2017 (8) TMI 1146 - HC - VAT and Sales Tax

Court dismisses challenge to Goods Detention Notice; emphasizes natural justice principles in administrative actions.

R. Valarmathi Versus Deputy Commercial Tax Officer (Enf), The Managing Director, K. Selvaraj

The court dismissed the challenge to the Goods Detention Notice at Hosur check-post after test results confirmed no adulteration in the transported sago ... Detention of goods - sago and sago products - second respondent has passed the impugned order on the ground that the petitioner has filed WP.No.3711/2017 and has misrepresented and acted prejudicial in the interest of the second respondent by giving false information thereby spoiling reputation and name of the second respondent and therefore, the petitioner is debarred from participating in the daily tender sales for four years - Held that: - It is not clear as to in what manner the petitioner had brought disrepute to the second respondent society and the order dated 24.03.2017 passed by the second respondent, impugned in this writ petition, has been passed without issuing any show cause notice. Therefore, it is not understandable as to what is the basis for the impugned order - the Commercial Tax Department was of the primafacie opinion that there is likelihood that the sago which was being transported by the petitioner could be adulterated. Therefore, a direction was issued to the petitioner to take the sample for testing and accordingly, the sample was tested and the test report confirmed that there was no adulteration. Debarring a contractor or tenderer or blacklisting a tenderer has severe civil consequences and therefore, the Courts have held that before such orders are passed, the parties are entitled for a reasonable opportunity to show cause against proposed action. In the instant case, the second respondent has not taken any such steps to comply with the principles of natural justice by putting the petitioner on notice. However, taking note of the fact that samples which were intercepted and tested were found to be in order, without any adulteration, this Court is inclined to interfere with the impugned order. Petition allowed - decided in favor of petitioner. Issues:1. Challenge to Goods Detention Notice at Hosur check-post.2. Impugned order debarring petitioner from participating in daily tender sales.3. Compliance with principles of natural justice by the second respondent.Analysis:1. The petitioner, a dealer in sago products, challenged a Goods Detention Notice issued by the check-post officer at Hosur. The Commercial Tax Department suspected adulteration in the transported sago, prompting a testing directive. The test results confirmed no adulteration, leading to the disposal of the writ petition (WP.No.3711/2017) and the release of goods as per food safety standards.2. The second respondent debarring the petitioner from tender sales for four years was based on the petitioner's writ petition filing and alleged misrepresentation. However, the High Court found no basis for the impugned order, as it lacked a show cause notice and justification. The Court emphasized the need for natural justice principles, highlighting the severe consequences of debarring without a fair opportunity for the affected party.3. Despite the Court's intervention setting aside the impugned order and allowing the writ petition, the second respondent retains the right to take appropriate action if the petitioner breaches registration conditions. The judgment underscores the importance of affording parties a chance to respond before imposing significant penalties, emphasizing adherence to procedural fairness in administrative actions.