Frost International Ltd. and Another vs Commissioner of Sales Tax and Others

On January 3, 2008, goods belonging to the writ petitioners were seized by the Sales Tax Officer on the basis that he had reasons to believe that the iron ores, a taxable commodity, were imported in contravention of section 73 of the West Bengal Value Added Tax Act, 2003. Challenging the aforesaid order the writ petitioners approached the Tribunal. The learned Tribunal by its judgment and order dated June 30, 2009, came to the conclusion that a case of violation of section 73 of the West Bengal Value Added Tax Act, 2003 against the petitioners had in fact been made out and therefore the seizure u/s 76 of the aforesaid Act was found legal and valid.

Challenging the aforesaid order of the Tribunal the writ petitioners came up before this court. The writ petition was registered as W.P.T.T. 10 of 2012 which was disposed of by directing the Tribunal to hear out the matter afresh and to consider the documents relied upon by the petitioners by way of a supplementary affidavit before the High Court. Pursuant to the aforesaid order dated 14 May, 2012, the Tribunal has once again applied its mind and arrived at a finding by its judgment and order dated October 3, 2012 (2013) 64 VST 356

That the mandatory provisions as contained in section 73 of the VAT Act as well as in provision contained in rule 100 of the VAT Rules, 2005, not having been followed, the seizure was lawfully effected.

Challenging the aforesaid order once again the dealer has come up before this court.

Mr. Dutt, learned advocate, appearing in support of the writ petition, drew our attention to a judgment of the apex court in the case of Zunaid Enterprises and Others Vs. State of M.P. and Others, , wherein their Lordships took the view that a question of fact arising from out of any transaction has to be determined by the authorities under the Act. What had happened in that case was that the appellants before the Supreme Court were the successful bidders of tendu leaves, etc. Immediately after the bids given by them were accepted, they approached the High Court contending that the goods were not taxable under the VAT Act. The High Court held against them. Challenging the order of the High Court the matter travelled to the Supreme Court and it is in those circumstance that their Lordships expressed the aforesaid opinion.

This judgment does not help the writ petitioners.

Mr. Dutt, submitted that the Tribunal has given a finding as regards the nature of the transaction which, according to him, they had no competence to give and that could only have been given by the assessing officer.

Mr. Majumder, learned advocate, appearing for the respondents, pointed out that the assessing officer shall have no role to play in this case. The goods have been seized on the basis of a prima facie finding that there was violation of section 73 of the West Bengal Value Added Tax Act, 2003. Hereafter the penalty proceedings shall commence and it is in these proceedings that the issue as regards the nature of transaction shall be decided.

Mr. Dutt, reiterated that the question could only be decided by the assessing officer.

We have considered the rival submissions advanced by the learned advocates appearing for the parries. We are of the opinion, that the submission advanced by Mr. Dutt is altogether without any merit. The assessing officer exercises jurisdiction under sections 45 and 46. He has no jurisdiction with respect to a seizure made u/s 76. That proceeding has to culminate in a further penalty proceeding u/s 77. Therefore, it is the officer concerned who shall exercise power u/s 77 of the West Bengal Value Added Tax Act, who shall also be the appropriate authority to take a final decision in the matter as to the nature of the transaction.

It is clarified that the views taken by the Tribunal or opinion expressed by them was merely for the purpose of disposal of the question as to whether the seizure was legal. In order to answer the question they were obliged to examine the matters at least prima facie. In doing so, they may have expressed an opinion but that opinion shall have no binding effect on the officer concerned exercising power u/s 77 of the West Bengal Value Added Tax Act, 2003. He shall decide the matter on the basis of evidence in accordance with law.

This petition is, thus, disposed of. Urgent Xerox certified copy of this order, if applied for, be supplied to the learned advocate appearing for the parties subject to compliance with the requisite formalities.