Confiscation of goods in transit requires prior hearing and opportunity to produce accounts before demand or seizure

A notice demanding tax, surcharge and penalty for goods in transit was unsustainable where the authorities proceeded to confiscatory action without first allowing the owners to account for the goods or to produce relevant accounts and documents. Section 16-D(5) of the Orissa Sales Tax Act, 1947 permits seizure and confiscation only if the goods are not accounted for in the transporter's, bailee's or owner's records, and both that provision and rule 94(5) require a hearing before confiscation. The notice was therefore quashed, and the petitioners were entitled to be heard before any further action.

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Issues: Whether the notice demanding tax, surcharge and penalty for goods in transit could be sustained without first giving the owners of the goods an opportunity to account for the goods and without affording a hearing before confiscatory action.

Analysis: Section 16-D(5) of the Orissa Sales Tax Act, 1947 permits seizure and confiscation only when the goods in transit are not accounted for in the transporter's, bailee's or owner's accounts, registers and other documents. The provision also requires an opportunity of being heard before confiscation, and rule 94(5) of the Orissa Sales Tax Rules, 1947 similarly requires a hearing before ordering confiscation. The impugned demand was issued without first allowing the petitioners to produce their accounts and documents and without following the hearing requirement attached to the confiscatory power.

Conclusion: The notice was unsustainable and was quashed. The petitioners were entitled to be heard and to produce relevant documents before any further action was taken.

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