2017 (7) TMI 626 - HC - VAT and Sales Tax

Released of seized truck - Case of the petitioner is that he is not the owner of the goods and is merely a transporter owning the truck in which the goods were being transported. The State authorities have no power to seize the truck for any alleged irregularities in the transportation relatable to the goods - can the Value Added Tax Authorities, under such circumstances seize the vehicle? - Held that - prior to introduction of the Gujarat Value Added Tax (Amended) Act 6 of 2006, subsection (4) of section 68 empowered the concerned officer to seize the goods as well as the vehicle. With such amendment, the words now used in subsection (4) are seize such goods and detain the vehicle - Under subsection (5) of section 68, the officer6 10 incharge of the checkpost or barrier can after giving owner, driver or personincharge of goods, a reasonable opportunity of being heard and holding an inquiry, impose penalty in addition to tax payable under the Act at the prescribed rates. The penalty would not exceed one and a half time of the tax for possession of the goods so seized. Here also, by virtue of the same Amendment Act, the words one and half time of tax for possession of goods or vehicle so seized, the legislature has deleted the words or vehicle . Under clause (b) of subsection (5) again, the reference to releasing of the goods and vehicle is now limited to release of goods alone. Prior to Amending Act of 2006, the authority had the power under subsection (4) of section 68 to seize the goods as well as the vehicle. This power of seizure of vehicle is now removed permitting the authorities only to detain the vehicle. Corresponding changes have been made in subsection (5) where the authority could earlier levy penalty upto one and half times the value of goods and vehicle so seized. By virtue of amendment, such penalty cannot exceed one and half times of value of goods. Subsection (7) of section 68 was newly introduced when the legislature was making above changes and therefore, refers only to sale of goods in case the person from whose possession or control the goods are seized fails to establish the ownership or pay the tax, interest or penalty or fails to provide the security for the same - the Value Added Tax Authorities now do not have power of seizure of vehicle under section 68 of the Value Added Tax Act. That power is now limited to detaining the vehicle in terms of subsection (4) of section 68. There is no further provision under section 68, how such detained vehicle would be dealt with. Reasonable interpretation of such provision would be that against the seizure power which could be for indefinite period, unless curtailed by statutory provision, detention would be a temporary measure. The respondents are directed to release the vehicle in question. The seizure of the goods would remain intact. It is clarified that if there is cost in offloading the goods from the vehicle, the same shall be borne by the petitioner - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenging order of seizure/detention of vehicle under section 68(4) of Gujarat Value Added Tax Act, 2003.

Analysis:
The petitioner, a transporter, challenged an order seizing his vehicle and goods at a checkpost for various irregularities. The petitioner argued that as a transporter, he is not the owner of the goods being transported, and the authorities have no power to seize his truck. The respondents contended that the goods did not belong to the supposed owner, National Industries, and the entire transaction was allegedly bogus. An FIR was lodged against involved parties. The central question was whether the Value Added Tax Authorities had the power to seize the vehicle under section 68 of the Act.

The relevant provision, section 68(4) of the Act, empowers the officer in charge to seize goods and detain the vehicle if certain conditions are met, such as missing documentation or false declarations. Notably, an amendment limited the authority to detain the vehicle only, removing the power to seize it. Subsequent changes restricted the penalty imposition and introduced a provision for selling seized goods if ownership or payment issues arise. The court emphasized that detention is a temporary measure, and the detained vehicle should be released after inquiries are completed. The absence of provisions for detained vehicles indicates a temporary nature of detention, unlike seizure.

In conclusion, the court directed the respondents to release the vehicle while maintaining the seizure of goods. Any costs incurred in offloading the goods would be the petitioner's responsibility. The vehicle should be released promptly after offloading. The petition was disposed of accordingly, with direct service permitted.