w w w . L a w y e r S e r v i c e s . i n

Haresh Kumar Laxman Bhai & Co. & Others v/s Commissioner of Trade & Taxes & Another

Company & Directors' Information:- I TRADE LIMITED [Active] CIN = U67120TN1999PLC043813

Company & Directors' Information:- TRADE INDIA LTD [Active] CIN = U51909PB1982PLC004822

Company & Directors' Information:- R P TRADE PRIVATE LIMITED [Active] CIN = U51909AS1999PTC005646

Company & Directors' Information:- A R TRADE IN PRIVATE LIMITED [Active] CIN = U51909AS1999PTC005710

Company & Directors' Information:- S 3 M TRADE PRIVATE LIMITED [Active] CIN = U74900WB2013PTC193812

Company & Directors' Information:- LAXMAN PVT LTD [Strike Off] CIN = U31300RJ1974PTC001554

Company & Directors' Information:- BHAI & BHAI PVT LTD [Active] CIN = U74120WB1963PTC025842

Company & Directors' Information:- C TRADE (INDIA) PRIVATE LIMITED [Active] CIN = U74900KA2008PTC045372

Company & Directors' Information:- I-W TRADE PRIVATE LIMITED [Strike Off] CIN = U93030MH2012PTC233832

Company & Directors' Information:- U M TRADE PRIVATE LIMITED [Active] CIN = U67190MH2011PTC224523

    W.P.(C). No. 9308 of 2018 & CM. No. 40819 of 2018

    Decided On, 03 July 2019

    At, High Court of Delhi


    For the Petitioners: Virag Tiwari, K.J. Bhai, Ramesh Johri, Ramashish, Advocates. For the Respondents: Gautam Narayan, CGSC, Shivani Vig, Dacchita Shalu, Advocates.

Judgment Text

Dr. S. Muralidhar, J.

1. This petition has been filed at the instance of 7 Petitioners seeking release of the goods that were seized by the Respondents i.e. the Commissioner of Trade and Taxes (‘CTT’) (Respondent No.1) in the Department of Tarde and Taxes (DT&T), Government of the NCT of Delhi, and the Deputy Commissioner of Police (Respondent No.2) on 1st Mach, 2014.

2. In the earlier round of litigation, this Court had passed a detailed judgment in W.P.(C) No.3799/2014 (Hari Rai and Ors. v. Commissioner of Trade & Taxes) on 12th February, 2016. For the purposes of the present petition, the factual background, as noticed in the above order, requires to be noted. The relevant portion of the said order reads as under:

“1. This writ petition has been filed by nine Petitioners in rather unusual circumstances. Of the nine Petitioners, the first two are thelawalas (cart pullers) and the other seven have described themselves as 'Angadias,’ i.e., persons engaged in the business of arranging transportation of goods through road and rail.

2. The subject matter of the writ petition concerns the seizure by the Respondent, Commissioner of Trade and Taxes (CTT) in the Department of Trade and Taxes (DT&T) of 24 cartons containing gold and silver jewellery as well as cash worth nearly Rs. 4 crores found loaded on two thelas (goods carts) at around 10.30 am on 1st March 2014 from the railway parcel van of the Ahmedabad Express which arrived at the Old Delhi Railway Station. According to the Petitioners, the said 24 cartons were meant for delivery to the seven Angadias (Petitioners 3 to 9) having been despatched by some parties in Gujarat.

3. The 24 cartons found loaded on the two thelas of Petitioners 1 and 2, were seized by the Respondent, by issuing two Goods Detention Orders (‘GDOs’) dated 1st March 2014. The grievance of the Petitioner is that the GDOs do not disclose the number of cartons seized. Further, according to them, the seizure also did not take place in accordance with the law and the procedure envisaged under the Delhi Value Added Tax Act, 2004 (DVAT Act). According to the Petitioners, after their seizure on 1st March 2014, the 24 cartoons were loaded on a tempo and taken to the Power House, Ring Road godown of the Respondent. It is stated that the Petitioners 3 to 9 then approached the DT&T but were not permitted to even have a look at the goods. It is stated that the goods were next moved to Vyapar Bhawan, Indraprastha Estate. An inventory was stated to have prepared of the goods on 11th March 2014, during which the Petitioners were not asked to participate. It is stated that on 18th April 2014 one M/s Shaswat Jewels (P) Ltd. whose goods were purportedly carried by Bharat Kumar Praveen Kumar & Co., i.e., Petitioner No.9, made a request for release of the goods by furnishing the relevant documents like registration certificate of the dealers in Gujarat who had dispatched the goods and the dealer in Dealer in Delhi who was to receive such goods. But this was not responded to.

4. It appears that on 9th/10th May 2014, some of the seized goods kept at 13th floor of the Vyapar Bhawan in the custody of the Respondent was stolen. This led to registration of FIR No. 183 of 2014 under Sections 454 and 380 of the Indian Penal Code (‘IPC’) at Indraprastha Estate Police Station.

5. On 16th May 2014, the seven Angadias along with one ‘Nippon Gold’ made a joint representation to the Joint Commissioner, Department of Trade and Taxes to release the goods to them and also compensate them for the goods that were stolen. It is stated that with this letter the booking receipts, inventory of goods with items and value thereof and copies of the bills were enclosed. This was followed by a letter sent on their behalf by their counsel to the Joint Commissioner on 20th May 2014, requesting for inspection of the file and to be provided with copies of the inventory prepared on the first stage on 1st March 2014 and on the second stage on 11th March 2014. The Petitioners also sought copies of the statements recorded of the persons by the DT&T during or after the seizure and statements given to the police while lodging the aforementioned FIR including the copy thereof. A request was also made by the Petitioners to take stock of the inventory lying with the DT&T to satisfy themselves that those goods were seized on 1st March 2014.

6. An order dated 20th May 2014, passed by the Assistant Commissioner, Enforcement-II Branch of the DT&T, declining the application dated 16th May 2014 by the Petitioners for release of the goods and to compensate the Petitioners as regards the stolen goods. Thereafter the present petition was filed praying that the Court should summon the entire record relating to the seizure, quash the GDOs dated 1st March 2014 and the order dated 20th May 2014 declining the Petitioners' application for release of the goods.”

3. Pursuant to the pleadings filed in the above writ petition, and after perusing the status reports filed, this Court came to the following conclusions in its judgment dated 12th February, 2016:

(i) The Petitioners in the said writ petition had failed to produce the documents to prove their ownership of the goods that had been seized.

(ii) There was no averment in the writ petition to the effect that at the relevant time i.e. 1st March, 2014 the Angadias had the complete documents to show the ownership of the goods.

(iii) The method of bringing in jewellery and cash by road and rail had been deployed regularly for quite some time, obviously with the help of some officials of the DT&T and even the police. It remained either undetected or was allowed to continue. The provisions of the Delhi Value Added Tax Act (‘DVAT Act’) were being flouted with impunity.

(iv) There was no infrastructure with the DT&T to deal with the contingency where goods valued at around Rs. 4 crores were required to be detained and kept in the custody of the DT&T. As far as the goods seized were concerned, some portion of the same had already been stolen leading to the registration of a criminal case.

(v) In the absence of the proper documentation in respect of the seized goods, being produced to the satisfaction of the DT&T, the order dated 20th May, 2014 passed by the Assistant Commissioner could not be faulted and did not call for interference.

4. The Court in its judgment dated 12th February, 2016 then noted that it was necessary for the DT&T “to unearth the complete facts as to how the goods were despatched in the first place and from whom in Gujarat and what is the precise modus operandi adopted in despatching such valuable goods through railway vans and then through some thelawalas in Delhi”. A further question was as to how and why cash along with valuable jewellery was being despatched in such a manner from one State to another? This Court directed the DT&T to seek the assistance of and coordinate with the Reserve Bank of India (‘RBI’) “to put in place regulatory and corrective measures to check the adoption of such modus operandi of transporting huge amounts of cash from one State to the other”.

5. A series of directions was issued by the Court in paras 29, 30 and 31 of the above judgment which read as under:

“29. All that the Court can order at this stage is to direct the DT&T to examine the claim of the Petitioners for release of the goods and communicate to them a decision in that regard in accordance with law within eight weeks from their producing the complete documentation to the satisfaction of the DT&T. If the Petitioners are aggrieved by such decision it would be open to them to avail of appropriate remedies in accordance with law. Likewise, in regard to the stolen goods, the Petitioners are free to pursue the remedies available to them in accordance with law.

30. The documents placed in sealed covers, to the extent they concern the criminal investigation, shall be handed over by the Registry to Mr. Surender Dalal, Inspector, Crime Branch, Rohini, who is present in the Court, after obtaining appropriate acknowledgment. The other documents in sealed covers pertaining to the DT&T shall be handed over to any senior officer of the DT&T on his producing the necessary authorisation and the Registry will obtain an acknowledgment from the said officer.

31. The Crime Branch will pursue the investigation of aforementioned FIR to its logical end as expeditiously as feasible.”

6. From the short affidavit filed by the Special Commissioner, DT&T in the present petition on 28th September 2018, it appears that pursuant to the above order, the Petitioners on 31st March 2016 submitted their representations through their advocate to the DT&T enclosing the following documents:

“i. List of goods carried by each angadia;

ii. Invoices containing names of senders/receivers;

iii. Description, value and quantities of goods dispatched by senders to respective parties in Delhi; and

iv. Booking receipts.”

7. The said documents were examined by the DT&T. Keeping in view the value of the goods, it was decided to constitute a committee of senior officers of the DT&T to examine and verify the claims of the Petitioners. This was done by the CTT pursuant to the powers under Section 67 and Section 79 (1) (d) and (i) of the DVAT Act. It is stated that in order to ascertain the identity of the owners of the goods, teams were constituted to verify the particulars in respect of the following three consignees /dealers in Delhi:

i. Kashvijeel Pvt Ltd, 153 Aggarwal Cyber Plaza, Netaji Subhash Place, Pitampura. ii. Malhotra Jewellers, 1227, Darya ganj, Delhi.

iii. Radhey Shyam Jewellers, Sadar Bazar, Delhi.

8. According to the DT&T, the verification report revealed that no purchases were made by any of the above dealers from any of the dealers/consigners in Gujarat. Therefore, it was concluded that the identities/details of the consigners and consignees, as provided by the Petitioners, were false. It was then decided to invite the Petitioners for a personal hearing on 17th October, 2016. However, the Petitioners declined to participate in the hearing as they questioned the very constitution of the Committee.

9. This Court has been shown the files of the DT&T which contain the letters written by the Petitioners through their counsel raising objections to the constitution of the Committee and on that basis declining to participate in the proceedings of the Committee. Thereafter, proceedings were fixed for 11th November 2016 on which date neither the Petitioners nor their counsel appeared.

10. The above stand of the Petitioners resulted in a stalemate with the Committee not being able to proceed with its deliberations. With members of the Committee either retiring or being transferred, the Committee had to be re-constituted time and again.

11. It is in the above circumstances that the present petition was filed by the present Petitioners (who were Petitioner Nos. 3 to 9 in the earlier petition) seeking the following reliefs:

“a) summon the entire case records relating to seizure made on 1.3.2014 and the proceedings till date including the statements/inventories prepared by the Respondent No.1 from time to time;

b) direct the Respondent No. 2 to produce their case records and inform this Hon'ble Court as to the status of the criminal investigation against FIR No. 183/2014;

c) quash the Goods Detention Orders dated 1.3 .20 14;

d) direct Respondent No.1 to release the goods to the Petitioners in the wake of the documents already placed on record with them as the period of one year provided within Sec. 34(2) has lapsed long ago;

e) direct Respondent No.1 to compensate the Petitioners in money terms as regards goods which stand stolen;

t) issue a Writ of Mandamus or any other Writ, order or direction;

g) issue a Writ of Certiorari, or any other Writ, order or direction;

h) pass any other order or orders, direction or directions as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.”

12. Even today, the principal objection of the Petitioners is to the constitution of the Committee by the CTT pursuant to the order passed by this Court on 12th February, 2016 in W.P.(C) No.3799/2014. The Petitioners have further filed CM No.40819/2018 specifically seeking the setting aside of an order dated 13th August, 2018 constituting the Committee, since according to them, this is without jurisdiction and without the authority of law. It is further added that under Section 34 (2) of the DVAT Act, more than one year has elapsed since the seizure of the goods and therefore the Commissioner could not make any assessment of tax qua the said goods.

13. The Court finds that the Petitioners are proceeding on a misconception as regards the order passed by this Court on 12th February, 2016 in W.P.(C) No.3799/2014. It will be recalled that the prayers in the said writ petition were more or less similar to the prayers in the present writ petition viz., that the seized goods must be released and that too in favour of the Petitioners. This Court in its judgment dated 12th February 2016 negated the said prayers and granted a limited direction permitting the Petitioners to produce whatever documents they had in their possession before the DT&T for verification and to ascertain if the claims of the Petitioners as regards ownership of the goods were substantiated.

14. The Committee constituted by the CTT was only in aid of the above directions issued by this Court in the judgment dated 12th February, 2016. This was in the nature of a fact-finding exercise only to verify if the claims made by the Petitioners as regards the ownership of the goods in question were sustainable in law. The purpose of this Committee was not to make any assessment as claimed by the Petitioners. Therefore, the reference made by the Petitioners to Section 34 (2) of the DVAT Act in the above context is wholly misconceived.

15. Clearly, the goods cannot be released to the Petitioners unless they prove ownership of such goods. The directions issued by this Court in the judgment dated 12th February 2016 are clear. The DT&T was required to get to the bottom of the entire case and unearth the complete facts not only regarding the goods that were seized on 1st March 2014, but also with regard to the modus operandi deployed not only by the Petitioners but also in other similar instances. The Court had noted that this could not have and in fact was not a solitary instance where valuable goods in the form of gold and silver jewellery and even cash were being transported from one State to the other through road and rail without any proper checks either by the DT&T or the Police.

16. The Court expresses its displeasure of the manner in which the DT&T has failed, even 3 years after the passing of the previous judgment by the Court, to conclude the proceedings and to unearth the complete facts regarding the modus operandi deployed in transporting valuable goods and cash from one State to the other under the nose of the tax authorities and the police. Valuable time has needlessly been lost only because the Petitioners declined to participate in the proceedings before the Committee. There was no stay of the proceedings of the Committee at any stage. Irrespective of the deliberate failure of the Petitioners to participate in the verification exercise, it was incumbent upon the Committee constituted by the CTT to have concluded its proceedings and determined whether the documents submitted by the Petitioners were genuine and whether the documents proved their ownership of the seized goods. This exercise could not have gone on endlessly and that too for over three years.

17. As far as the Petitioners’ objections to the constitution of the Committee by the CTT is concerned, as already noticed hereinbefore, there was no legal basis for the Petitioners to question the constitutio

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n of such a committee. The Petitioners not having challenged the judgment dated 12th February 2016 passed by this Court negating their pleas, could not have turned around to question the constitution of the committee. Having submitted the documents in their possession to the DT&T pursuant to the orders of this Court, the Petitioner ought to have cooperated with the DT&T and enabled it to complete the exercise of verifying those documents and giving a finding thereon. They instead raised needless objections thereby frustrating the work of the Committee constituted by the CTT. 18. The Court accordingly hereby negatives the objections raised by the Petitioners to the constitution of the Committee by the DT&T and directs the Committee to now conclude its proceedings by preparing and releasing its report on the documents submitted by the Petitioners not later than 31st July 2019. The copy of the said report will be made available to the Petitioners. If the Petitioners are aggrieved by such report, it will be open to the Petitioners to seek appropriate remedies as may be available to the Petitioners in accordance with law. 19. As far as the other directions issued by this Court in its judgment dated 12th February 2016 are concerned, the Court would impress upon the DT&T the need to complete the exercise expeditiously and prepare and place before the Court a separate compliance report on those aspects in a sealed cover not later than 31st October 2019. For the limited purpose of compliance with this direction, the matter be placed by the Registry before this Court on 13th November 2019. 20. The writ petition and application are disposed of in the above terms. No costs. CM 35981/2018 (exemption) 21. Allowed, subject to all just exceptions.