervaluation - natural justice - Held that - a market survey is stated to have been done. This market survey was done at the back of the petitioner. No evidence can be collected against back of a party. If any market survey is to be done then those people must file their evidence in affidavit or the market survey report should be made available to the petitioner. The goods have been lying seized for more than a year. We do not know what will be the condition of the goods at this stage. Till date neither the assessing authority nor the revisional authority has made any demand of tax from the petitioner - the goods are directed to be released - opportunity of being heard to be provided to petitioner - petition allowed - matter on remand.

Summary

Issues: Challenge of goods seizure based on undervaluation.

Analysis:
The petitioner, a registered dealer of UPS, challenged the seizure of goods by the respondents, alleging undervaluation. The petitioner had purchased UPSs for resale in Tripura, paying 2% CST based on the invoice value. The goods were seized at a check post, claiming undervaluation compared to the Maximum Retail Price (MRP) displayed on the boxes. The Commissioner of Taxes rejected the petitioner's claims, stating that the declared purchase price was unjustified. The court emphasized that MRP alone cannot determine the value of goods, highlighting the need for assessing officers to consider market prices and the dealer's selling practices. The court noted that profit margins vary based on various factors like operational expenses, and suggested verifying the petitioner's sales records and comparing with other dealers.

The court criticized a market survey conducted without the petitioner's involvement, stating that evidence must be provided formally. Referring to a previous case, the court highlighted that seizure should be a last resort, especially for registered dealers, and goods should be released under a surety bond for verification. Despite the goods being seized for over a year, no tax demand was made by the authorities. The court directed the release of the goods upon a surety bond and ordered the Commissioner to provide the market survey report to the petitioner for further evidence submission.

Consequently, the petition was allowed, setting aside the Commissioner's order. The matter was remanded to the Commissioner to determine the UPSs' value promptly, with a deadline set for the decision.