M/S Ashu Traders Madar Gate vs. Union Of INDIA And 3 Others

Held

The Court held that the writ petitioner was not entitled to any relief under Article 226 of the Constitution of India. The Court found that the facts revealed in the counter-affidavit demonstrated the petitioner's conduct post-seizure, including the non-submission of TRAN-1 and the discovery of undeclared godowns with stock. Proceedings were initiated under Section 67(2) of the UPGST Act, 2017, and Rule 139(1) of the UPGST Rules, 2017. Crucially, the petitioner failed to deposit any tax, penalty, bond, or security as required by Section 67(6) of the UPGST Act, 2017. Furthermore, the petitioner did not appear for scheduled hearings despite notices and summonses being issued. The Court also noted that the rejoinder affidavit filed by the petitioner was evasive and vague. Consequently, the Court found no grounds to exercise its discretionary jurisdiction and dismissed the writ petition.

Facts

The petitioner, M/s Ashu Traders, through its proprietor Girraj Kishore Rathore, filed a writ petition challenging a seizure order dated May 10, 2018, issued by the Deputy Commissioner, Commercial Tax, Aligarh. The petitioner also sought the release of seized goods. The respondent's counter-affidavit stated that confidential information indicated the petitioner was evading tax by not maintaining proper account books and stock registers as per the UPGST Act, 2017. An enquiry revealed discrepancies, including zero opening stock for taxable goods (Agarbati) while having a significant opening stock in VAT, and a mismatch between declared and actual stock. The petitioner allegedly conducted transactions outside account books and from undeclared godowns. Proceedings were initiated under Section 67(2) of the UPGST Act, 2017, and Rule 139(1) of the UPGST Rules, 2017. The petitioner failed to deposit tax, interest, penalty, or furnish security as required under Section 67(6) of the Act, and did not appear for scheduled hearings.

Key Issues

1. Whether the seizure of goods by the respondent authority was justified under Section 67(2) of the UPGST Act, 2017, read with Rule 139(1) of the UPGST Rules, 2017, given the alleged tax evasion and discrepancies in stock and transactions? Petitioner's Arguments: The judgment does not explicitly record arguments made by the petitioner beyond the challenge to the seizure order and prayer for release of goods. Respondent's Arguments: The respondent argued that confidential information, subsequent enquiry, and the petitioner's own return data indicated tax evasion. Specific points raised included the petitioner showing zero opening stock for taxable Agarbaties while having a significant VAT opening stock, a substantial difference between expected stock based on sales data and actual stock found, and the discovery of stock in undeclared godowns without proper documentation. These actions were contended to be violations of the UPGST Act, 2017, justifying the seizure under Section 67(2) and Rule 139(1). The respondent also highlighted the petitioner's failure to comply with Section 67(6) by not depositing tax, penalty, or security, and their non-appearance at hearings.