TaxTMI 
TaxTMI 
2016 (8) TMI 301
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....nding that the premises was locked, sealed the premises. The Petitioner states that on 8th July 2016, it moved an application before the AC for de-sealing the premises, pointing out that the Petitioner is a transporter and not a dealer. The Petitioner stated that the goods lying at its premises are value added tax ("VAT") paid goods and traceable to bona fide dealers registered under the DVAT Act. 3. The Petitioner states that on 11th July 2016, the premises was de-sealed for a few hours. The statement of the Branch Manager of the Petitioner was recorded. The original invoices and other relevant documents relating to the stocks in the premises were seized. The original documents lying in the premises were taken into custody by the AC. On the same day, a notice under Section 59 of the DVAT Act was issued, requiring the Petitioner to produce the complete books of accounts before 3.30 pm which was within a few minutes of the issuance of the notice, and which was drawn up in the premises itself. Immediately thereafter, the premises was re-sealed under Section 60 of the DVAT Act for alleged non-compliance and failure to produce the books of accounts. 4. The Petitioner states that ....
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....r dated 2nd July, 2016 signed by Mr. P.R. Meena, Spl. Commissioner, Enforcement Branch, authorizing a team of four officials, led by Mr. Mr Ajay Arora, SDM, Mayur Vihar, and including Mr. Yogesh Pal Singh, AC, to enter and search the premises of the Petitioner, to inspect the accounts and other documents, seize any records, goods etc. and "take action under Section 60 of the DVAT Act, 2004, as may be necessary". 5. The Court also notices that there is a carbon copy of the notice dated 2nd July, 2016 under Section 60 of the DVAT Act and is signed by Mr. Yogesh Pal Singh, AC, which appears to have been issued at the time of sealing of the premises on that date. The said notice reads as: "....Whereas, Shri the Director/ Proprietor/ Partner/Authority signatory of the said Firm was present at the time of visit of the team who was directed to produce the books of accounts of the firm. However, he has failed to produce the books of account till p.m. inspite of issue of notice u/s 59 of DVAT Act, 2004....". When the Court inquired from Mr. Yogesh Pal Singh about the notice under Section 59 of the DVAT Act referred to in the above notice under Section 60 of the DVAT Act, he w....
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....he Commissioner has to be based on materials that are available on record. It ought not to be mechanically exercised, using a cyclostyled form, as has been done in the present case. The notice dated 19th January 2016, the date of the sealing, sets out only one the ground, in a pre-printed form, that the dealer "failed to produce the books of accounts till 7:30 PM in spite of issue of notice under Section 59 of the DVAT Act 2004". This obviously does not satisfy the statutory requirement under Section 60(2)(f) of the Act. 6. The facts as set out in the petition that the decision reveal that the decision to invoke the powers under Section 60(2)(f) of the Act was taken in undue haste virtually in continuation of invocation of the power under Section 59 of the Act to search the premises for information and documents. Sufficient opportunity was not afforded to the Petitioner to explain why, if at all, it was unable to produce the documents and information sought by the Department. Also, there could not be an automatic presumption that since the Petitioner failed to produce the documents at once it was attempting to avoid or evade tax or was concealing its tax liability...." ....
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....Act., the Court noted that "there is a basic misconception that the VAT Authorities are to mechanically exercise the power of survey under Section 59 of the Act followed immediately by a search and seizure operation under Section 60 of the DVAT Act". 12. It is unfortunate that despite the above judgments of the Court, which are in the knowledge of not only the Commissioner (VAT), but also the Spl. Commissioner Mr. R.P. Meena, who appears to have issued the order in a printed format on 2nd July 2016, no real effort has been made to comply with the requirement of law. The order dated 2nd July, 2016 signed by Mr. P.R. Meena is in a pre-printed format and casually states that it would be open to the raiding party to "take action under Section 60 of the DVAT Act, 2004, as may be necessary". 13. The above actions of sealing of the business premises of the Petitioner have been undertaken in ignorance of the law and contrary to the judgments pronounced by the Court time and again. The sealing of the Petitioner"s premises is hereby declared to be illegal. 14. The Court directs immediate de-sealing of the Petitioner"s premises at Gali No.8, Swaroop Nagar, Delhi by ....
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....t 2016 was only one of the relevant file and that there was another file in which a note had been recorded prior to the action taken in the present case and which according to him satisfied the requirement of law under Section 60(2) of the DVAT Act. 9. The file produced today was perused by the Court. It contains a note prepared on 2nd July 2016 which talks of a complaint received in the office of the Chief Minister through the PGMS portal stating that pan masala, bidi, cigarettes, plastic goods, hardware, medical goods etc. "are being supplied through Rajasthan to Delhi without tax invoices by certain transporters". The note then refers to a list of transporters provided by the Special Commissioner (E-II) prepared on the basis of information received by him from various complainants/informers during his public interactions about the transporters "who are transporting/stocking goods without invoices in contravention to the provisions of DVAT Act". It then states that senior officers had worked on the said information and a list of twenty six probable suspected transporters had been prepared and "proposed for conducting survey u/s 60 of DVAT Act, 2004 by the teams headed by SDMs ....
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....note dated 4th July 2016, a superior officer of the DT&T before whom the file was placed posed a question on 5th July 2016 whether the assessing and de-sealing team "may be different as per current practice or the same team may complete the process as proposed by the branch." The note also proposed that the sealing team may prepare the inventory which may be co-signed/countersigned by the SDM "under complete videography". The Special Commissioner to whom the file was next sent proposed that the same team should "prepare the inventory and de-seal and assess the cases." This note was approved by the Commissioner, VAT on the same day i.e. 5th July 2016. 15. Each of the above officers appear to have overlooked the fact that there was no authorisation in the first place for the 'sealing' of the premises of the transporters. The last note in the file produced today is dated 29th July 2016 and it states inter alia that: "survey of 24 godowns were conducted out of which 23 godowns have been de-sealed after assessment and realising of tax and penalty of Rs. 1,06,74,689". 16. From the file produced today, it is clear that that what was proposed on 2nd July 2016 was only a "surv....
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....wer to enter premises and seize records and goods (1) All goods kept at any business premises by a dealer, transporter or operator of a warehouse shall at all reasonable times be open to inspection by the Commissioner. (2) Where the Commissioner, upon information in his possession or otherwise has reasonable grounds to believe that any person or dealer is attempting to avoid or evade tax or is concealing his tax liability in any manner and for the purposes of administration of this Act, it is necessary so to do, the Commissioner may- (a) enter and search any business premises or any other place or building; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not readily available; (c) seize and remove any records, books of account, registers, other documents or goods; (d) place marks of identification on any records, books of account, registers and other documents or make or cause to be made extracts or copies thereof without charge; (e) make a note or any inventory of any such money or goods found as a result of....
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....ustifying the sealing of that transporter's premises/godown. There must be a recording of the reasonable ground of belief of the Commissioner or his duly authorised delegate that "any person or dealer is attempting to avoid or evade tax or is concealing his tax liability" and that there is some material to believe that the goods of such a person or dealer are in the godown of the transporter whose premises are proposed to be sealed. 23. The legislature has made a conscious distinction between an 'inspection' under Section 60 (1) of the DVAT Act, which could be of the any premises or warehouse of any dealer, transporter or operator and Section 60(2) of the DVAT Act only talks of evasion or avoidance of tax or concealment of tax liability by "any person or dealer". Therefore, qua the person whose premises is sought to be sealed under Section 60 (2) (f) or any of the steps contemplated under Section 60 (2) (a) to (e) of the Act, the requirement of the Commissioner having to record reasonable ground to believe that a person or dealer is attempting to avoid or evade tax is a sine qua non. Where the premises belongs to a transporter the Commissioner or his delegate should ....
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.... and should be deemed to be a person liable to pay tax, simply did not arise on 2nd July 2016, when the first sealing took place. 26. In any event, the notes dated 2nd and 4th July 2016 make no reference to Section 3(9) of the DVAT Act. The notes do not describe the Petitioner as a person who should be taken to be a deemed evader of tax in terms of Section 3 (9) of the DVAT Act. They do not record that the Petitioner either failed to furnish any information in his possession or failed to permit inspection of the premises. Therefore, the Court does not see how on the strength of the two notes on the file, the action under Section 60(2) of the DVAT Act could have been taken against the Petitioner. 27. The de-sealing memo of 11th July 2016 written by the AC states that the premises of the Petitioner at Swaroop Nagar were "sealed due to non- production of books of accounts inspite of issuance of notice under Section 59 of DVAT Act, 2004/nobody responded o the date of sealing i.e. 02.07.2016." This was an untenable ground for sealing the premises as explained in Capri Bathaid Private Limited v. Commissioner of Trade & Taxes (supra). In other words the mere non-production of docume....
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.... was not a valid reason for re-sealing the premises. In any event, the reasons for re- sealing, consistent with the requirements of Section 60 (2) of the DVAT Act, had to be found in the form of a note in the file by the Commissioner or his authorised delegate. There is no such note. 32. The Court is therefore satisfied that the re-sealing that took place of the Petitioner's premises at Swaroop Nagar on 11th July 2016 was also illegal. It is clarified, however, that it will be open to the Respondent DT&T to proceed in accordance with law as far the goods and documents seized by its officials from the Petitioner's premises. 33. The Court enquired from Mr. Srinivasan, how Mr P R Meena, the Special Commissioner could have issued a blanket order on 2nd July 2016 authorising the team led by Mr. Ajay Arora, SDM Mayur Vihar to proceed to take action under Section 60 of the DVAT Act "as may be necessary" without noticing the difference between an inspection under Section 60 (1) and a sealing under Section 60 (2) of the DVAT Act. The Special Commissioner's order dated 2nd July 2016 authorises inspection of the accounts and other documents which was perhaps permissible unde....