2015 (10) TMI 298 - HC - VAT and Sales Tax

Prohibition on selling and transporting the empty beer bottles duly collected inside the State of Tamil Nadu by the petitioner and to sell and transport outside the State of Tamil Nadu - Violation of Article 19(1)(g) and Article 301 - Whether the stoppage of the petitioner s lorry carrying empty beer bottles at Hosur Check post on 18.12.2014 on the premise that the empty beer bottles carried in their lorries would be misused can be a basis for doing so - Held that1 - Nowhere the respondent has thrown any light against any such misuse committed by the petitioners. Even as per the counter affidavit, it could be seen that only preliminary investigation has been conducted by Dr. T. Kannan, Inspector of Police, PEW, Krishnagiri at Indore (Madhya Pradesh), he had not supported the inference that the empty beer bottles belonging to Tamil Nadu Breweries are being misused in Madhya Pradesh State. When the respondents have not produced any document showing the registration of complaint against any person belonging to the petitioner s company showing that the empty beer bottles purchased from Tamil Nadu have been illegally misused, in the absence of such document produced before this Court, the action of the respondent cannot be espoused. Besides, a mere prevention of movement of empty beer bottles by way of an executive action without legislative authority is invalid, since such an action infringes the fundamental right of the petitioner to carry on business, for it is guaranteed under Article 19(1)(g) of the Constitution of India and also under Article 301 of the Constitution of India. - Decided in favour of assessee.

Summary

Issues:
Petitioner seeking writ of mandamus to prevent respondent from interfering with sale and transport of empty beer bottles collected in Tamil Nadu. Respondent alleging misuse of bottles and taking action to prevent movement.

Analysis:
The petitioner, a registered company under Tamil Nadu GST and Central Sale Tax Act, filed a writ petition under Article 226 of the Constitution of India seeking a writ of mandamus to prevent the respondent from interfering with the sale and transport of empty beer bottles collected in Tamil Nadu. The petitioner argued that their business activities, including selling empty beer bottles to distilleries inside and outside the state, were being unlawfully obstructed by the respondent. The petitioner contended that such interference violated their constitutional rights under Article 19(1)(g) and Article 301 of the Constitution of India, which guarantee the right to carry on business freely and ensure inter-state trade and commerce. The petitioner emphasized their compliance with legal requirements, employment generation, and contribution to the state's revenue through taxes and loans from financial institutions. The sudden stoppage of their lorries carrying empty beer bottles by the respondent without concrete evidence of misuse was deemed unconstitutional and invalid by the petitioner.

The respondent, represented by the Special Government Pleader, filed a counter affidavit alleging suspicions of misuse of the empty beer bottles by the petitioner. The respondent claimed that the bottles with specific imprints indicating they were for sale only in Tamil Nadu were being diverted to other states for refilling and circulation, causing wrongful gains and losses to the state's excise department. The respondent cited a preliminary investigation conducted in Indore, Madhya Pradesh, which revealed the misuse of bottles belonging to Tamil Nadu breweries in another state. Based on these findings, the respondent justified their actions to prevent the movement of empty beer bottles collected by the petitioner.

In response to the respondent's objections, the petitioner's senior counsel argued that the imprints on the bottles were meant for the contents and not the empty bottles themselves. The petitioner reiterated their right to conduct business freely under the constitutional provisions of Article 19(1)(g) and Article 301, emphasizing that restrictions, if any, must be reasonable and within the scope of the law. The petitioner contended that the respondent's actions were based on presumptions and lacked legal authority, thereby infringing upon their fundamental rights as guaranteed by the Constitution.

After considering the arguments presented by both parties, the Court agreed with the petitioner's submissions and allowed the writ petition. The Court restrained the respondent from preventing the petitioner company from selling and transporting the empty beer bottles collected within Tamil Nadu. The Court emphasized that the respondent's actions, taken without concrete evidence of misuse and without legislative authority, violated the petitioner's constitutional rights to carry on business freely and engage in inter-state trade and commerce. The judgment highlighted the importance of upholding fundamental rights and ensuring that executive actions are in accordance with the law.