Tax recovery jurisdiction extends to incidental damages claims for unlawful sealing of business premises, with nominal exemplary relief possible.

A tax tribunal was held competent to entertain a damages claim arising from an allegedly unlawful sealing of business premises, because the claim was treated as incidental to tax collection and recovery. On the merits, the sealing of the immovable business premises during certificate execution was found unauthorized and illegal, as the recovery framework contemplated attachment and sale rather than sealing in the circumstances. The officer's act was not protected as a good-faith exercise of lawful authority, and the State was held vicariously liable for the wrongful recovery action. As no actual loss was proved, the tribunal declined compensatory relief but awarded nominal exemplary damages.

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Issues: (i) Whether the Tribunal had jurisdiction, in a tax-related proceeding, to entertain a claim for damages arising out of an allegedly illegal sealing of the business premises; (ii) whether the sealing of the business premises in execution of the certificate proceeding was lawful and whether exemplary damages could be awarded against the State.

Issue (i): Whether the Tribunal had jurisdiction, in a tax-related proceeding, to entertain a claim for damages arising out of an allegedly illegal sealing of the business premises.

Analysis: The Tribunal treated the sealing of business premises during recovery proceedings as an act connected with collection and enforcement of tax and, consequentially, the claim for damages as a matter incidental to the tax recovery process. It relied on the wide jurisdiction conferred by the West Bengal Taxation Tribunal Act, 1987, including the exclusion of civil court jurisdiction in matters connected with levy, assessment, collection, and enforcement of tax, and held that its powers were comparable to civil court powers for adjudication of such connected disputes. On that basis, the damages claim was held to fall within its competence.

Conclusion: The Tribunal held that it had jurisdiction to entertain the damages claim.

Issue (ii): Whether the sealing of the business premises in execution of the certificate proceeding was lawful and whether exemplary damages could be awarded against the State.

Analysis: The Tribunal held that the certificate officer had no lawful authority to seal the immovable business premises in the manner adopted, as the relevant recovery law contemplated execution by attachment and sale and the applicable civil procedure provisions did not justify sealing of the premises in the facts found. It further held that the act was illegal, that the certificate officer was protected only where the act was done in good faith within claimed jurisdiction, and that the State, as principal, bore vicarious liability for the unauthorized act of its officer. Since no actual loss was proved, the Tribunal declined actual compensation but considered the infringement and the circumstances sufficient to justify a token award of exemplary damages.

Conclusion: The sealing was held illegal and exemplary damages of Rs. 1,000 were awarded against the State.

Final Conclusion: The application succeeded only to the extent of a nominal damages award, while the Tribunal reaffirmed its authority to grant relief in a tax-linked dispute arising from an unlawful recovery action.

Ratio Decidendi: In a tax-recovery matter falling within the Tribunal's connected and incidental jurisdiction, an unlawful and unauthorized sealing of business premises may justify an award of exemplary damages against the State on principles of vicarious liability, even where actual loss is not specifically proved.

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