2016 (2) TMI 544 - HC - VAT and Sales Tax

Court orders examination of goods release claims, directs investigation, emphasizes regulatory measures.

Hari Rai & Others Versus Commissioner of Trade & Taxes

The court disposed of the writ petition, directing the DT&T to examine the petitioners' claims for the release of goods and communicate a decision ... Seized goods disappeared / were stolen - Seizure of 24 cartons containing gold and silver jewellery as well as cash - - It is stated that “the thela pullers and pushers, who were in-charge of the goods, ran away and in such circumstances the burden of safety and security of the detained goods became the responsibility of the Department, which was the first such experience of the branch with such eventuality”. - Held that:- The provisions of the DVAT Act are being flouted with impunity since it seems extremely unlikely that such valuable consignment would be first despatched through a railway van and then transported on thelas openly without any protection through a busy locality of Delhi in broad daylight. Clearly the Respondent’s enforcement team has not, prior to the incident on 1st March 2014, been performing its duty, or otherwise things would not have come to such a pass. The Respondent on its own admission appears to have no infrastructure to deal with such contingency where the goods valued at around ₹ 4 crores are required to be detained and kept in the custody of the DT&T. This is an unfortunate instance of the DT&T being unable to ensure the safety of the detained goods, resulting in some portion of it being stolen and a criminal case having to be registered in that behalf. The Crime Branch will pursue the investigation of aforementioned FIR to its logical end as expeditiously as feasible. As far as the main prayer in the petition is concerned the Court is not inclined to order release of the goods at the present stage and in the circumstances narrated above to any of the Petitioners. As already noticed, Petitioners 1 and 2 are thela pullers and the question of releasing the goods that have been detained to either of them does not arise. In the absence of proper documentation in respect of the goods being produced to the satisfaction of the CTT, the order dated 20th May 2014 passed by the Assistant Commissioner cannot be faulted and does not call for interference. - Decided against the appellants. Issues Involved:1. Legality of the seizure of goods by the Department of Trade and Taxes (DT&T).2. Non-disclosure of the number of cartons seized in the Goods Detention Orders (GDOs).3. Compliance with the Delhi Value Added Tax Act, 2004 (DVAT Act) during the seizure.4. Request for the release of seized goods and compensation for stolen goods.5. Investigation and accountability for the theft of seized goods.6. Petitioners' entitlement to the release of detained goods.7. Examination of the modus operandi for transporting valuable goods.Issue-wise Detailed Analysis:1. Legality of the Seizure of Goods by the DT&T:The petitioners challenged the seizure of 24 cartons containing gold, silver jewelry, and cash worth nearly Rs. 4 crores by the Commissioner of Trade and Taxes (CTT) on 1st March 2014. The seizure was conducted under Sections 59 and 61 of the DVAT Act. The DT&T's counter affidavit stated that the goods were seized because the thela pullers could not produce the required documents.2. Non-disclosure of the Number of Cartons Seized in the GDOs:The petitioners argued that the GDOs issued on 1st March 2014 did not disclose the number of cartons seized. The DT&T's counter affidavit did not specifically address this issue but mentioned that an inventory was prepared.3. Compliance with the DVAT Act during the Seizure:The petitioners contended that the seizure did not follow the procedure envisaged under the DVAT Act. They claimed that the inventory was prepared without their participation and they were not allowed to inspect the goods. The DT&T admitted that due to a lack of infrastructure, they were ill-equipped to handle such a situation, leading to the theft of some seized goods.4. Request for the Release of Seized Goods and Compensation for Stolen Goods:The petitioners made several representations to the DT&T for the release of the goods and compensation for the stolen items. The Assistant Commissioner, Enforcement-II Branch of the DT&T, declined their application on 20th May 2014. The court noted that the petitioners failed to provide proper documentation to prove ownership of the goods.5. Investigation and Accountability for the Theft of Seized Goods:An FIR was registered for the theft of some seized goods. The court directed the DT&T to file a detailed affidavit on the circumstances leading to the theft. The DT&T admitted that they were ill-equipped to secure the goods, leading to the suspension of several officials. The court emphasized the need for a thorough investigation and directed the Crime Branch to expedite the investigation.6. Petitioners' Entitlement to the Release of Detained Goods:The court was not inclined to order the release of the goods at this stage due to the lack of proper documentation from the petitioners. The court noted that the petitioners failed to show any averment that they had the necessary documents at the time of seizure. The court directed the DT&T to examine the petitioners' claims and communicate a decision within eight weeks upon submission of complete documentation.7. Examination of the Modus Operandi for Transporting Valuable Goods:The court observed that the method of transporting valuable goods through railway vans and thelas was unusual and likely involved collusion with officials. The court directed the DT&T to investigate the entire process of how the goods were dispatched and transported, and to coordinate with the Reserve Bank of India (RBI) to implement regulatory measures.Conclusion:The court disposed of the writ petition, directing the DT&T to examine the petitioners' claims for the release of goods and communicate a decision within eight weeks. The court also directed the Crime Branch to pursue the investigation of the FIR to its logical conclusion. The court emphasized the need for regulatory measures to prevent such incidents in the future. No order as to costs was made.