2017 (3) TMI 1424 - HC - VAT and Sales Tax

Detention of goods with vehicle - detention is for the purpose to verify whether the petitioner had discharged tax liability for the prior period - subsequently order of attachment was passed - is detention justified? - Held that - None of the grounds on which an officer-in-charge of a check-post can seize the goods and detain the vehicle include verification of payment of past taxes. It is true that u/s 45(1) of the VAT Act, the competent authority has the power to provisionally attach the goods of a dealer pending any proceedings for assessment or reassessment if he is of the opinion that for the purpose of protecting the interest of the Revenue, it is necessary to do so. However, the powers u/s 68(4) of the Act and of provisional attachment u/s 45(1) of the Act are vastly different in nature - also, the department has already attached other goods worth ₹ 1.60 crores, lying in the petitioner s godown. Additional attachment of the consignment of the goods in question therefore would not be necessary. Goods directed to be released - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenging detention of goods for tax verification, powers under section 45(1) of VAT Act, difference between powers under section 68(4) and section 45(1), necessity of additional attachment of goods, directive to release detained goods.

Analysis:
The petitioner contested the detention of their truck with ceramic tiles for tax verification purposes based on an order dated 04.08.2016. The respondents justified the detention citing an order passed under section 45(1) of the Gujarat Value Added Tax Act, 2003, due to alleged tax default by the petitioner. Subsequently, an order of attachment was issued for the goods valued at ?4,95,381 to safeguard revenue interests.

Upon review, it was observed that the initial halt of goods for tax verification under section 64 was followed by an attachment order under section 45(1) of the Act. Notably, the Act's section 68(4) outlines specific grounds for seizing goods at check-posts, none of which include past tax payment verification. While provisional attachment under section 45(1) is permissible to protect revenue interests, it differs significantly from the seizure powers under section 68(4).

Furthermore, it was noted that goods worth ?1.60 crores had already been attached by the department against the alleged tax dues of ?1.59 crores. Given this existing attachment, additional attachment of the goods in question was deemed unnecessary by the court. Consequently, the respondents were directed to release the detained truck and goods at the Bhilad check-post, thereby disposing of the petition with a directive for direct service.