2014 (9) TMI 226 - HC - VAT and Sales Tax

Seizure of goods and books of accounts - Scope of Power Seizure of goods upheld by judge on ground seized goods did not tally with invoices produced and hence not accounted for in books of account Findings based on exhaustive examination of facts and legal provisions Held that - The ambit of this jurisdiction dominantly is presided over by the two grounds enumerated in Order 47, rule 1 of the Code, i.e., (i) discovery of new and important matter or evidence which after the exercise of due diligence was not within the applicant s knowledge or could not be produced by him at the time when the decision was made, and (ii) mistake or error apparent on the face of the record. The expression sufficient reason as a matter of universal rule even if not insisted upon to be analogous to these two legally codified precepts of review, a perceptible nexus ought to exist and unbridled divagation therefrom is the prepotent precedential mandate. A mistake or error apparent necessarily has to be one which is patent on the face of the record and does not warrant a detailed and exhaustive examination/scrutiny of the facts and the law involved to fathom and ferret out the same. A decision erroneous in law or on the ground that a different view of the same court was plausible is not envisaged within the legally recognized tenets of review jurisdiction and no re-hearing for correcting such a decision is permissible. The carefully secured distinction between these two cardinal jurisdictions is, amongst others, the time-tested endeavour to safeguard against the possibility of the same forum exercising appellate jurisdiction over its own determination a concept anathemic to the notion of fairplay and justice the quintessence of the rule of law. Grounds of seizure of the goods revealed that those were allegedly not matching with the invoices produced was also taken note of. Inferring that the allegations as made in the seizure lists are correct, it was held, inter alia, that as the seized goods were found not tallying with the invoices produced, those could not be said to have been accounted for in the books of accounts, registers and other documents of the respondent-company as contemplated under section 74(5)(a) (ii) of the Act. It, thus, concluded that the conditions precedent for the exercise of power under this provision of the Act did exist and, thus, the seizure of the goods could not be repudiated to be without jurisdiction or authority of law. Decision rendered by way of review of the original judgment in Dhanani Shoes Ltd. v. State of Assam 2008 (4) TMI 687 - GAUHATI HIGH COURT cannot be sustained in law and on facts. The impugned notice dated April 16, 2008 though mentions that the decision in Dhanani Shoes Ltd. v. State of Assam 2008 (4) TMI 687 - GAUHATI HIGH COURT had been taken note of in issuing the same, we are of the view that the respondent-company ought to avail of its remedies under the law vis-a-vis the same. Having reversed the judgment in Dhanani Shoes Ltd. v. State of Assam 2008 (7) TMI 869 - GAUHATI HIGH COURT whereby this notice too had been annulled on the limited considerations recited hereinabove, we consider it expedient not to offer any comment on the merit of the challenge to the notice dated April 16, 2008 and leave the parties to exhaust their remedies otherwise available in law. - Decided in favour of Revenue.

Issues Involved:
1. Legality of the seizure of goods and books of accounts under section 74 of the Assam Value Added Tax Act, 2003.
2. Interpretation of section 74(3) and section 74(5) of the Assam Value Added Tax Act, 2003.
3. Review jurisdiction of the court and grounds for review.

Detailed Analysis:

1. Legality of the Seizure of Goods and Books of Accounts:
The respondent-company contended that the seizure of its goods and books of accounts was unlawful. The company argued that the goods seized were plastic goods taxed at 4%, not leather goods taxed at 12.5%, and that all goods were accounted for in the stock register. The Revenue, however, maintained that the company misclassified goods to evade taxes and that the goods did not match the invoices produced, justifying the seizure under section 74(5)(a)(ii).

The court initially upheld the seizure, stating that the goods did not tally with the invoices, indicating that they were not accounted for in the books of accounts, thereby meeting the conditions under section 74(5)(a)(ii). However, upon review, the court found that the goods were indeed accounted for in the stock register, and the misclassification did not equate to "not accounted for," rendering the seizure unlawful.

2. Interpretation of Section 74(3) and Section 74(5):
The respondent-company argued that the learned single judge failed to distinguish between the preconditions for seizure under section 74(3) and section 74(5). Section 74(3) allows for the seizure of books of accounts to determine if income has escaped assessment, while section 74(5) pertains to the seizure of goods not accounted for in the books of accounts.

The court on review concluded that "not accounted for" under section 74(5)(a)(ii) means the complete absence of entries in the books of accounts, not improper or misclassified entries. Therefore, the original decision was based on a misinterpretation of the law, as the goods were entered in the stock register, albeit misclassified.

3. Review Jurisdiction and Grounds for Review:
The review was sought on the grounds of erroneous interpretation of section 74. The Revenue argued that the grounds for review did not meet the legal requirements, as the original decision was based on a thorough examination of facts and law. The court on review, however, concluded that the original decision suffered from an error apparent on the face of the record, as it failed to consider that the goods were accounted for in the stock register.

The court emphasized that review jurisdiction is not an appeal and is limited to correcting errors apparent on the face of the record or new evidence not available earlier. The learned single judge on review found that the original decision misinterpreted the law, leading to a miscarriage of justice, and thus, the review was justified.

Conclusion:
The court on review set aside the original judgment, finding that the seizure of goods was unlawful as they were accounted for in the stock register. The interpretation of section 74(5) was clarified to mean complete absence of entries, not misclassification. The review was justified on the grounds of correcting an error apparent on the face of the record, ensuring justice was served. The appeals were allowed, and the impugned judgment and order were set aside.

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