2016 (5) TMI 435 - HC - VAT and Sales Tax

Validity of detention order - passed under Section 70A(2) of the Gujarat Value Added Tax Act, 2003 - Violation of principles of natural justice - Goods were in transit - No notice issued - Held that - there is nothing therein to indicate as to what is the nature of information in respect of the goods that was sought for by the second respondent, nor is it the case of the respondent that he has sought permission to inspect the goods. The only explanation called for from the driver of the vehicle was to explain his statement that the goods were required to be offloaded at Changodar. While the notice was issued calling upon the driver to explain his statement as to why the goods were required to be offloaded at Changodar, the impugned detention order is totally silent in that regard and proceeds on some other footing that the transporter could not produce the required information called for under section 70A of the GVAT Act. In the opinion of this court, the impugned detention order purportedly made under section 70A of the GVAT Act, leaves a lot to be decided and speaks a volume about the conduct of the officers under the GVAT Act or their lack of knowledge of the statutory provisions. It is not the case of the second respondent that any procedure as envisaged under sub-section (7) of section 67 of the GVAT Act has been followed in the present case. Thus, the vehicle does not appear to have been stopped under section 67(6) of the GVAT Act. From the impugned notice, it is difficult to cull out as to what is the nature of the information sought for by the second respondent. All that is stated by the second respondent in the notice is calling upon the driver to explain his statement that the goods were required to be off loaded at Changodar. Evidently therefore, the requirements for invocation of the powers under section 70A of the GVAT Act have not been satisfied in the present case. Therefore, the impugned detention order passed under section 70A of the GVAT Act suffers from the breach of principles of natural justice as well as lack of application of mind and therefore, stands vitiated. The impugned detention order is quashed and set aside. Since the truck in question has been released during the pendency of the petition, the respondents are directed to forthwith release the goods seized from the truck as well as other documents which have been seized by them. Since in the meanwhile, the transit pass issued in Form 405 has expired and the vehicle in question has also been released, the goods would be required to be carried in another vehicle and therefore, the second respondent is directed to do the needful for issuance of a fresh transit pass in Form 405 for transit of the goods. - Decided in favour of petitioner

Summary

Issues Involved:
1. Validity of the notice and detention order under section 70A of the Gujarat Value Added Tax Act, 2003.
2. Alleged violation of principles of natural justice.
3. Jurisdiction and applicability of section 70A to goods in transit.
4. Procedural irregularities in issuing and serving the notice.

Detailed Analysis:

1. Validity of the notice and detention order under section 70A of the Gujarat Value Added Tax Act, 2003:
The petitioners challenged the notice dated 22.03.2016 and the subsequent detention order issued by the second respondent under section 70A of the GVAT Act. The petitioners argued that the goods were merely in transit from Nagpur to Delhi and were not meant to be offloaded in Gujarat. The truck carrying betel-nuts obtained a transit pass in Form 405 at the Songadh check post, indicating that the goods were only passing through Gujarat. Despite this, the authorities detained the truck and issued a notice to the driver, alleging that the goods were to be offloaded at Changodar.

2. Alleged violation of principles of natural justice:
The petitioners contended that the detention order was passed in violation of the principles of natural justice. The notice issued to the driver at 01:30 p.m. required a response by 02:30 p.m. on the same day, which was deemed arbitrary and insufficient for a proper response. Furthermore, no notice was issued to the petitioners, which was a clear violation of natural justice. The court observed that the notice was not served upon the transporter but only to the driver, and the detention order was passed without granting any opportunity of hearing to the petitioners.

3. Jurisdiction and applicability of section 70A to goods in transit:
The petitioners argued that section 70A of the GVAT Act does not apply to goods merely in transit through Gujarat. The court noted that the driver was carrying the required transit pass in Form 405, and no system-generated Form 403 was necessary for goods in transit. The detention order mentioned the absence of Form 403, which was not applicable in this case. The court refrained from delving into the larger controversy regarding the applicability of section 70A to goods in transit, as the impugned order was already found to be unsustainable on other grounds.

4. Procedural irregularities in issuing and serving the notice:
The court found several procedural irregularities in the issuance and service of the notice. The notice was issued to the driver and not to the transporter, and the driver was given only one hour to respond. The detention order, which appeared to be a cyclostyled document with several blanks, failed to specify the exact default on the part of the petitioners. The court observed that the requirements for invoking powers under section 70A were not satisfied, and the detention order suffered from a lack of application of mind and breach of natural justice.

Conclusion:
The court quashed and set aside the impugned detention order dated 22.03.2016, directing the respondents to release the goods and documents seized from the truck. The court also instructed the issuance of a fresh transit pass in Form 405 for the goods, as the original transit pass had expired. The petition was allowed with no order as to costs.