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2016 DIGILAW 869 (GUJ)

Tirupati Enterprises v. State of Gujarat

2016-04-22

G.R.UDHWANI, HARSHA DEVANI

body2016
JUDGMENT : Harsha Devani, J. 1. Rule. Mr. Hardik Vora, learned Assistant Government Pleader, waives service of notice of rule on behalf of the respondents. 2. Having regard to the urgency of the matter and the nature of the controversy involved in the present case, the matter is taken up for final hearing today. 3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the seizure memorandum dated 31.3.2016 issued by the Commercial Tax Officer, (3), Vadodara whereby he has detained the truck bearing No. GJ-1-CX-8931 and seized the goods of the petitioner. 4. The petitioner is engaged in trading in sopari (betel nut) and is registered under the Value Added Tax Law of the State of Delhi. The petitioner placed an order upon M/s. Liberty Supari Trading Company which is a registered dealer in the State of Kerala for purchase of sopari. Pursuant to such order, the goods were moved by the transporter M/s. Ocean Cargo from Mangalore to the place of business of the petitioner in Delhi. M/s. Ocean Cargo has issued transport receipt wherein it was specifically mentioned that the goods were moving from Mangalore to Delhi. The goods entered the State of Gujarat through Songadh check-post. When the truck reached near Golden cross roads on Vadodara-Halol highway, it was stopped by the officers of the Commercial Tax Department. When the driver informed them that he did not have transit pass in the prescribed Form 405 with him, the truck with the goods was seized and the truck was taken to the office of the second respondent in Vadodara city. It is the case of the petitioner that while the seizure was made on Vadodara-Halol highway and the truck with the goods was thereafter taken to Vadodara city, the place of issuance of the seizure memorandum has been mentioned as Makarpura Check-post. Subsequently, the concerned officer further issued show cause notice to the driver stating that if tax, interest and penalty are not paid on the seized goods then the goods would be auctioned. It appears that the transporter had also received notice for imposition of penalty as well as for making issue based assessment under section 34(8A) of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as "GVAT Act") to which the transporter duly submitted a reply. It appears that the transporter had also received notice for imposition of penalty as well as for making issue based assessment under section 34(8A) of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as "GVAT Act") to which the transporter duly submitted a reply. It is further the case of the petitioner when it came to know about the seizure of the goods, it enquired from the transporter the reason why the driver did not carry transit pass in the prescribed Form 405 with him and was informed that there were alternative routes for reaching Delhi from Mangalore and the transporter was not aware that the driver would take the truck through the State of Gujarat and hence, he failed to generate online transit pass in the prescribed Form 405. 5. The petitioner appeared before the Commercial Tax Officer on 2.4.2016 and submitted that the goods were seized at Golden cross roads on Vadodara-Halol highway and not at Makarpura Check-post as alleged in the seizure memorandum and the seizure itself was illegal. It was also submitted that there was no power of seizure under the GVAT Act for failure to possess transit pass. Despite the detailed submissions made by the petitioner, the respondents failed to release the truck with the goods seized by the impugned seizure memorandum. Being aggrieved, the petitioner has filed the present petition. 6. Mr. Uchit Sheth, learned advocate, for the petitioner submitted that the truck carrying the goods of the petitioner has been stopped at Vadodara-Halol highway, which is not a check-post as envisaged under sub-section (4) of section 68 of the GVAT Act and hence, the respondents have no authority to detain the truck and seize the goods. Inviting attention to the seizure memorandum, it was pointed out that the only deficiency referred to therein is that the driver did not have a transit pass in Form 405 with him. It was submitted that when the driver or the person in-charge of the vehicle fails to carry with him a transit pass obtained in the prescribed manner from the officer-in-charge of the first check-post or barrier after his entry into the State, throughout the State, he is liable to pay such penalty as prescribed under the said section as may be determined after giving a reasonable opportunity of being heard. Section 69 of the GVAT Act, however, does not empower the officers under the GVAT Act to seize the goods and detain the truck. Referring to the impugned order, it was submitted that the respondents have exercised powers under section 68(4) of the GVAT Act for the alleged breach of the provisions of section 69 of the GVAT Act and, therefore, the action of the respondents of seizing the goods and detaining the truck is without any authority of law. It was, accordingly, urged that the impugned order passed by the second respondent deserves to be quashed and set aside and the respondents are required to be directed to forthwith release the truck and the goods. 7. Vehemently opposing the petition, Mr. Hardik Vora, learned Assistant Government Pleader for the respondents, drew the attention of the court to the averments made in the affidavit-in-reply filed on behalf of the second respondent. It was submitted that the contention of the petitioner that the truck was stopped by the officers at Golden Cross-roads on the Vadodara-Halol highway is totally false and baseless and that the truck was stopped at Makarpura check-post and that as the driver did not have the requisite Form 405, the goods were seized after following due procedure as required by law. Reference was also made to the averments in paragraphs 9 and 10 of the affidavit-in-reply to submit that the transactions entered into by the petitioner are not doubtful in nature. It was submitted that it is an admitted position that the driver or the person in-charge of the vehicle was not carrying Form 405, and hence, the second respondent was wholly justified in passing the impugned seizure memorandum. It was submitted that the petition being devoid of merits deserves to be dismissed. 8. From the facts and contentions noted hereinabove, it is evident that the petitioner has challenged the seizure memorandum mainly on two grounds. Firstly, on the ground that the truck in question had not been stopped at a notified check-post as reflected in the seizure memorandum, but at a mobile check-post at Vadodara-Halol highway; and secondly, on the ground that the truck and goods could not have been seized for breach of the provisions of section 69 of the GVAT Act. 9. Firstly, on the ground that the truck in question had not been stopped at a notified check-post as reflected in the seizure memorandum, but at a mobile check-post at Vadodara-Halol highway; and secondly, on the ground that the truck and goods could not have been seized for breach of the provisions of section 69 of the GVAT Act. 9. Insofar as the first ground for assailing the impugned seizure memorandum is concerned, the fact regarding the truck having been stopped at Vadodara-Halol highway and not at the Makarpura Check-post has been denied by the respondents. Thus, the first ground involves a disputed question of fact and hence, this court in the exercise of powers under Article 226 of the Constitution of India, would not enter into the arena of disputed questions of fact and render a finding one way or the other as to whether the truck had been actually stopped at Vadodara-Halol highway or at the Makarpura check-post. This ground, therefore, does not merit acceptance. 10. There is however, substantial force in the second contention raised by the petitioner. As can be seen from the impugned seizure memorandum, the sole ground for detention of the truck is that the driver or the person in-charge of the vehicle was not carrying a transit pass in Form 405. The provision for carrying a transit pass in Form 405 is relatable to section 69 of the GVAT Act, which bears the heading "Transit pass for transit of goods by road through the State". Subsection (1) of section 69 of the Act imposes an obligation upon the driver or person in charge of a vehicle carrying goods, coming from any place outside the State which is bound for any other place outside the State, to obtain in the prescribed manner, a transit pass for such vehicle from the officer-in-charge of the first check-post or barrier after his entry into the State and deliver the same to the officer-in-charge of the last check-post or barrier before his exit from the State. Subsection (1A) of section 69 provides that if the driver or the person in-charge of such vehicle fails to carry with him such transit pass throughout the State, he shall be liable to pay such penalty not exceeding one and one half times the amount of tax of goods carried by him, as may be determined after giving a reasonable opportunity of being heard. Reading section 69 of the GVAT Act in its entirety, there is nothing therein to indicate that the same, in any manner, empowers the officer-in-charge of the check-post to seize the goods or detain the truck. Reverting to the facts of the present case, though the alleged breach is of the provisions of section 69 of the GVAT Act, the second respondent has resorted to the powers under Sub-section (4) of section 68 of the GVAT Act of seizing the goods and detaining the truck. It appears that since under section 69 of the GVAT Act, the authorities under the said Act not empowered to seize the goods and detain the truck, the second respondent has resorted to the colourable exercise of powers under section 68(4) of the GVAT Act, by seizing the truck and goods contained therein for the alleged breach of the provisions of section 69 of the GVAT Act. The action of the second respondent of resorting to seizure of the goods and the truck is, therefore, beyond the bounds of his authority inasmuch as for breach of the provisions of section 69of the GVAT Act, the authorities under the said Act cannot resort to the provisions of section 68(4) of the GVAT Act. The goods carried in the vehicle can be seized only if the requirements of sub-section (4) of section 68 of the GVAT Act are not satisfied. However, for breach of the provisions of section 69 of the GVAT Act, action can only be taken under that section whereby the concerned officer is empowered to levy penalty not exceeding one and one half times the tax as may be determined, against the driver or person in-charge of the vehicle. 11. Another aspect of the matter is that the second respondent has not only seized the goods but has also detained the truck. 11. Another aspect of the matter is that the second respondent has not only seized the goods but has also detained the truck. The detention of the truck continues till date, which amounts to seizure of the truck which the officer is not empowered even under sub-section (4) of section 68 of the GVAT Act. Under sub-section (5) of section 68 of the GVAT Act, the officer-in-charge of the check-post is empowered to release the goods or the documents so seized under sub-section (4) on payment of tax, interest and penalty or on furnishing such security in such form as may be prescribed. However, for release of the truck, the officer-in-charge of the check-post is not empowered to impose any condition. Under sub-section (4) of section 68 of the GVAT Act the officer in-charge of the check post is empowered to seize goods and detain the vehicle and give receipt thereof to the person from whose possession the goods are seized. Insofar as the vehicle is concerned, the expression used is "detain". This court in the case of Bikaner Assam Roadlines India Ltd. v. State of Gujarat rendered on 4.3.2015 in Special Civil Application No. 3121 of 2015, on an interpretation of sub-section (4) of section 68 of the GVAT Act, has held that the authority has power to detain the vehicle but ultimate power is to seize the goods and to give receipt to the person from whose possession the goods are seized. With a view to have the seizure of the goods, vehicle can be detained but there is no power to seize the vehicle. The power given to detain the vehicle is to facilitate the seizure of the goods and it cannot be termed as the detention for an indefinite period. The reasonable interpretation would mean that once the goods are found in any vehicle and upon inquiry if it is found unsatisfactory, the authority may seize the goods after detaining the vehicle and after the seizure of the goods, the goods may be kept by the authority at any place where it is permissible, but the vehicle is required to be released thereafter. 12. 12. In the present case, not only have the respondent officers, in purported exercise of powers under sub-section (4) of section 68 of the GVAT Act, wrongly seized the truck along with the goods that it was carrying, but despite the fact that sub-section (4) of section 68 of the GVAT Act only permits the officer to detain the truck, till date they have not released the truck in clear violation thereof. The action of the respondent authorities, therefore, is in breach of the provisions of sections 68 and 69 of the GVAT Act. The impugned seizure memorandum dated 31.3.2016, therefore, cannot be sustained. 13. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned seizure memorandum dated 31.3.2016 issued by the Commercial Tax Officer is hereby quashed and set aside and the respondents are directed to forthwith release the truck No. GJ-1-CX-8931 along with the goods contained therein. Rule is made absolute accordingly. 14. Since the petitioner's truck has been detained and the goods have been seized without any authority of law, costs are quantified at Rs. 10,000/- (Rupees ten thousand only).