High Court sets aside sealing order under KVAT Act, emphasizing right to livelihood.

The High Court allowed the writ petition challenging the sealing order issued by the Commercial Tax Officer under the Karnataka Value Added Tax Act, 2003. The court found the sealing order to be ultra vires, as it did not meet the prescribed circumstances for sealing under the KVAT Act. Emphasizing the petitioner's right to livelihood under Article 21 of the Constitution of India, the court set aside the sealing order and directed the immediate unsealing of the business premises, highlighting that Revenue authorities have adequate powers to ensure compliance without resorting to sealing.

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Issues:
Challenge to legality of sealing order by Commercial Tax Officer under KVAT Act, 2003 - Violation of prescribed circumstances for sealing - Ultra vires jurisdiction - Colorable exercise of power - Violation of right to livelihood under Article 21 of the Constitution of India.

Analysis:
The petitioner challenged the sealing order issued by the Commercial Tax Officer (CTO) under the Karnataka Value Added Tax Act, 2003, directing the sealing of the business premises of M/s. Suhail Timber and Plywood. The petitioner contended that the CTO's action was ultra vires as it did not meet the prescribed circumstances for sealing under Section 52(1)(f) of the KVAT Act. The petitioner argued that despite being present and cooperating during the inspection, the CTO sealed the premises without valid grounds, thus violating the law and exercising power colorably.

The petitioner's counsel emphasized that the power to seal a business premise can only be exercised when specific conditions are met as per the KVAT Act. The counsel argued that the CTO's decision to seal the premises lacked legal basis as the petitioner had not left the premises, refused to open any part of the building, or hindered the inspection in any way. This failure to adhere to the statutory requirements rendered the sealing order invalid and beyond the jurisdiction of the CTO.

Furthermore, the petitioner's right to livelihood, protected under Article 21 of the Constitution of India, was highlighted as being infringed by the sealing order. The counsel contended that denying the right to livelihood without following due process violated the law and the constitutional rights of the petitioner. The petitioner's counsel asserted that the impugned order not only contravened the statutory provisions but also violated the fundamental rights guaranteed by the Constitution.

In response, the Revenue's counsel justified the CTO's decision to seal the premises by alleging potential unauthorized selling of timber and non-compliance with reporting requirements. However, the court found the justifications insufficient to warrant the sealing of the premises, especially considering the petitioner's cooperation during the inspection. The court emphasized that the power to seal must be exercised strictly within the confines of the law and cannot be extended beyond the prescribed circumstances.

Ultimately, the High Court allowed the writ petition, setting aside the sealing order dated March 2, 2017. The court directed the immediate unsealing of the business premises owned by the petitioner, emphasizing that the Revenue authorities have the necessary powers to ensure compliance with document production without the need for a court order.

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