2013 (11) TMI 1678 - HC - VAT and Sales Tax

Court overturns seizure order due to lack of legal justification; emphasizes goods cannot be seized based on quality alone.

M/s Dev Nandi Trading Co. Versus The Commissioner, Commercial Tax, U.P. Lucknow

The court set aside the order of seizure dated 7th October 2013 and subsequent orders, including tribunal confirmation, due to lack of legal ... Seizure of goods - the quality of the goods ie. Supari which were in transit were better than the quality disclosed in the accompanying documents - purchasing dealer was not a registered dealer - Held that: - The seizure of the goods on the ground that they were of better quality is not a ground for seizure of the goods under the Act and the authorities are not even competent to adjudge the quality of the goods. The seizing authority has no expertise to adjudge the quality of the goods. Therefore, seizure for the reason that the Supari which was being carried was of a superior quality is not tenable in law. The goods have also been seized for the reason that the purchasing dealer of Bihar was not registered - Held that: - genuineness of the consignor and consignee and their registration under the taxing statute are not relevant for the purposes of seizing the goods, the authorities could not have seized the goods on the above score also. Revision allowed - decided in favor of assessee. Issues: Seizure of goods during transit; Quality of goods; Registration of purchasing dealerSeizure of Goods during Transit:The judgment pertains to a revision against the order of seizure passed on 7th October 2013 and its confirmation by the tribunal on 26th October 2013. The tribunal upheld the seizure on the grounds that the quality of the goods, specifically Supari, in transit was better than what was declared in the accompanying documents and that the purchasing dealer was not registered. However, it was established that the goods were in transit from Nagpur to Bihar with proper documentation, including a Transit Declaration Form specifying the route through U.P. The tribunal rejected the claim that the goods were taking a longer route without justification, as they were following the disclosed route. Moreover, the judgment highlighted that the seizing authority lacked the expertise to assess the quality of the goods, making the seizure on the basis of superior quality legally untenable.Quality of Goods:Regarding the quality of the goods, the judgment emphasized that the authorities seizing the goods were not authorized to determine the quality of the goods being transported. The court clarified that the seizure of goods solely based on the grounds of superior quality is not permissible under the law. The lack of expertise of the seizing authority in evaluating the quality of goods was a crucial factor in determining the illegitimacy of the seizure on quality grounds.Registration of Purchasing Dealer:The final issue addressed in the judgment was the registration status of the purchasing dealer in Bihar. The department seized the goods citing that the purchasing dealer was not registered. However, it was noted that there was no contention regarding the genuineness or bonafide nature of the dealer. The judgment referenced a previous case to establish that the registration status of the consignor and consignee under the taxing statute is not relevant for the purpose of seizing goods. As a result, the court concluded that the seizure of goods based on the purchasing dealer's registration status was not legally justified.In conclusion, the court set aside the order of seizure dated 7th October 2013 and all subsequent consequential orders, including the tribunal's confirmation. The revision was allowed, and no costs were imposed. The judgment underscored the importance of legal grounds for seizing goods during transit, emphasizing the necessity for proper legal justifications and expertise in assessing the validity of such actions.