2019 (7) TMI 193 - HC - VAT and Sales Tax

Release of seized goods - ownership of goods could not be proved - Section 34 (2) of the DVAT Act - HELD THAT - Clearly, the goods cannot be released to the Petitioners unless they prove ownership of such goods. The directions issued by this Court in the judgment dated 12th February 2016 are clear. The DT T was required to get to the bottom of the entire case and unearth the complete facts not only regarding the goods that were seized on 1st March 2014, but also with regard to the modus operandi deployed not only by the Petitioners but also in other similar instances. The Court had noted that this could not have and in fact was not a solitary instance where valuable goods in the form of gold and silver jewellery and even cash were being transported from one State to the other through road and rail without any proper checks either by the DT T or the Police. There was no stay of the proceedings of the Committee at any stage. Irrespective of the deliberate failure of the Petitioners to participate in the verification exercise, it was incumbent upon the Committee constituted by the CTT to have concluded its proceedings and determined whether the documents submitted by the Petitioners were genuine and whether the documents proved their ownership of the seized goods. This exercise could not have gone on endlessly and that too for over three years. As far as the Petitioners objections to the constitution of the Committee by the CTT is concerned, as already noticed hereinbefore, there was no legal basis for the Petitioners to question the constitution of such a committee. The Petitioners not having challenged the judgment dated 12th February 2016 passed by this Court negating their pleas, could not have turned around to question the constitution of the committee - The Court accordingly hereby negatives the objections raised by the Petitioners to the constitution of the Committee by the DT T and directs the Committee to now conclude its proceedings by preparing and releasing its report on the documents submitted by the Petitioners not later than 31st July 2019. Petition disposed off.

Summary

Issues Involved:
1. Legality of the seizure of goods by the Commissioner of Trade and Taxes (CTT) and Deputy Commissioner of Police.
2. Petitioners' failure to produce ownership documents.
3. Constitution and jurisdiction of the Committee by CTT.
4. Compliance with the Delhi Value Added Tax Act (DVAT Act) provisions.
5. Petitioners' objections to the Committee's constitution.
6. Release of seized goods and compensation for stolen goods.

Detailed Analysis:

1. Legality of the Seizure of Goods:
The petitioners sought the release of goods seized by the Commissioner of Trade and Taxes (CTT) and the Deputy Commissioner of Police on 1st March 2014. The goods, comprising gold, silver jewelry, and cash worth nearly ?4 crores, were seized from two thelas (goods carts) at the Old Delhi Railway Station. The petitioners claimed that the seizure was not conducted in accordance with the law and the procedure envisaged under the Delhi Value Added Tax Act (DVAT Act).

2. Petitioners' Failure to Produce Ownership Documents:
In the previous litigation (W.P.(C) No.3799/2014), the court concluded that the petitioners failed to produce documents proving ownership of the seized goods. There was no averment that at the time of seizure, the petitioners had complete documents to show ownership. The court noted that the method of transporting jewelry and cash by road and rail had been regularly deployed, flouting the DVAT Act provisions.

3. Constitution and Jurisdiction of the Committee by CTT:
The court directed the CTT to examine the petitioners' claims for the release of goods and communicate a decision within eight weeks upon the petitioners producing complete documentation. The CTT constituted a committee to verify the claims, but the petitioners objected to its constitution and refused to participate in the hearings, leading to a stalemate.

4. Compliance with the DVAT Act Provisions:
The court observed that the DT&T lacked the infrastructure to handle the detention and custody of goods valued at around ?4 crores. Some of the seized goods were stolen, leading to the registration of a criminal case. The court emphasized the need for DT&T to unearth the complete facts regarding the transportation of valuable goods and cash from one state to another and to coordinate with the Reserve Bank of India (RBI) to implement regulatory measures.

5. Petitioners' Objections to the Committee's Constitution:
The petitioners filed a petition questioning the constitution of the committee by the CTT, arguing that it was without jurisdiction and authority of law. The court clarified that the committee was constituted to verify the ownership claims and not to make any tax assessments. The petitioners' reference to Section 34 (2) of the DVAT Act was deemed misconceived.

6. Release of Seized Goods and Compensation for Stolen Goods:
The court held that the goods could not be released to the petitioners unless they proved ownership. The DT&T was required to verify the documents submitted by the petitioners and determine their genuineness. The court expressed displeasure at the DT&T's delay in concluding the proceedings and directed the committee to release its report by 31st July 2019. The petitioners were given the option to seek appropriate remedies if aggrieved by the report.

Conclusion:
The court dismissed the petitioners' objections to the committee's constitution and directed the committee to conclude its proceedings and release its report. The DT&T was instructed to complete the verification exercise expeditiously and submit a compliance report by 31st October 2019. The writ petition was disposed of with no costs.