2015 (11) TMI 1318 - HC - VAT and Sales Tax

Seizure of goods - Misdeclaration of goods - whether there was some mis-declaration with regard to the entry in the schedule under which Dettol Antiseptic Liquid fell and accordingly, the entire consignment of Dettol was seized at the check post - Held that - neither in the order under challenge nor in the reply is it stated that the documents are false or forged. The only allegation is that there is mis-declaration and the petitioner company has wrongly shown the items to fall under a particular entry which entails less payment of tax and have thus mis-declared the goods with a view to evade taxes. As already held by us earlier, we are not going into the question of assessment as that is an order which the Assessing Officer must pass after hearing the party. However, we are clearly of the view that the Officer-in-Charge of the check post did not have the authority to seize the goods since the documents were produced and he has not even prima facie come to the conclusion that the documents are false or forged. What is the purpose of seizing the goods, when the petitioner company is a registered dealer and is not going to run away. At best the driver could have been ordered to keep the goods in a godown and within seven days, as indicated above, a decision could have been taken. In fact, we are doubtful whether even that course could have been followed because this is not a case of no documents or forged documents but only a case, even according to the State, of mis-declaration - soaps are also sold under the brand name Dettol and antiseptic liquid is also sold under the brand name Dettol. This does not mean that only because the brand name Dettol is used both the goods are to be classified under one entry for the purpose of assessing the tax. If this reasoning of the officer was to be accepted, tomorrow if the petitioner company starts manufacturing cars and starts selling them under the name of Dettol then would the same duty be charged on the cars also? Obviously, the answer is no. What tax has to be charged on an item depends on the classification of the item and on the entry in which that item or good falls, regardless of the brand name which it may have. - seizure was totally illegal. Accordingly, the impugned order is set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Authority to seize goods.
2. Mis-declaration of goods.
3. Legal provisions under Section 67 of the TVAT Act.
4. Proper procedure for handling suspected mis-declaration.
5. Legality of seizure and subsequent actions.

Detailed Analysis:

1. Authority to Seize Goods:
The petitioner challenged the authority of the respondent No. 3, the Superintendent of Taxes, Churaibari, Charge-VII, to seize goods on the grounds of mis-declaration. The court examined Section 67 of the Tripura Value Added Tax Act, 2004 (TVAT Act), which deals with the establishment of check posts for inspection of goods in transport. Sub-section (3) empowers the officer to stop and inspect any vehicle. Sub-section (4) allows the officer to seize goods only if no documents are produced or if the documents appear to be false or forged. The court concluded that in this case, the documents were produced and there was no allegation of them being false or forged, thus the officer did not have the authority to seize the goods.

2. Mis-declaration of Goods:
The dispute centered on whether there was a mis-declaration regarding the entry under which Dettol Antiseptic Liquid fell in the schedule of the TVAT Act. The court clarified that it was not deciding the classification of Dettol Antiseptic Liquid in these proceedings, as that is a matter for the Assessing Authority. The court noted that the officer's seizure was based on the assertion that the petitioner had mis-declared the goods to fall under an entry with less tax liability. However, the court found that the officer should have referred the matter to the Assessing Authority rather than seizing the goods.

3. Legal Provisions under Section 67 of the TVAT Act:
Section 67 outlines the powers and duties of officers at check posts. Sub-section (4) specifically states that seizure can only occur if documents are not produced or appear false or forged. The court emphasized that the power of seizure is limited to these conditions. The court referenced a previous decision (M/s Ruchi Soya Industries Ltd. vs. The State of Tripura and Ors.) which held that seizure should be the last resort and not the first action when documents are present and not forged.

4. Proper Procedure for Handling Suspected Mis-declaration:
The court suggested that if there is a doubt regarding the value of goods, the officer should direct the driver not to part with the goods until verification is done, rather than seizing them. The court highlighted that in cases of stock transfer, where goods are transported between branches of the same company, seizure is generally unnecessary. The officer should have noted the value and allowed the goods to be transported under a surety bond.

5. Legality of Seizure and Subsequent Actions:
The court found the seizure to be illegal as the officer did not have the authority under the given circumstances. The documents were neither absent nor forged. The court criticized the state's reasoning that different items under the brand name Dettol should fall under the same classification. The court clarified that classification depends on the nature of the goods, not the brand name.

Conclusion:
The court set aside the seizure order and directed the state to refund the amount recovered from the petitioner within four weeks, failing which interest at 12% per annum would be applicable. The court allowed the revenue to decide the proper classification of Dettol Antiseptic Liquid after giving the petitioner a hearing.

Disposition:
The petition was disposed of with no costs.