2014 (5) TMI 1157 - HC - VAT and Sales Tax

Seizure of goods - challenge to the order is founded on the premises that the seizure was made on mere suspicion without any material basis - Held that - Sub-Section (4) of Section 60 of the Act authorizes the competent authority to seize any goods covered under the Act if it is being transported in contravention of the provisions of Sub-Section (2) of Section 60 of the Act - the Act does authorize the competent authority to seize the goods along with the vehicle for due verification, but the seizure cannot be depend on the ipse dixit of the officer and, in order to make his act of seizure valid, existence of reasonable ground of suspicion is a condition precedent. This apart, no penalty can be raised or assessed on mere suspicion without any material basis. The certificate, granted by the Forest Officer, shows that the rates, mentioned in the Bill and Form-DIX, were correct. We further find that respondent Commercial Tax Officer, on self assessment, based on surmises, came to the conclusion that the rate quoted was low and, thus, fixed the value of logs at 1000/-per cubit feet in place of ₹ 700/-and ₹ 764/-, which were mentioned in the Bill, without assigning any cogent reason therefore. We too notice that there was no material or basis for coming to the conclusion that the rate, mentioned in the bill, was deliberately kept under valued and was so done to avoid liability of due Sale Tax. Application allowed.

Summary

Issues:
Challenge to the order imposing tax and penalty under Bihar Value Added Tax Act, 2005 based on seizure of goods on suspicion without material basis.

Analysis:
The petitioner, a proprietor of a firm, challenged the order passed by the Commercial Tax Officer imposing tax and penalty on seized logs and sawn timber being transported. The challenge was based on the seizure being made on mere suspicion without any material basis, as per Bihar Value Added Tax Act, 2005. The petitioner argued that the seizure was unjustified as all relevant documents were produced. The State, however, contended that the seizure was proper, alleging deliberate undervaluation of goods to evade taxes. The Act empowers seizure of goods being transported in contravention of specified provisions, but it requires reasonable grounds for suspicion. The petitioner had submitted all necessary documents, including bill, transport challan, and form D-IX, detailing the goods being transported.

The Court examined the grounds of challenge and found that the petitioner had indeed provided all relevant documents related to the transportation of goods. The Act allows for seizure if there are reasonable grounds to suspect incomplete or incorrect declarations. However, the seizure cannot be solely based on the officer's discretion; there must be a valid reason for suspicion. In this case, the Commercial Tax Officer unilaterally increased the value of goods without substantial basis, alleging undervaluation without concrete evidence. The Court noted the lack of material or basis for such a conclusion, deeming the order arbitrary and unsustainable in law.

The petitioner presented additional evidence showing the correctness of rates mentioned in the documents, further undermining the justification for the seizure and subsequent penalties. The Court, therefore, quashed the impugned order dated 21.12.2013 and directed the respondents to refund the tax and penalty amount to the petitioner. The writ application was allowed, emphasizing the importance of reasonable grounds for seizure and the necessity for concrete evidence before imposing penalties under tax laws.