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TMI Blog2016 (8) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... DVAT Act, had to be found in the form of a note in the file by the Commissioner or his authorised delegate. There is no such note. Hence, the re-sealing was illegal. There has been a wilful violation of the statutory provisions by the officers concerned. They have acted not only in ignorance of the law but in violation of the statutory requirements – disciplinary action against officers after opportunity of personal hearing should be taken – rights of petitioner reserved – respondent to pay petitioner damage charges – writ petition disposed off – decided in favor of assesse. - W. P. (C) 6705/2016 & CM No. 27444/2016 - - - Dated:- 4-8-2016 - S. Muralidhar And Najmi Waziri, JJ. For the Petitioner : Mr. Akarsh Garg, Mr. Pawanshree Agrawal, Advocates For the Respondents : Mr. Ramji Srinivasan, Senior Advocate with Mr. P. Roy Chaudhuri, Advocate with Mr. Vivek Paul Oriel, Advocate ORDER Dr. S. Muralidhar, J. 1. The Petitioner, a partnership firm, carries on the business of transportation goods of dealers registered under the Delhi Value Added Tax Act, 2004 ( DVAT Act ) as well as registered dealers of other States. The Petitioner, whose registered office app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner and the Power of Attorney ( POA ) holder. The order requires the Manager to produce a set of documents and adjourns the case for 4pm on 14th July, 2016. However, there is no record of proceedings drawn up for 14th July 2016. The next order is of 18th July 2016, which records the presence of a Chartered Accountant representing A.H. Products Ltd., one of the dealers whose goods have been detained in the godown of the Petitioner. The order notes that the said person did not have a POA but had submitted the purchase register up to July, 2016. The case is then adjourned to 11am on 20th July, 2016. 3. The file contains a copy of a letter received on 19th July, 2016 from Mr. Rajiv Tripathi of the Petitioner seeking one week s time to produce the necessary documents. Significantly, there is no noting in the file regarding the visit to the Petitioner s premises around midnight on 2nd July 2016; on moving an application by the Petitioner on 8th July 2016 for de-sealing; the de-sealing that took place for a brief while on 11th July 2016; and the re-sealing that took place on the same date. 4. The Petitioner states that it was served a notice under Section 59 of the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner on 11th July, 2016. A copy of the sealing notice has been placed on record. The only reason stated therein is that the Petitioner has failed to produce its books of accounts despite notice under Section 59 of the DVAT Act. 8. The above action, on the face of it, is wholly illegal. Section 60 of the DVAT Act, which gives the power to enter premises and seize goods and records makes it explicit that the Commissioner should have either information in his possession or otherwise have reasonable grounds to believe that any person or dealer is attempting to avoid or evade tax or is concealing his tax liability . It is only thereafter that the Commissioner can proceed with any of the steps under Section 60(2) (a) to (f) of the DVAT Act. 9. The Court has on numerous occasions in the past dealt with the misuse by the officers of the Department of Trade and Taxes of the powers under Section 59 of the DVAT Act (for inspection of records) and Section 60 of the DVAT Act to enter premises and seize the goods. In its order dated 27.01.2016, in WP(C) No. 714/2016 (Shree Ashtvinayak Gems Stone Pvt. Ltd. v Commissioner, Trade and Taxes, Delhi) the Court observed as under: 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehru Place. The deployment order was not in respect of the aforementioned two addresses and yet those were sealed. How this was possible without a fresh deployment order being issued is unexplained. 14. Further, there is no indication as to what prompted the extreme step of sealing of the three premises. The order in that behalf has been passed not by the Commissioner but by the VATO. There is nothing to indicate that the VATO was authorised to do so by an order issued in Form DVAT 50 as on 15th March 2013. 15. With the sealing order bristling with so many illegalities, there can be no manner of doubt that the sealing action was undertaken mechanically and only for the reason of failure to produce records as sought by the notice under Section 59 of the Act. There was no satisfaction arrived at by the Commissioner, as mandatorily required by Section 60 (1) of the DVAT Act, that there was any deliberate attempt by the Petitioner to avoid or evade tax W.P. (C) Nos. 1820/2013, 1821/2013 1822/2013 Page 11 of 12 or to conceal its tax liability in any manner..... 11. The Court then directed de-sealing of the three premises of the said Petitioner which had been wrongfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred above. 16. Mr. Yogesh Pal Singh, Asstt. Commissioner shall also remain present in court on the next date of hearing. The Court will also be informed with the compliance of the above order. 17. A certified copy of this order shall be delivered by the Registry forthwith by a Special Messenger to Mr. P.R. Meena, Spl. Commissioner, Enforcement Branch, for compliance. 18. List on 4th August, 2016. 19. Order dasti under the Signature of the Court Master. 6. Pursuant to the order dated 2nd August 2016, Mr. P.R. Meena, Spl. Commissioner, Enforcement Branch appeared in the Court. On enquiry by the Court, Mr Akarsh Garg, learned counsel for the Petitioner confirmed that pursuant to the order dated 2nd August 2016 the premises has been de-sealed at 5 pm on that date itself as directed by the Court. However, he pointed out that the originals of the documents that had been seized during the sealing had not yet been returned to the Petitioner. The Court then kept the matter at 2.15 pm and requested the Commissioner, VAT to remain present. 7. At 2.15 pm when the matter was called out, Mr. S.S. Yadav, Commissioner, VAT was also present in the Court. Mr Akarsh Gar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been prepared on 4th July 2016, setting out the action taken/status in respect of special drive initiated against the transporters on 2nd July 2016. In tabular columns the name of the Zonal In- Charge, Team No., name of the Officers/AC and the action/status have been set out. In the last column, where the sealing operation on a particular transporter/travel agent did not succeed, the name is mentioned. In respect of all others it is simply stated: Godown Sealed . It appears that twenty six godowns were sealed and four were not identified/traced. The note also mentions that 8-10 applications had been received from the transporters for de-sealing of their business premises/godowns. The note then proposes that since the teams are large in number it would be appropriate that the teams who had sealed the Godowns may prepare their inventory and also make necessary action of de-sealing after following the due process under the DVAT Act, 2004. 13. What the note fails to acknowledge is that in the first place there was no authorisation for the 'sealing' of any of the premises. What had been permitted to be undertaken on 2nd July 2016 was only a 'survey' under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the 26 transporters, which included the Petitioner. The officers present in the Court, including Mr. Yogesh Pal Singh AC, Mr. Meena, Special Commissioner, and Mr. S. S. Yadav, Commissioner VAT, also were unable to point out to any other note justifying the sealing that took place of the Petitioner's premises first on 2nd July and then again on 11th July 2016. 18. It is plain to the Court that sealing which took place of the Petitioner's godown in Swaroop Nagar on 2nd July 2016, with the AC issuing a sealing order on that date, which was extracted in full in para 5 of this Court's order dated 2nd August 2016, was wholly without the authority of law. This Court's order dated 2nd August 2016 records the further reasons for concluding that the sealing action on 2nd July was illegal. The re-sealing of the Petitioner's godown on 11th July 2016 was also not supported by any such note in terms of Section 60 (2) of the DVAT Act. Therefore, that sealing too was without the authority of law. 19. It was then volunteered by Mr. Srinivasan that the mention in the note dated 2nd July 2016 that there was a complaint about goods being transported from Rajasthan to Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing of security for such sum in such form and manners as may be prescribed. (5) The Commissioner may requisition the services of any police officer or any public servant, or of both, to assist him for all or any of the purposes specified in subsection (2) of this section. (6) Save as otherwise provided in this section, every search or seizure made under this section shall as far as possible be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures made under that Code. Explanation.- The powers under this section may also be exercised in respect of a dealer or a third party for the purposes of undertaking an audit or to assist in recovery. 21. This Court has in its decisions in Capri Bathaid Private Limited v. Commissioner of Trade Taxes (2016) 155 DRJ 526 (DB) and Larsen Toubro Ltd. v. Govt. NCT of Delhi (2016) SCC OnLine Del. 664 discussed in some detail the legal position as regards the powers of survey and search and seizure under Sections 59 and 60 of the DVAT Act. These have been adverted to in the order dated 2nd August 2016 extracted in full hereinbefore and therefore ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a the Petitioner. To overcome this difficulty, Mr. Srinivasan attempted to advance an argument based on Section 3(9) of the DVAT Act which reads as under: Section 3 Imposition of Tax ...... (9) If any person who transports goods or holds goods in custody for delivery to or on behalf of any person, on being required by the Commissioner so to do, fails (a) to furnish any information in his possession in respect of the goods; or (b) fails to permit inspection thereof; then without prejudice to any other action which may be taken against such person, a presumption may be raised that the goods in respect of which he has failed to furnish information or permit inspection, are owned by him and are held by him for sale in Delhi and the provisions of this Act shall apply accordingly. 25. When asked whether any attempt had been made, prior to the sealing action taken on 2nd July 2016, to seek information from the Petitioner in respect of any goods or documents in his possession, the answer was in the negative. This re-confirmed what was recorded by this Court in para 5 of its order dated 2nd August 2016 that no notice had been issued to the Petitioner prior to 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods on the following day. The Court finds this explanation unconvincing. 30. The sealing order dated 11th July 2016 is again in a pre-printed form. It states that the Petitioner's Director/authorised signatory has failed to produce the books of accounts/records of the firm. Yet, the file contains a list prepared on 11th July 2016 on the letterhead of the Petitioner titled Seized Documents which lists out 47 documents, the originals of which were returned today i.e. 4th August 2016. Therefore, the officials did seize the documents found in the premises on 11th July 2016 apart from seizing the goods found therein. There is nothing in the file to indicate why despite this, it was decided to re-seal the premises on 11th July 2016. 31. Mr Srinivasan referred to a statement in writing given by Mr Rajiv Tripathi Branch Manager of the Petitioner undertaking to produce the relevant documents to the AC on 12th July 2016 for assessment and release of the goods. The Court fails to understand how this could be a reason for re-sealing the premises. The goods and 47 documents had already been seized by this time. How would the re-sealing of the premises thereafter be of any he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empting to avoid or evade tax or is concealing his tax liability in any manner. Further, as underscored by Section 60 (6) of the DVAT Act, every search or seizure made under this section shall as far as possible be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 relating to searches or seizures made under that Code. These provisions have more often than not been observed in the breach. 35. The Court is of the considered view that there has been a wilful violation of the statutory provisions by the officers concerned and in this case in particular by Mr. P.R. Meena, Spl. Commissioner as well as the team of the officers authorized by him to take the action. They have acted not only in ignorance of the law but in violation of the statutory requirements. 36. The Court is constrained to observe that in the past one year several judgments have been pronounced by this Court on the limitation of powers under Section 59 and 60 of the DVAT Act. Despite this, the Court finds that a person holding a responsible position like Mr. P. R. Meena, Spl. Commissioner, Enforcement Branch is continuing to issue orders in mechanical and irresponsible manner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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