2014 (4) TMI 643 - HC - VAT and Sales Tax

Whether seizure of goods in purported exercise of power u/s 50 of U.P. Value Added Tax Act,2008 was justified Seizure of Chasis of goods carrier Exercise of Power u/s 50 Held that - The record shows that assessee is not a mere Driver but the owner of chassis in question as the invoice was issued by M/s Ganga Nagar Motors, Kota (Rajasthan) in the name of revisionist - The chassis is shown hypotheticated to HDFC Bank - Regarding intention of revisionist, it is too early at this stage to form any conclusive opinion but the fact remains that revisionist did not inform checking authority as to whom he has to met for getting the body, built on the chassis - The revisionist has given his address at Kota whereat the chassis was purchased - However, this by itself may not be sufficient to give an impression and no person of ordinary prudence having reasonable acquaintance in the matter like present can form an opinion that the Driver or owner has brought chassis in State of U.P. for sale, by evading payment of tax - A chassis registered on temporary basis and hypotheticated to Bank, cannot be sold without several formalities in which various other agencies like Transport Department, HDFC Bank etc. are involved. Whether quantum and form of security demanded for release of the goods was excessive and arbitrary Pre-deposit for release of chasis of goods carrier Held that - It is not the case of revisionist that a person, purchasing a single vehicle or chassis would answer the definition of a dealer or such a person, if enters into State of U.P,. has to obtain requisite forms, necessary for import of goods by dealers - It appears that respondents-authorities in this case have adopted an extra hyper technical view based on total conjectures and surmises - This is nothing but a sheer endeavor on their part to harass an otherwise bona fide purchaser of goods outside the State of U.P. - It is not found as to how seizure is consistent with the requirement of statute - In fact seizure from its very inception is patently illegal and amounts to gross abuse of process of law - In the result, revision is allowed - The impugned orders are hereby quashed. The respondents-authorities are directed to release chassis in question forthwith Decided in favour of assessee.

Summary

Issues:
1. Seizure of goods under Section 50 of U.P. Value Added Tax Act, 2008
2. Quantum and form of security demanded for release of goods

Analysis:

Issue 1: Seizure of goods under Section 50 of U.P. Value Added Tax Act, 2008
The case involved the interception of a vehicle carrying a new chassis of a goods carrier by the Assistant Commissioner of the Commercial Tax Department. The driver claimed he was transporting the chassis for body construction and not for sale to evade tax. Despite the explanation provided, the Assistant Commissioner ordered the seizure of the chassis, demanding a cash security of Rs. 6,24,000 for its release. The revisionist challenged the seizure, arguing that there was no evidence to support the claim that the chassis was intended for sale to evade tax. The High Court found that the authorities had taken an overly technical approach based on conjectures and surmises. It concluded that the seizure was illegal and an abuse of process, directing the immediate release of the chassis and awarding costs to the revisionist.

Issue 2: Quantum and form of security demanded for release of goods
The Assistant Commissioner had demanded a cash security of Rs. 6,24,000 for the release of the seized chassis, equivalent to 40% of its estimated value. The revisionist contended that this amount was excessive and arbitrary, given the circumstances of the case. The High Court, upon finding the seizure to be unjustified and illegal, also ruled in favor of the revisionist on this issue. The court quashed the impugned orders, directing the immediate release of the chassis without any further delay. Additionally, the court awarded costs amounting to Rs. 5,000 to the revisionist.

In conclusion, the High Court allowed the revision, answering both questions of law in favor of the revisionist and against the Revenue. The court found the seizure to be inconsistent with statutory requirements, declaring it illegal and an abuse of process. The immediate release of the chassis was ordered, along with the award of costs to the revisionist.