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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 ..... re 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'). The officers who visited the premises on 27.5.2016 did not carry any D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands 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 various VAT authorities for the various provisions of the Act. Such VAT authorities could only be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 prepared by such officer or other person and signed by such witness; but no person witnessing a search under this S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 conduct operations under Section 60(1) at the premises of the petitioner at (i) PD-29A, Pitam Pura, Delhi-100 034, (ii) 67 Harsh Vihar, Pitampura, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 50 in their favour. On demand, no such authority was shown during the period of ten hours i.e. between 5.30 pm on 27.5.2016 to 3.30 am on 28.5.2016. The said survey caused u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 Colly. Petitioner has recording of CCTV of the enforcement proceedings which can also be produced for the perusal of this Hon'ble Court. That way, the submissions made by the Respondent that they have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide 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 records, books of account, registers and other documents; (ii) answer such questions; and (iii) prepare and furnish such additional information, relating to his activities or to the activities of any other person as the Commissioner may deem necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 dealer or a third party for the purposes of undertaking an audit or to assist in recovery. XXXX 68. Delegation of Commissioner's powers (Rule 48) (1) Subject to such restrictions and conditions as may be prescribed, the Commissioner may delegate any of his powers under this Act to any Value Added Tax authorities. (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of accounts, registers and other documents. and answer such questions and prepare and furnish additional information relating to his activities or activities of other persons. The Commissioner under sub-section (3) is empowered to require a person referred to be sub-section (2) to prepare and provide documents and verify answer given to any question in the manner specified by him. Sub-section (4) empowers the Commissioner to take away copies of extracts or cause copies or extracts to be made of the records, books of account, registers etc. without fee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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, the same shall be in the Form DVAT-50 and shall be issued by the person empowered by the Commissioner in this regard. Sub-rule (2) stipulates that grant of authority would for a period not exceeding three years; shall be to a specified person and expire on retirement, resignation or transfer of the person. 18. Section 66 of the DVAT Act reads as under:- "66. Value Added Tax Authorities (1) For carrying out the purposes of this Act, the Government shall appoint a person to be the Commissioner of Value Added Tax. (2) To assist the Commissioner in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 below the rank of a Value Added Tax Officer; (b) under section 61, to a person not below the rank of a Value Added Tax Inspector; and (c) under section 84, to a person not below the rank of Special Commissioner." Rule 48 restricts power of the Commissioner and states that without prejudice to the provisions of Section 68, the Commissioner would not delegate any of his power to an officer not below the rank of Assistant Value Added Tax Officer. Clauses (a), (b) and (c) state that delegation of power under Sub-Sections 1 and 2 to Section 60 would be to a person not below the rank of Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 the bodies authorized by the statutes. It is essential that the delegated power should be exercised by the authority on whom it is conferred and no one else. Yet, given the administrative set up extreme judicial aversion to delegation is unacceptable, for in many statutes delegation is authorized expressly or by necessary implication. Thus, the maxim quoted above is not applied universally. Reference was made to Barium Chemicals Ltd. Vs. Company Law Board AIR 1967 SC 295 and other decisions wherein it had been observed that delegation mechanism is merely a rule of construction and sub delegation may be permissible and can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reted 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 from Sub-Rule 3 which stipulates that the person, who is authorized to undertake search and survey shall carry with him authorization Form DVAT-50 while exercising any of the power contained under Chapter X and shall produce such authorization in Form DVAT -50 at the request of the owner / occupier. This also becomes clear when we look at Form DVAT 50. The said form is not required to be filled by the Commissioner when he delegates his power to issue authorization to Special Commissioner. The Form has to be filled up when power is conferred and authorization is given to a particular officer by name for carrying out audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stipulated in the notification dated 12th November, 2013 to carry out audit and enforcement function under Chapter X of the Act. The delegation order dated 12th November, 2013 in different columns had specified the jurisdictional officer authorized to exercise power under Sub-sections 1 and 4 of Section 59 and Sub-sections 1 and 3 of Section 60. This was because of the wording of the notification dated 12th November, 2013, paragraph 1 of which reads:- "In supersession of all previous orders on the subject, I, Prashant Goyal, Commissioner of Value Added Tax, Department of Trade & Taxes, Government of NCT of Delhi, in exercise of the powers conferred by sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 specified in the order dated 12th November, 2013 would no longer be applicable. This is not the requirement stipulated and mentioned in the empowerment order dated 23rd March, 2016. 30. The petitioner has stated that Form DVAT 50 was never shown to the petitioner/dealer at the relevant time. This is a disputed question of fact and in view of the fact that the respondents had placed on record Form DVAT50, we would accept their version. We would add that the respondents should ensure that when the said form is shown to the dealer at the time of the search or survey/investigation, signatures of the party ought to have been obtained to avoid such controversy. 31. The next ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 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 of accounts and records were never returned. Without answering and determining the dispute/issue regarding return of books and papers, we would observe that even if there was violation of the aforesaid provision, the books of accounts, documents, etc. could not have been seized and taken away from the said shop. Moreover, correct factual position regarding removal of the books of accounts, etc. should have been accepted and stated in the counter affidavit and not concealed and accepted only after evidence to show the said removal was produced by the petitioner. It is obvious that a dealer would have to maintain bill books, etc. at every place of business. 32. Counsel for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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