2020 (5) TMI 206 - HC - VAT and Sales Tax

Release of seized vehicle - allegation that the vehicle was carrying five plastic drums of illicit adulterated liquor - Confiscation under Section 72 of CEA - option to pay the fine in lieu of the confiscation - knowledge with the owner that the owner knew that his vehicle was likely to be used for transporting illicit material - HELD THAT - The record does not reveal that any point of time, the petitioner was given any opportunity to get his vehicle released in lieu of fine etc. Further the Court finds that the authorities had not arrived at any finding that the owner knew or had reason to believe that the vehicle was likely to be used for transporting illicit material. Further, this Court is also of the view that no useful purpose would be served by seizing the vehicle and keeping it in the Police Station for a very long time. Reliance can be placed in the case of SUNDERBHAI AMBALAL DESAI VERSUS STATE OF GUJARAT 2002 (10) TMI 773 - SUPREME COURT where it was held that whatever be the situation, it is of no use to keep such-seized vehicles at the police stations for a long period. It is for the Magistrate to pass appropriate orders immediately by taking appropriate bond and guarantee as well as security for return of the said vehicles, if required at any point of time. This can be done pending hearing of applications for return of such vehicles. The vehicle is directed to be released - petition allowed.

Summary

Issues:
1. Confiscation of vehicle under U.P. Excise Act
2. Compliance with Section 72(2) of the Act
3. Discretionary power of confiscation
4. Release of the vehicle

Confiscation of Vehicle under U.P. Excise Act:
The writ petition challenged the orders of confiscation of a vehicle allegedly involved in transporting illicit liquor. The petitioner denied involvement and argued that he was not responsible for the illegal activity. The District Magistrate had confiscated the vehicle, which was upheld by the District Judge. The petitioner contended that the confiscation was not justified as he was not aware of the illicit activity.

Compliance with Section 72(2) of the Act:
The petitioner's counsel argued that under Section 72(2) of the U.P. Excise Act, the owner should have been given the option to pay a fine instead of facing confiscation. It was emphasized that confiscation could only be justified if the owner was aware of the vehicle's use for transporting illicit material. The petitioner claimed that he had no knowledge of the illegal activity involving his vehicle.

Discretionary Power of Confiscation:
The petitioner's counsel highlighted that the power to confiscate was discretionary, and the authority could have chosen not to exercise this power. It was argued that keeping the vehicle in the police station served no useful purpose and would lead to its deterioration. The Standing Counsel, however, argued that the confiscation was justified due to the vehicle's involvement in transporting illicit liquor.

Release of the Vehicle:
After considering the arguments, the Court found that the impugned orders of confiscation could not be sustained. The Court noted that the owner was not given the option as provided under Section 72(2) of the Act. It was observed that there was no finding that the owner knew or had reason to believe that the vehicle was being used for illegal purposes. Citing a Supreme Court precedent, the Court directed the release of the vehicle, condoning any delays in tax payments and allowing the petitioner to use the vehicle after fulfilling necessary requirements. The petitioner was also directed to produce the vehicle if needed for criminal proceedings, with a prohibition on selling the vehicle during the trial.

In conclusion, the Court allowed the petition, quashed the confiscation orders, and ordered the release of the vehicle, providing specific instructions regarding tax payments and the use of the vehicle during the trial period.