2015 (9) TMI 360 - HC - VAT and Sales Tax

Seizure of goods False/incomplete disclosure Petitions challenging action of respondent-commercial taxes authorities of seizure of goods in transit and vehicles/carriers for alleged violation of Section 60(2) of Bihar Value Added Tax Act, 2005 and action of imposing penalty Petitioners also challenges constitutional validity of Section 60(4) Held that - not in dispute that disclosure made by driver was not true / complete Section 60 of amended act, 2005 empowers State Government to establish check posts to prevent evasion of tax payable In case where driver or person in-charge of goods fails to make true and complete disclosure, such failure gives rise to presumption of intention to avoid tax In such case, authorities concerned are enjoined to seize goods and vehicle or carrier and to impose penalty Challenge to action of respondent authorities in seizing goods and carriers and of imposing penalty, three times tax assessed on goods, has to be rejected Respondent authorities acted in discharge of their official duty and cannot be said to be arbitrary or illegal. Constitutional validity of Section 60(4) and Notifications dated 4th July 2012 and 12th July 2012 Held that - Section 60 applies not only to goods in transit through State of Bihar, it applies to all goods which are brought in State of Bihar Goods may have been brought for sale or use in State or goods may have been brought for passing through State Evidently, Sections 60(3) and 60(4) Act, 2005 is invoked in case of goods which are believed to have been brought in State for sale or use in State, Article 304(b) of Constitution is not attracted Therefore, challenge to constitutional validity of Section 60(4) rejected Once statutory presumption of intention to sale or use of goods within State and of intention to avoid tax is raised, machinery prescribed for collection of tax is ancillary and incidental to Taxes on sale or purchase of goods under Entry 54 of List II of Schedule VII to Constitution State Legislature is competent to raise legal presumption of intention to avoid tax and to legislate machinery to prevent tax evasion Notifications have no bearing upon impugned actions of seizure of goods and vehicles/carriers and imposition of penalty by respondent authorities Failure to publish Notification in Official Gazette will render Notification ineffective But impugned Notifications being operational and having been operated, its validity or otherwise is of no consequence Therefore challenge to Section 60(4) and Notification hereby rejected Decided against petitioner.

Summary

Issues Involved:
1. Seizure of goods and vehicles under Section 60(2) of the Bihar Value Added Tax Act, 2005.
2. Imposition of penalty under Sections 60(4)(a) and 60(4)(b) read with Section 56(4)(b) of the 2005 Act.
3. Constitutional validity of Section 60(4) of the 2005 Act.
4. Validity of Notifications dated 4th July 2012, 12th July 2012, and 30th October 2012 issued by the Commissioner of Commercial Taxes.
5. Requirement of publication of notifications in the Official Gazette.

Detailed Analysis:

1. Seizure of Goods and Vehicles:
The petitioners, transporters, challenged the seizure of goods in transit and vehicles for alleged violations under Section 60(2) of the Bihar Value Added Tax Act, 2005. The court noted that the drivers failed to produce true and complete particulars as required by Rule 40 of the Bihar Value Added Tax Rules, 2005. This failure led to the seizure of goods and vehicles by the authorities, who acted under Section 60(4) read with Section 56(4) of the 2005 Act. The court upheld the seizure, stating that the authorities acted within their powers to prevent tax evasion.

2. Imposition of Penalty:
The authorities imposed penalties three times the amount of Value Added Tax assessed on the goods for failure to provide accurate information. The court emphasized that the failure to make true and complete disclosure gave rise to a statutory presumption of intention to avoid tax. Consequently, the authorities were justified in seizing the goods and vehicles and imposing penalties as mandated by Section 60(4) read with Section 56(4) of the 2005 Act.

3. Constitutional Validity of Section 60(4):
The petitioners argued that Section 60(4) violated Articles 301 and 304(b) of the Constitution, as it imposed restrictions on the free movement of goods. The court rejected this argument, stating that the provision was enacted to prevent tax evasion and did not impose an unreasonable restriction on trade. The court held that the statutory presumption of intention to avoid tax justified the imposition of penalties and seizure of goods and vehicles. Therefore, Section 60(4) was not ultra vires Articles 301, 303, or 304(b) of the Constitution.

4. Validity of Notifications:
The petitioners challenged the validity of the Notifications dated 4th July 2012, 12th July 2012, and 30th October 2012, arguing that they were not published in the Official Gazette as required. The court noted that the Notifications were operational instructions for generating "Suvidha" and did not affect the substantive or procedural provisions of the Act. Despite the failure to publish these Notifications in the Official Gazette, the court held that the impugned actions of seizure and penalty were valid, as the drivers had generated and filed "Suvidha" forms.

5. Requirement of Publication in the Official Gazette:
The court emphasized that the publication of Notifications in the Official Gazette was mandatory under Section 2(u) of the 2005 Act and Section 28 of the Bihar & Orissa General Clauses Act, 1917. However, it held that the failure to publish the Notifications in the Official Gazette did not invalidate the actions taken by the authorities, as the Notifications were operational and had been acted upon.

Conclusion:
The court dismissed the writ petitions, upholding the constitutional validity of Section 60(4) of the Bihar Value Added Tax Act, 2005, and the Notifications dated 4th July 2012, 12th July 2012, and 30th October 2012. It clarified that the individual actions of seizure and penalty were not examined on merits. The court also noted that the petitioners had an alternative statutory remedy of appeal under Section 72 of the 2005 Act.