2014 (9) TMI 669 - HC - VAT and Sales Tax

Seizure of goods - demand of security for release of goods - Whether under the facts and in the circumstances of the case the Commercial Tax Tribunal was legally justified in directing for release of the goods without any security specially when it was established from the facts of the case that there is no possibility of payment of any tax in U.P. on a transaction of central sale which is taking place in U.P. from Kanpur to Kolkata - Held that - Tribunal has recorded a finding of fact that all the entries regarding agreements, job work, etc. have been entered in various records and after perusal thereof it has recorded its satisfaction in this regard. The aforesaid satisfaction shown by Tribunal is not shown perverse or contrary to material on record. This is a finding of fact. I am not inclined to interfere with the same unless the same is shown perverse or contrary to material on record. That being so, the Tribunal has rightly found that all the entries are recorded and there was no intention to evade tax. In absence of anything to assail the above findings, it cannot be said that the order of Tribunal is not in accordance with law - Decided against Revenue.

Issues:
1. Legality of directing release of goods without security by the Commercial Tax Tribunal.
2. Whether a ground not raised before the Tribunal can be considered in revision.

Analysis:
1. The case involved a dispute where goods were seized by trade tax authorities due to alleged tax evasion. The Commercial Tax Tribunal directed the release of goods without any security. The main question was whether this decision was legally justified considering the circumstances of the case, where a central sale transaction was taking place from Kanpur to Kolkata without the possibility of tax payment in Uttar Pradesh (U.P.).

2. Another question arose during the proceedings regarding whether a ground not raised before the Tribunal could be raised in revision. The parties were allowed to address the court on this additional question, and it was considered alongside the main issue.

3. The facts of the case revealed a complex chain of transactions involving various entities like M/s National Textile Corporation (NTC), M/s New City of Bombay Manufacturing Mills Ltd., M/s Liner Design Pvt. Ltd., M/s Tewari Exports, and others. The goods in question were intended for supply to the National Cadet Corps (NCC) Directorate in West Bengal.

4. The respondents argued that they were acting as sub-contractors under orders from NTC and that there was no direct sale of goods to evade taxes. However, the trade tax authorities found discrepancies in the documentation, leading to the seizure of goods and issuance of a show cause notice.

5. The Commercial Tax Tribunal, after considering the facts and submissions, decided to release the goods without any security, noting that all transactions were recorded and there was no clear intention to evade taxes. The Tribunal's decision was based on the satisfaction drawn from the records of agreements and job work.

6. The High Court, in its analysis, referred to previous judgments regarding the scope of revisional jurisdiction and the limitations on raising new grounds not considered by the Tribunal. It emphasized that the High Court's role in revision is to ensure the Tribunal's order complies with the law.

7. Ultimately, the High Court upheld the Tribunal's decision, stating that the findings regarding the recorded entries and lack of intention to evade tax were not perverse or contrary to the evidence. As there was no valid reason to challenge these findings, the High Court dismissed the revision in favor of the respondents.

8. The judgment highlighted the importance of factual findings and adherence to legal principles in tax-related disputes, emphasizing the need for proper documentation and transparency in transactions to avoid allegations of tax evasion.

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