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March 21, 2022

HC upheld order imposing conditions on release of seized goods & vehicle

by CA Shivam Jaiswal in Income Tax

HC upheld order imposing conditions on release of seized goods & vehicle

Fact and Issue of the case

Facts of the case are that the goods were detained ever since March, 2021 and the vehicle also has deteriorated on account of exposure to the fury of weather.

The learned Single Bench on taking note of the fact that there is no forum available for the respondent  to challenge the order passed by the Appellate Authority, entertained the writ petition and imposed a condition on the respondent for release of the vehicle and the goods. The learned Single Bench had directed 20% of the disputed tax amount to be paid by the respondent so as to be entitled to release of the goods and the vehicle taking note of the fact that at time of filing of the appeal before the Appellate Authority, the first respondent, the consignee in the State of Assam, who claims ownership of the goods had deposited 10% of the disputed tax.

The revenue is aggrieved by such order on the ground that if the vehicle and the goods are released, the interest of the revenue will not be protected and such an order could not have been passed, more particularly in the light of the condition stipulated.

Observation of the court

We have heard Mr. Debasish Ghosh, learned counsel appearing for the appellant and Ms. Rita Mukherjee, learned counsel appearing for the respondent  It is not disputed by the revenue that as on date there is no Appellate Tribunal available for the respondent to challenge the order passed by the Appellate Authority dated 15th September, 2021. Therefore, the writ petition was rightly entertained by the learned Single Bench. With regard to the direction issued by the writ Court for release of the goods and the vehicle, it is an order in exercise of discretion by the learned writ Court. Unless and until the exercise of discretion is absolutely unreasonable and arbitrary, as an Appellate Court, seldom such directions are interfered with. In the instant case, the first respondent does not admit any tax liability as their case is that the goods were consigned from the State of Uttar Pradesh to be delivered in the State of Assam and the consignee is the first respondent herein and the second respondent is the transporter.

The further case of the respondents / writ petitioners is that the driver of the vehicle, who also hails from the State of Uttar Pradesh had mistakenly taken a different route and travelled about 21 kilometers into the State of West Bengal and there was no intention on the part of the respondent to deliver the goods within the State of West Bengal.

It is the further case of the first respondent that he is the consignee and the owner of the goods has shown his bona fide by appearing before the tax authorities and claiming ownership of the goods and praying for release of the goods and the vehicle to be taken to the State of Assam. By efflux of time, the goods are no longer safe for consumption and the vehicle has also undergone deterioration on account of the same being detained for nearly a year. Thus, we find that the exercise of discretion is neither improper or irrational for us to interfere.  The interest of revenue stands sufficiently safeguarded as 30% of the disputed tax has been collected by the department. This Court expressed a concern that the product being pan masala and vehicle along with the goods having been detained for almost a year, the same would be unfit for consumption. This factual position is admitted by the first respondent.

The Court also expressed a concern that the first respondent, the consignee / owner of the goods, if is allowed to take the goods to the State of Assam, there may be a likelihood that the goods may be sold in the open market, which would be harmful. Taking note of the concern expressed by the Court, the learned counsel appearing for the respondent , on instruction, submitted that the first respondent may be permitted to send back the goods to the consignor in the State of Uttar Pradesh. If such permission is granted, it would ensure that the goods are not sold in the State of Assam and at the same time, would go back to the consignor in the State of Uttar Pradesh.

So far as the merits of the matter is concerned, it will be well open to the parties to agitate the same before the learned Single Bench, before which the appellant has to file affidavit-in-opposition, which has not been filed till date.

In order to safeguard the interest of revenue as well as to ensure that the respondent  cooperate in the proceedings, we are of the view that the balance amount of the disputed tax should be secured by the respondent  by executing a bond in the form as approved by the appellant.

Conclusion

In the result, we find no grounds to interfere with the order passed by the learned Single Bench exercising discretion, imposing conditions for the purpose of release of the impugned goods and the vehicle.

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