2016 (1) TMI 1264 - HC - VAT and Sales Tax

Release of goods to driver - detention of goods in transit - the driver of the vehicle deposited a sum of Rs. One lac as security based on which, 110 bags were released in favor of the driver on 22nd December 2011 - it is the petitioner s case that when the petitioner appeared in person the goods could not have been released to the driver and that the goods if, any, should have been released only to the petitioner - Held that - we find it strange that the petitioner does not dispute the deposit of Rs. One lac made by the driver on 22nd December, 2011 and only dispute the receiving of the goods by the driver - Section 48(7) of the U.P. VAT contemplates that the officer seizing the goods shall serve the notice on the dealer or the person incharge with regard to the seizure of the goods. In the instant case, the person incharge of the goods at the relevant moment of time was the driver of the vehicle who was transporting the goods. The SCN and thereafter the seizure order were issued in the name of the driver - When the goods are detained it is not humanly possible to serve the notice to the owner of the goods who is sitting some where else in some other part of the country outside the State of Uttar Pradesh. The goods detained are required to be handled and disposed off at the earliest. In such circumstance, unless otherwise instructed by the owner, the person incharge of the goods would be the driver. We find that the petitioner appeared before the authorities immediately thereafter, but did not object to the fact that notice or custody of the goods should not be given to the driver - also, from the provision of Section 48 that there is no embargo of releasing the goods in part - release of goods is not under any error - petition dismissed - decided against petitioner-owner of goods.

Summary

Issues:
1. Seizure of goods by Commercial Tax Department during transportation.
2. Dispute over release of goods and payment of security.
3. Interpretation of Section 48(7) of the U.P. Value Added Tax Act.
4. Authority to release goods in part.

Analysis:
1. The petitioner, a firm dealing in plastic granules, purchased goods from another state but they were detained during transportation in Uttar Pradesh. A seizure order was issued, and security was demanded for the release of goods.

2. The petitioner contended that only 490 bags were released, alleging collusion in releasing 110 bags to the driver instead of the petitioner. The petitioner sought a writ to release the remaining bags or compensation for their value.

3. The court examined Section 48(7) of the U.P. Value Added Tax Act, which requires serving notices to the person in charge of seized goods. In this case, notices were served to the driver, who deposited security for the release of goods. The court held that the driver, being in charge during transportation, was the rightful recipient of the goods.

4. The court clarified that there is no prohibition on releasing goods in part under Section 48. It is within the authority's discretion to release goods based on the security provided. Hence, the release of 110 bags to the driver upon partial security deposit was deemed appropriate.

5. The court found no fault in the actions of the tax department and dismissed the writ petition, upholding the release of goods to the driver and the legality of the proceedings followed.

This judgment clarifies the legal provisions regarding the seizure and release of goods under the U.P. Value Added Tax Act, emphasizing the role of the person in charge during transportation and the authority's discretion in releasing goods either in full or in part based on the security provided.