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TMI Blog2018 (1) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions and powers inter-se the Value Added Tax authorities. This is left to the Commissioner, who in exercise of power under Section 68 can delegate and prescribe functions, powers and jurisdiction to the Value Added Tax authorities. This power is exercised by means of notification(s) issued by the Commissioner - This authority of delegation of power and functions is vested with the Commissioner subject to restrictions and conditions as may be prescribed. These restrictions and conditions can be prescribed by Rules. Chapter-X, as noted above, deals with audit, investigation and enforcement and the chapter conferring powers requires that the delegate shall carry and produce on demand evidence in the prescribed form while exercising powers delegated to him by the Commissioner. The Commissioner has, by notification / order of empowerment dated 23rd March, 2016, conferred the said power upon Special Commissioner. Thus the Special Commissioners are authorized to issue an authorization in DVAT -50. The authorization in Form DVAT-50 would authorize the person named with their rank to conduct survey/investigation or search. Authorized officers should not be below the rank of Value Adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and without jurisdiction; (b) declare the entire exercise of investigation, search and seizure conducted on 27 and 28.5.2016 u/s 59 and 60 of the Act, as illegal; (c) direct the respondent to release and return the seized records, documents, bill books, ledgers, invoices, inventories etc., as neither any Panchnama was drawn nor any list of seized documents/records was prepared under acknowledgement of the petitioner; (d) issue a Writ of Mandamus or any other Writ, order or direction; (e) pass any other order or orders, direction or directions as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case. 3. The grounds on which the aforesaid action is challenged in the present writ petition for the sake of convenience are reproduced below:- A. Because the exercise of investigation and enforcement covered u/s 59 and 60 of the Act fall under Chapter X of the Act. For any officer to exercise the power in any of these two Sections, was statutorily required to carry an authority in form DVAT 50. This is the mandate of Section 68(2) read with Rule 65 of the Delhi Value Added Tax Rules, 2005 (in short 'the Rules' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e empowered officer or authority who has to issue the DVAT 50 in favour of the person who stands appointed by the Commissioner himself. Thus, it is only the authorities who have been delegated powers through order dated 12.11.2013, which has not been modified till date, with respect to the powers available u/s 59 and 60 of the Act, the empowered authority could have issued DVAT 50 in their name only. The Commissioner by issuing this order of empowerment on 23.3.2016 has conferred upon the Special Commissioner two powers i.e. to appoint an officer or person to exercise the powers under Chapter X, and (b) to grant authority to the officer/person so appointed in form DVAT 50. That way, through the order of empowerment, the Commissioner has exceeded his jurisdiction which is not vested in him. Thus, any exercise of investigation and enforcement carried out by persons who have been appointed by the Special Commissioner and been issued DVAT 50 is without the authority of law. C. Because the officers who visited the premises to carry out the proceedings were not even jurisdictional officers. The Commissioner, in terms of Section 68 of the Act, had delegated his authority unto variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two witnesses to vouch for those proceedings. When the entire exercise went on for about 10 hours, it is surprising to see that no witnesses were summoned, which was necessary in terms of Section 100(4) of CrPC which applies to such proceedings under the VAT Act. F. Because seizure of records when made either u/s 60(2)(c), then as per Section 62(1) of the Act, the Commissioner is under an obligation to give a dealer or the person present on his behalf, as the case may be, receipt for the same and obtain acknowledgement of the receipt so given to him. To the shock of the petitioner, neither any Panchnama was drawn nor any list of seized documents was prepared. Where Section 62(1) calls upon the Commissioner to obtain an acknowledgement of the documents seized from the dealer's premises, the question of such acknowledgement does not arise when no list of documents had ever been prepared. This is not only suggested u/s 62(1) but is also well laid down u/s 100(5) of the CrPC which reads as under:- The search shall be made in their presence, and a list of all things seized in the course of such search and of the places in which they are respectively found, shall be prep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (2) to Section 60 of the Act were undertaken. Thus, Section 100 of the Code was not attracted and summoning of independent witness was not required. It is asserted that only Investigation in terms of power conferred under Sections 59 and 60 (1) of the Act was undertaken on the basis of authorization under DVAT-50 dated 27th May, 2016 issued by the Special Commissioner. Reliance is placed upon annexures R-2 and R-3 to the counter affidavit. It was denied that any records, books of accounts, register, other documents and goods were seized. Thus, no panchnama was drawn. 6. The respondents submit that Commissioner vide order dated 23rd March, 2016, in exercise of power under Section 68 of the Act read with Rules 48 and 65, has empowered all officers, not below the rank of Special Commissioner, to appoint an officer or person to exercise power under Chapter-X to grant authority in Form DVAT-50. Special Commissioner (Endorsement -I) vide order dated 27th May, 2016 after recording that he had information in his possession and had reasonable grounds to believe that the petitioner was attempting to avoid or evade tax or concealing his liability, had given authorization to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther that no such coercieve steps shall be taken till the next date of hearing. 2. The main prayer in the present petition is for declaring the order of empowerment dated 23rd March, 2016 issued by the Commissioner (VAT) to the extent it confers powers of appointment on Special Commissioner, as illegal and without jurisdiction. It also seeks a declaration that the entire exercise of investigation search and seizure conducted on 27th and 28th May, 2016 in the business premises of the Petitioner under Sections 59 and 60 of the Delhi Value Added Tax Act, 2004 (DVAT Act) as illegal. 3. There is a specific prayer c which reads as under:- (c) direct the respondent to release and return the seized records, documents, bill books ledgers, invoices, inventories etc., as neiether any Panchnama was drawn nor any list of seized documents/records was prepared under acknowledgement of the petitioner. 4. In the writ petition there is a specific avermement at para No.11 which reads as under: 11.When petitioner continuously pusued its refunds, then, instead of granting the same, it was visited by a team of Enforcement Officers on 27.5.2016 without carrying any DVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, books of accounts, registers, other documents or goods were seized from the business premises of the Petitioner. 6. In other words there is a categoric assertion by the DVAT Department that no record, registeres, goods or documents were seized from the business premises of the Petitioner. 7. A rejoinder has been filed to the said counter affidavit by the Petitioner supported by the affidavit of Mr. Manpreet Singh Sethi, the Director of the petitioner company. Para 7 (a) and 7 (b) of the rejoinder affidavit assert as under:- (a) no two independent witnesses were summoned to vouch the proceedings. This was essentially required in terms of Section 100 (4) of CrPC when the exercise went on for about 10 hours and stretched to early morning of 28.5.2016. (b) no panchnama was prepared of the seized records when in fact during this entire exercise, sale bills, purchase vouchers, ledger and other documents were seized from the premises for which the petitioner has CCTV footage as well as photographs in its possession. Copies of some photographs which establish that records were seized and taken away by the members of the team are enclosed as Annexure P9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his affidavit sworn on 2nd August, 2017 stating that in the CCTV footage only two officers, namely, Satya Prakash, AVATO (Branch-I) and Vijay Kumar, AVATO (Ward-71) could be seen. A. Statutory Provisions 12. In order to decide the present controversy, we would have to first make reference to Sections 59, 60 and 68 of the Act and Rule 65 and Form DVAT-50, which are as under:- 59. Inspection of records (1) All records, books of accounts, registers and other documents, maintained by a dealer, transporter or operator of a warehouse shall, at all reasonable times, be open to inspection by the Commissioner. (2) The Commissioner may, for the proper administration of this Act and subject to such conditions as may be prescribed, require a) any dealer; or b) any other person, including a banking company, post office, a person who transports goods or holds goods in custody for delivery to, or on behalf of any dealer, who maintains or has in his possession any books of accounts, registers or documents relating to the business of a dealer, and, in the case of a person which is an organisation, any officer thereof; to (i) produce before him such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not remove or part with or otherwise deal with them except with the previous permission of the Commissioner. (4) Where any premises have been sealed under clause (f) of sub-section (2), of this section or an order made under sub-section (3) of this section, the Commissioner may, on an application made by the owner or the person in occupation or in charge of such shop, godown, box, locker, safe, almirah or other receptacle, permit the desealing or release thereof, as the case may be, on such terms and conditions including furnishing of security for such sum in such form and manners as may be directed. (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 dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner of Value Added Tax, Delhi do hereby appoint the following officials holding the designation, mentioned against their name for carrying out audit, investigation and enforcement functions under Delhi Value Added Tax Act and Rules: S. No. Name Designation This authority would be valid for the period from ______________________to __________________ (not exceeding three years). Seal of authority Signature Name Date Designation B. Interpretation of statutory provisions 13. Section 59 of the Act relates to inspection of records, which means all records, books of accounts, registers, other documents etc. maintained by a dealer, transporter or operator of warehouse at all reasonable times, and states that the said records will open to inspection by the Commissioner. Sub-section (2) stipulates that the Commissioner may for proper administration, subject to the conditions prescribed, require the dealer etc. to produce before him records, books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made to sub-section (6), which stipulates that every search and seizure made under this Section shall be as far as possible in terms of the provision relating to search and seizure under the Code i.e. Code of Criminal Procedure. 16. Section 68 of the Act deals with the power of the Commissioner to delegate any of his powers under the Act to any Value Added Tax Authorities. Sub-section (2) is relevant, for it relates to delegation of power under Chapter-X, and states that the delegate shall carry and produce on demand evidence in the prescribed proforma while exercising the power. Sub-section (3) states that where the Commissioner has delegated power to a Value Added Tax authority, he may supervise, review and rectify any decision made or action taken by that authority. Object and purpose behind this provision has been elucidated and explained below. 17. Rule 65 is a specific provision relating to the power of delegation given to the Commissioner for exercise of different powers under Chapter-X. It stipulates that where the Commissioner wishes to appoint an officer or person to exercise powers under Chapter-X of the Act including grant of authority to exercise the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers inter-se the Value Added Tax authorities. This is left to the Commissioner, who in exercise of power under Section 68 can delegate and prescribe functions, powers and jurisdiction to the Value Added Tax authorities. This power is exercised by means of notification(s) issued by the Commissioner. This authority of delegation of power and functions is vested with the Commissioner subject to restrictions and conditions as may be prescribed. These restrictions and conditions can be prescribed by Rules. Chapter-X, as noted above, deals with audit, investigation and enforcement and the chapter conferring powers requires that the delegate shall carry and produce on demand evidence in the prescribed form while exercising powers delegated to him by the Commissioner. 20. At this stage we would refer to Rule 48, which reads as under:- 48. Conditions upon delegation of powers by the Commissioner Without prejudice to the provisions of section 68, the Commissioner may delegate any of his powers to any person not below the rank of an Assistant Value Added Tax Officer, but he may delegate his powers- (a) under sub-sections (1) and (2) of section 60, to a person not bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 50 for exercise of powers by them. The Rules, as elucidated, nowhere stipulate and postulate that the Commissioner cannot delegate his power for issue of authorization under Chapter X. On the other hand Rule 65 and Form DVAT-50 state to the contrary. 22. One of the primary contentions raised by the petitioner, that the Commissioner alone has the power to issue Form DVAT-50 under Section 68 of the Act, albeit this power cannot be delegated, falters and fails. The Commissioner has delegated the said power to Special Commissioner, who in turn authorizes specific officers to undertake investigation, search etc. This, it is submitted, violates the principles of sub-delegation. Maxim of delegatus non potest delegare is invoked to assert that delegation to Special Commissioner to issue DVAT 50 is ultra vires under Sections 68 read with 66 and 67 of the Act. Reliance is placed under Sahni Silk Mills Pvt. Ltd Anr. Vs. ESIC 1994 (5) SCC 346. We are not impressed with the said argument, which in the context of the present Statute has to be rejected. Decision in Sahni Silk Mills (Supra) observed that the Courts are rigorous in requiring the power to be exercised by the persons or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed to conduct survey/ investigation or search. The contention of the petitioner, if accepted, would warrant accepting the position that the Special Commissioner must himself undertake the search and seizure. The power to authorize survey/ investigation or search is different and distinct from the power exercised by the officers so authorized and who actually undertake the search and survey. The argument of the petitioner does not take notice of the aforesaid position and is therefore fallacious and wrong. 24. We would concede that there is ambiguity and difficulty in Rule 65 of the Act but the same has to be interpreted in a pragmatic and in a practical manner. It stipulates that where the Commissioner wishes to delegate his power for grant of authority to exercise power, the delegate will issue the authority letter in Form DVAT-50. The authority will be given to a person empowered by the Commissioner in this regard. Sub Rule 2 stipulates that grant of authority will be to a specific person and limited to a period not exceeding three years and would expire earlier on retiring, resignation or transfer. Authority in terms of time can, however, be extended. This is also clear fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person authorized by the CVAT under Rule 65 (1) shall carry the authorization in Form DVAT-50 with him when purporting to exercise any of the powers conferred under Chapter X of DVAT Act. (vi) Such officer is required in terms of Rule 65 (3) (b) of the DVAT Rules to produce the authorisation in Form DVAT -50, if requested by the owner or occupier of any premises where he proposes to exercise these powers. 27. We do not perceive and believe that there is any conflict between the aforesaid principles and what has been held above and the ratio in Capri Bathaid Pvt. Ltd (Supra). In fact our findings concur and resonate the aforesaid principles. In Capri Bathaid Pvt. Ltd (Supra) delegation and empowerment of Special Commissioner to issue authorization in Form No. DVAT-50 was accepted and judgment proceeds on validity of the delegation of authority. The point of distinction between Capri Bathaid Pvt. Ltd (Supra) and the present case is that in the former case notification / order of delegation dated 12th November, 2013 and order dated 15th October, 2014 were under examination. By the latter order the Special Commissioner was empowered to authorize jurisdictional officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner dated 28th August, 2015 with retrospective effect from 1st April, 2015. The validation action with retrospective effect, it was observed, had no authority of law. The Division Bench was also critical of the manner in which powers under Chapter X had been exercised in the said case. 29. The empowerment order dated 23rd March, 2016, to the contrary does not state or put any restriction when an officer not below the rank of Special Commissioner grants authority and empowerment to the officer/persons so appointed. In these circumstances, we accept the contention of the respondents that empowerment order dated 23rd March, 2016 would necessarily override the order dated 12th November, 2013 in respect of delegation of power under Chapter X of the Act. Of course, this does not mean that the Special Commissioner can appoint an officer contrary to Rule 48 and empower a person below the rank of Value Added Tax Officer in case investigation is to be done under sub-sections (1) and (2) to Section 60 of the Act. As per the empowerment order dated 23rd March, 2016, the requirement that the power under Chapter X of the Act would be only exercised by the jurisdictional officer as specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier on 26th May, 2016. (iv) Respondents in the counter affidavit have denied and refuted that any books, records, etc. were seized. CCTV footage/photographs that books of accounts were seized and taken away from premises G-52, Aggarwal City Plaza, Mangalam Palace, Rohini, New Delhi-85 was accepted by the respondents in the subsequent affidavit of Mr. Ranjit Singh, Joint Commissioner (Enforcement-1 Branch) sworn on 2nd August, 2017, which refers to Satya Prakash and Vijay Kumar as officers who had seized and taken away books of accounts. The seizure was without preparing pachnama and in the absence of any witnesses. This was impermissible and beyond the scope and power under Sections 59 and 60(1) of the Act. Moreover, the respondents changed their stand and stance once they were compelled to accept and admit that the books of accounts and records, including bill books, etc. were taken away from Rohini office. The respondents submit that the books of accounts and records were removed and taken to the principal place of business to ensure compliance with Section 48 read with Rule 42 of the Rules. This, as per the petitioner, is an afterthought and is unacceptable and books o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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