M/S Calcutta South Transport Co. vs. State Of U.P. And Another

Facts

The petitioner, M/s Calcutta South Transport Co., owns a truck that was hired out for transporting goods. The truck was intercepted in Uttar Pradesh by the Assistant Commissioner (Mobile Squad), Commercial Tax, Agra, who found goods exceeding those covered by invoices. An order of detention was issued on 14.10.2020. As the owner of the goods and the transporter failed to deposit the demanded tax and penalty, proceedings for confiscation of the truck under Section 130 of the CGST/UPGST Act, 2017 were initiated. A notice (GST MOV-10) was issued to the petitioner, but before a hearing could be held, an order of confiscation (GST MOV-11) was passed on 29.11.2020. The petitioner's first appeal was dismissed. Subsequently, this Court, in a previous writ petition (Writ-Tax No.650 of 2021), quashed the confiscation order and the appellate order on 15.11.2021, granting liberty to the respondents to issue a fresh show cause notice. Despite this, the truck remains detained, and no fresh notice has been issued.

Held

The Court held that the continued detention of the petitioner's truck is illegal and unauthorized, as the previous confiscation order dated 29.11.2020 and the appellate order dated 28.06.2021 were quashed by this Court's judgment dated 15.11.2021. The Court noted that despite the liberty granted to issue a fresh show cause notice, the respondents have neither issued one nor released the truck, which has been detained for approximately 18 months without any valid confiscation order. The Court found the detention to be arbitrary and oppressive, causing harassment to the petitioner. Citing Supreme Court judgments, the Court stated that such actions constitute an abuse of power. Regarding compensation, the Court acknowledged the petitioner's claim of Rs. 5,000/- per day loss. As determining this loss is a question of fact, the Court directed the Commissioner of Commercial Tax, U.P., Lucknow, to determine the financial loss within three weeks after hearing the petitioner and to pay it within the following week. The Court ordered the immediate release of the truck and imposed costs of Rs. 5,000/- on the respondents for their arbitrary and illegal action.

Key Issues

1. Whether the continued detention of the petitioner's truck is illegal and arbitrary, given that the previous confiscation order was quashed by this Court and no fresh proceedings have been initiated. 2. Whether the petitioner is entitled to compensation for the financial losses incurred due to the illegal and unauthorized detention of its truck. Petitioner's arguments: The petitioner contended that the detention of the truck is illegal as the confiscation order was quashed by this Court. The respondents have failed to comply with the Court's previous order by not issuing a fresh show cause notice and continuing to detain the vehicle without any valid order. The petitioner argued that they are suffering significant daily financial losses due to this arbitrary detention and are therefore entitled to compensation. They relied on the principle that public functionaries cannot act maliciously or oppressively, leading to harassment. Respondent's arguments: The respondent's counsel produced written instructions indicating that the mobile squad office lacks the facility to issue notices online and has repeatedly requested the higher authorities to provide this facility to comply with the Court's order. They did not dispute the quashing of the previous order or the continued detention.