2016 (4) TMI 484 - HC - VAT and Sales Tax

Detention order and tax penalty set aside due to lack of authorization and reasoning

The court set aside the detention order and tax penalty imposed by the Value Added Tax Officer (Enforcement), directing the refund of the deposited amount ... Seeking release of consignment - Seizure of 207 cartons of Raga Shampoo under ‘Mal Roko Adesh’ - Petitioner contended that there was only a stock transfer from the company's branches and that there was no sale as such of the stock - Held that:- it was being asserted by the Petitioner that there was only a stock transfer from the company's branches and that there was no sale as such of the stock. What is surprising is that the impugned order does not even note the said contention much less deal with it. While an effort has been made in the counter affidavit to summarize the statements that were made before the VATO, the impugned order itself does not note any of these contentions. In particular, the assertion now made that at the time when the vehicle was intercepted, it was moving on Shahdara road and not stationary, is not mentioned in the impugned order. In the facts and circumstances, the Petitioner is justified in stating that there was no occasion for the VATO to have seized the vehicle and the goods under Section 61(2) of the DVAT Act. The assertion made by petitioner only meets with the bare denial in the counter affidavit and not a specific denial. It is simply stated “the contents of paras 24 to 26 are wrong and denied. Each and every averment made in these paras are specifically denied”. No attempt has been made to deal with the issue of authorisation enabling the VATO concerned to undertake the exercise of interception of the vehicle in question and to detain the goods. The impugned order of detention and the consequent order of assessment stands vitiated on this score as well. If the Delhi office of the Petitioner was registered under the DVAT Act, and has been regularly filing its tax returns and depositing the VAT and CST since 2006-07, and has been following the same system of receiving goods by way of stock transfer from its Chennai and other branches, the VATO should have in the instant case taken note of the facts and taken the trouble of discussing the circumstances under which the truck happened to be intercepted and the goods detained. What the Court has found in the present case is a complete non-application of mind by the VATO, not only to the facts and circumstances of the case but also to the requirement of the law. Therefore, the impugned detention order dated 10th September 2012 and the consequent order of assessment of tax and penalty are set aside. The amount deposited by the petitioner by way of tax and penalty shall be refunded in accordance with law. - Decided in favour of petitioner Issues:Challenge to orders passed by the Value Added Tax Officer (Enforcement) regarding seizure of goods and imposition of tax and penalty.Analysis:1. The petitioner, engaged in manufacturing personal care products, challenged orders dated September 10th and 17th, 2012, passed by the Value Added Tax Officer (Enforcement) of the Department of Trade and Taxes, seeking to quash the seizure of goods.2. The petitioner received consignments of Raga Shampoo via stock transfer from its Chennai branch, which were seized by the VATO on September 10th, 2012, citing 'without bills' as the reason for detention.3. The petitioner contended that the detention was unlawful as proper documents were provided, and the goods were seized without authority. The VATO imposed a tax demand and penalty, compelling the petitioner to deposit the amount for release.4. Despite representations and explanations by the petitioner, the VATO upheld the tax demand and penalty, leading to a petition challenging the orders.5. The respondents argued that the vehicle was detained due to lack of documents, denying the petitioner's submissions and justifying the tax and penalty imposition.6. The court found the pre-printed forms used for detention and tax assessment inadequate, highlighting the lack of reasoning and consideration of submissions by the VATO.7. The court noted the absence of proper authorization for the VATO's actions, rendering the detention and assessment orders null and void.8. Emphasizing the non-application of mind by the VATO and the violation of legal requirements, the court set aside the detention order and tax penalty, directing the refund of the deposited amount to the petitioner.This detailed analysis covers the issues raised in the legal judgment comprehensively, highlighting the key arguments, submissions, and findings of the court.