2014 (12) TMI 1072 - HC - VAT and Sales Tax

Court overturns seizure order, deems it baseless & grants compensation for damages under U.P. VAT Act.

M/s. Sandeep Bulk Carriers Versus State of UP. And 3 Others

The court set aside the seizure order and subsequent orders, finding them arbitrary and beyond the authority conferred under the U.P. VAT Act. The ... Direction to be made for release the Tanker No. UP85V9636 with Bitumen lying in the custody of respondent No.2 since 30.6.2014 or not - Held that:- The sole basis for detention of the tanker and seizure of the bitumen was the information collected by him from the toll plaza which revealed that last four digit of the registration number of the tanker in question was similar to the last four digit of registration number of a vehicle recorded in the records of toll plaza - the source of supply of bitumen from Mathura is only the Mathura Refinery of M/s Indian Oil Corporation - neither he took any steps nor the Joint Commissioner nor the Tribunal considered it appropriate to verify the invoice and the information and thus they mechanically passed the orders - Registration number of three tankers containing similar last four digits are registered with the transport department as has been admitted by the Respondents in the supplementary counter affidavit - On verification from the Indian Oil Corporation, Mathura Refinery, Mathura it was found by the authorities concerned that bitumen in the tanker in question was loaded as per invoice accompanying it and thereafter it was not loaded from the Mathura Refinery till 30.6.2014 - The bills of repair of the tanker in question in support of proof that it was under repair from the night of 28.6.2014 till 30.6.2014, were not even verified by the authorities concerned so as dispute its genuineness - In the supplementary counter affidavit dated 20.8.2014 the Respondents have even admitted that the tanker in question was detained and bitumen was seized without any basis. Even if such an order was actually passed by the respondent No.4, yet it was a complete nullity for reasons that firstly no power is conferred under the Act and the Rules to pass such orders, secondly it was wholly impossible to remove the mounted body of the fully loaded big tanker with bitumen weight 24.60 M.T. from body of the engine and thirdly the petitioner was directed merely to take away the body of the engine which could not be of any use for the petitioner who is engaged in the business of running his tanker on hire – thus, the seizure order dated 5.7.2014, the order of Joint Commissioner under proviso to Section 48 (7) of the Act dated 8.7.2014 and the impugned order of the Commercial Tax Tribunal, Bench-I, Agra dated 16.7.2014 passed in IInd Appeal No. 223/2014 cannot be sustained - The provisional release of the tanker and bitumen in question by order dated 28th August, 2014 is confirmed. What amount of compensation may be awarded to the petitioner for illegal detention of the tanker - Per day damages to be granted or not @ ₹ 5,000/- Held that:- The tanker in question was baselessly detained - The detention continued from 1st July, 2014 upto 28th August, 2014 - The state respondents have also not disputed the quantum of loss caused to the petitioner and compensation thereof as prayed – the petitioner is entitled for compensation – Decided in favour of petitioner. Issues Involved:1. Legality of the seizure order dated 5.7.2014 and subsequent orders.2. Validity of the detention of the tanker and bitumen.3. Claim for damages due to illegal detention.4. Need for guidelines to prevent arbitrary actions by authorities.Detailed Analysis:1. Legality of the Seizure Order:The petitioner challenged the seizure order dated 5.7.2014, passed under Section 48 of the U.P. VAT Act, on the grounds that it was based solely on the similarity of the last four digits of the registration number of the tanker with another vehicle recorded at a toll plaza. The court found that the authorities did not verify the complete registration number or the invoices from the Indian Oil Corporation, Mathura, despite having the means to do so. The seizure was deemed arbitrary and beyond the power conferred under Section 48 of the Act. Consequently, the court set aside the seizure order and the subsequent orders of the Joint Commissioner and the Commercial Tax Tribunal.2. Validity of the Detention of the Tanker and Bitumen:The detention of the tanker and bitumen was found to be without any basis. The authorities failed to verify the information from the toll plaza and the invoices from the Indian Oil Corporation. The court noted that the respondents admitted the tanker was detained and bitumen seized without any basis. The respondents' actions were arbitrary, illegal, and aimed at harassing the petitioner. The court confirmed the provisional release of the tanker and bitumen and discharged any undertaking furnished by the petitioner.3. Claim for Damages Due to Illegal Detention:The petitioner claimed damages at the rate of Rs. 5,000 per day for the illegal detention of the tanker. The court found that the state respondents did not dispute the quantum of loss or the period of illegal detention. Citing the case of Ram Singh and others vs. State of U.P., the court held that the petitioner was entitled to compensation. The determination of the quantum of compensation was left to the respondent No.1, who was directed to determine and pay the compensation within a specified period.4. Need for Guidelines to Prevent Arbitrary Actions by Authorities:The court highlighted the need for guidelines or laws to prevent arbitrary actions by authorities and minimize harassment. The State Government and the Central Government were considering issuing guidelines or enacting laws to provide remedies and compensation for wrongs committed by government officers or employees. The court expressed hope that appropriate decisions or actions would be taken within three months to address this issue effectively.Conclusion:The writ petition was allowed with costs of Rs. 20,000, to be paid by respondent No.1 within a month, apart from the compensation to be determined and paid as directed. The court emphasized the need for the State and Central Governments to consider enacting laws or issuing guidelines to prevent arbitrary actions by authorities and ensure compensation for aggrieved parties.