Patna High Court
The State Of Bihar vs M/S Ankur Career on 2 April, 2025
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad
IN THE HIGH COURT OF JUDICATURE AT PATNA
Miscellaneous Appeal No.678 of 2023
======================================================
The State of Bihar through the Deputy Commissioner of State Taxes, Central
Investigation Bureau, Government of Bihar through Anju Kumari, D/o
Krishna Dev, R/o Near Royal Colony, Gaya, Gaya- 823002.
... ... Appellant
Versus
M/s Ankur Career, 107, First Floor, Suryaprabha Mention Exhibition Road,
P.S.Gandhi Maidan, Patna through its Proprietor Sri Ram Ujagar Yadav, Son
of Sri Ramdeo Yadav R/o 203A, Hari Om Apartment, Exhibition Road, Near
Narmada Apartment, GPO, Patna-800001.
... ... Respondent
======================================================
Appearance :
For the Appellant/s : Mr.Vivek Prasad (GP 7 )
: Ms. Supriya, Advocate
For the Respondent/s : Mr. Gautam Kumar Kejriwal, Advocate
: Mr. Mukund Kuamr, Advocate
: Mr. Akash Kumar, Advocate
: Mr. Aditya Raman, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE SOURENDRA PANDEY
ORAL JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 02-04-2025
I.A. 1 of 2023
This is an Interlocutory Application seeking condonation
of delay of 397 days in filing of the present appeal.
2. We find from the records that the office had pointed
out one of the defects that learned counsel for the appellant should
disclose the date of receipt of the copy of the order dated
07.06.2022 and thereafter, the period of limitation would be
calculated.
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3. Since the matter has been listed under heading 'For
Admission' today, we heard the whole matter on merit, thereafter it
has been pointed out that an order on the application seeking
condonation of delay is required to be passed. We have been
informed that there is a delay of 397 days in filing of the present
appeal.
4. Learned counsel for the sole respondent does not
oppose the prayer for condonation of delay.
5. We, therefore, condone the delay.
6. Accordingly, I.A. No. 1 of 2023 stands allowed.
MA No. 678 of 2023
7. Heard Mr. Vivek Prasad, learned GP- 7 for the
appellant and Mr. Gautam Kejriwal, learned counsel for the
respondent.
8. This Miscellaneous Appeal has been preferred under
Section 79 of the Bihar Value Added Tax Act, 2005 (hereinafter
called 'the Bihar VAT Act' or 'Act of 2005') since repealed. The
State of Bihar is aggrieved and dissatisfied with the order dated
07.06.2022
(hereinafter referred to as the ‘impugned order’)
passed by the Commercial Taxes Tribunal Bihar, Patna (in short
‘The Tribunal’) in the Appeal Case No. PT- 99/2017. By the
impugned order, the Tribunal has been pleased to set aside the
Patna High Court MA No.678 of 2023 dt.02-04-2025
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penalty order dated 05.09.2014 and the order dated 27.02.2017
passed by the Joint Commissioner (Appeal), Patna.
Brief Facts of the Case
9. From the narration of facts present on the records, it
appears that on 30.08.2014 at about 11 P.M., a team of Sales Tax
Officers inspected and verified the truck bearing Registration No.
BR-01GC-8831 at Buxar. The Sales Tax Officers were of the view
that in the said truck, the goods were being transported in violation
of Section 61(1) of the Act of 2005, therefore, show cause notice
was issued to the transporter and finally a penalty of Rs.
2,01,170.00/- under section 61(3) read with section 56(4) (b) of the
Act of 2005 were imposed.
10. The sole respondent herein paid the said amount of
penalty and got the release of goods but at the same time being
aggrieved by the order imposing penalty and the demand notice,
he raised his grievances before the Joint Commissioner of
Commercial Tax (Patna Division) giving rise to Appeal Case No.
S.T./I.B.(C)-04/14-15 for the relevant period 2012-13.
11. A number of pleas were raised before the Joint
Commissioner of Commercial Tax (Patna Division) but were
rejected. The order passed by the Joint Commissioner of
Commercial Tax (Patna Division) was challenged before the
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learned Tribunal where a plea was taken on behalf of the sole
respondent that the inspection, verification and seizures itself
appear to be illegal and unauthorized as no letter of authorization
had been issued as mandatorily required in terms of Section 56(2)
(b) of the Bihar VAT Act read with Rules 35(4) and (5) of the
Bihar Value Added Tax Rules, 2005 (hereinafter referred to as the
‘Rules of 2005’) framed thereunder. It was contended that on
account of this legal infirmity, the initiation of penalty proceeding
and imposition of penalty would be illegal as the same was passed
without jurisdiction.
12. The learned Tribunal has discussed the relevant
provisions of the Bihar VAT Act. It has ultimately concluded that
there is a mandatory provision of law to get authorisation from the
Competent Authority before conducting inspection or in case,
where it is in the interest of revenue, the Officer may, for reasons
would be recorded in writing, proceed to inspect all the places of
business of the dealers, transporting goods or the owner of
warehouse or godown without obtaining such authorization which
may be granted subsequently. In paragraph ’13’ of its order, the
Tribunal observed as under:-
“13. In the impugned case no authorization letter is
available on the record of the lower court and in
spite of many opportunities the learned counsel for
the Government has not produced any evidence
regarding authorisation of inspections as provided
Patna High Court MA No.678 of 2023 dt.02-04-2025
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in Section 56(2) of the Bihar Value Added Tax Act,
2005. In the absence of such authorization the
inspection, search and seizure are illegal, without
jurisdiction and void ab initio.”
Submissions on behalf of the State
13. While assailing the impugned order of the learned
State Tribunal within the scope of Section 79 of the Bihar VAT
Act, Mr. Vivek Prasad, learned GP-7 has submitted that this appeal
involves a substantial question of law as to whether an
authorization letter in terms of Sub-Rule (5) of Rule 35 of the
Rules of 2005 would be mandatorily required for purpose of
conducting search of any goods carrier as envisaged under Sub-
Section (2) of Section 61 of the Bihar VAT Act? It is his
submission that the case in hand would be governed by Section 61
and Section 56(2)(b) of the Bihar VAT Act read with Rules 35(4)
and (5) of the Rules of 2005.
14. Learned counsel submits that in this case a post
facto approval was taken on 3rd of September, 2014 which is
available in the official file. Referring to the notings in the file,
copy of which has been enclosed as part of Annexure ‘1’ to the
memo of appeal, Mr. Vivek Prasad, learned GP-7 submits that a
proposal was mooted on 03.09.2014 for authorizing Sri K.K.
Sinha, Deputy Commissioner Commercial Taxes, Patna, Sri A.K.
Pandey, Additional Commissioner Commercial Taxes, Patna of the
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Central Investigation Bureau and Sri A.K Upadhayay,
Commissioner Tax Officer of the Central Investigation Bureau.
This proposal was placed before the Joint Commissioner of
Commercial Taxes (Patna Division) as the Joint Commissioner
was the duly authorized Officer in terms of Sub-Rule (4) of Rule
35 of the Rules of 2005 who may further delegate the power of
inspection, search and seizure, to any officer not below the rank of
a Deputy Commissioner. In this case, the Joint Commissioner
agreed with the proposal and recommended the file to the
Additional Commissioner Commercial Taxes, Patna of the Central
Investigation Bureau for approval. On the same day, the Additional
Commissioner approved the proposal in the file. Learned GP-7
submits that once the approval was obtained in the file, though
post facto on 13.09.2014, the mandate of law in this regard has
been duly complied with. Thereafter, there would be no need to
issue a letter of authorization.
Submissions on behalf of Respondent
15. On the other hand, Mr. Gautam Kejriwal, learned
counsel for the sole respondent submits that from bare reading of
Sub-Section (3) of Section 61 of the Bihar Value Added Tax Act,
2005, it would appear that the provisions of Section 56 has to be
applied mutatis mutandis in the matters relating to seizure, penalty,
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security, release and confiscation of goods. Learned counsel
submits that Section 61 deals with the restriction on movement of
goods. Under sub-Section (2) of Section 61 any authority or officer
who may be authorized by the State Government in this behalf
may, for the purpose of verifying whether any goods are being
transported in contravention of the provisions of Sub-Section (1)
intercept, detain and search any goods carrier, vehicles or vessels
and may also search the warehouse or godown or any other such
place of transit storage, where goods are kept in course of
transportation and if the said authority is satisfied on such
verification and search that transportation of goods is being made
in contravention of the provision of Sub-Section (1), he may seize
any such goods together with any container or material for the
packing of such goods. It is submitted that proviso to Sub-Section
(2) of Section 61 describes the procedures which are required to be
followed at the time of seizure of goods. According to him, what is
important to take note of under Sub-Section (2) of Section 61 is
that it talks of any authority or officer who may be authorized by
the State Government. This provision has to be read keeping in
view the provision of Section 56.
16. Learned counsel further submits that Section 56 (2)
(b) clearly talks of “the prescribed authority” who has to proceed
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to inspect all the places of business of dealer or the forwarding
agent or the person engaged in the business in transporting goods
after making inquiries. It is submitted that the proviso to clause (b)
of Sub-Section (2) of Section 56 of the Bihar VAT Act provides
that if the prescribed authority is satisfied that delay in obtaining
such authorization may be pre-judicial to the interest of revenue,
he may, for reasons to be recorded in writing, proceed to inspect
all the places business of the dealer or the clearing or forwarding
agents or the persons engaged in the business of transporting
goods or the owner of warehouse or godown without obtaining
such authorization which may be granted subsequently. It is
submitted that in terms of proviso to clause of (b) of Sub-Section
(2) of Section 56, no doubt a post facto authorization may also be
obtained but the requirement of Sub-Rule (5) of Rule 35 of the
Rules of 2005 is mandatory and it has to be followed by issuing an
authorization letter. It is his submission that since the learned
Tribunal was satisfied that on record there is no authorization
letter, it has rightly been concluded that in absence of the
authorization letter, the initiation of the proceeding was bad in law.
For this reason, the entire exercise of inspection, search and
seizure are liable to be held illegal. It is submitted that the law
being settled that if the statute provides for a particular thing to be
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done in a particular manner that thing must be done in that manner
or not at all. This being the position of law, according to him no
substantial question of law arises in the present appeal, hence, the
appeal is liable to be dismissed.
Consideration
17. We have heard learned counsel for both the parties
and perused the records. In order to appreciate the contentions of
the parties, it would be appropriate to take note of Sections 56 and
61 of the Bihar VAT Act as under:-
“56. Production of books of account, inspection,
search and seizure. – (1) Subject to such rules as may be
made by the State Government under this Act, any
authority appointed under sub – section (1) of section 10
may, either before or after assessment, require any dealer
to produce before it or him any accounts, registers or
documents or to furnish any information relating to the
details of his purchases and sales and the stock of goods
produced, raised, processed, manufactured, bought, sold
or delivered by such dealer, and the dealer shall comply
with such requirement.
(2) If reasonable grounds exist to suspect that –
(a) a dealer, with an intention to reduce his tax
liability under the Act, has suppressed any financial
transaction, element of value addition implicit in the
transaction or the stock of goods produced, raised,
processed, manufactured, bought, sold or delivered
by such dealer or has claimed input tax credit in
excess of his entitlement; or
(b) any clearing or forwarding agent or a person
engaged in the business of transporting goods or
owner of a warehouse or a godown is keeping or
has kept his accounts in such a manner as is likely
to cause evasion of tax payable under this Act, the
prescribed authority shall, after making such further
inquires as may be deemed fit and after obtaining
such authorisation in the manner prescribed,
Patna High Court MA No.678 of 2023 dt.02-04-2025
10/16proceed to inspect all the places of business of the
dealer or the clearing or forwarding agent or the
person engaged in the business of transporting
goods or the owner of warehouse or godown :
Provided that if the prescribed authority is satisfied that
delay in obtaining such authorisation may be prejudicial
to the interest of revenue, he may, for reasons to be
recorded in writing, proceed to inspect all the places of
business of the dealer or the clearing or forwarding agent
or the person engaged in the business of transporting
goods or the owner of warehouse or godown without
obtaining such authorisation which may be granted
subsequently.
(3) The prescribed authority shall have the powers to
enter into and search the premises, including the place of
business, of such dealer or the person and, for reasons to
be recorded in writing, seize such accounts, registers or
documents of the dealer or the person as may be
necessary, in the manner prescribed, and shall retain the
same for so long as may be necessary in connection with
any proceeding under this Act or for a prosecution under
any law :
Provided that if the dealer or person whose accounts,
registers or documents have been seized, applies for a
copy of the same, he shall be supplied with a photo –
copy of the same on payment of appropriate cost into a
Government Treasury or a bank authorised in this behalf
by the State Government :
Provided further that such authority or inspector may
take or cause to be taken such copies of or extracts from,
the accounts, registers or documents, as such authority or
inspector may consider necessary.
(4) (a) Any authority referred to in sub – sections (1) and
(2) shall have the powers to seize any goods not properly
accounted for in the books, accounts, registers and other
documents of the dealer or the dalal as defined in clause
(a) of the Explanation to Section 59, or the owner of the
warehouse, or the clearing, booking or forwarding agent,
or the person engaged in the business of transporting
goods in the manner prescribed.
(b) The authority referred to in clause (a) shall, in a case
where the dealer or the person in – charge of goods as
mentioned in clause (a) fails to produce any evidence or
fails to satisfy the said authority regarding the proper
accounting of goods, impose a penalty, after allowing an
Patna High Court MA No.678 of 2023 dt.02-04-2025
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dealer or such person, which shall be equal to three times
the amount of tax calculated on the value of such goods
and the goods shall be released as soon as the penalty is
paid.
(c) If the dealer or the person in-charge of the goods
mentioned in clause (a) requests for time for production
of necessary documents in support of proper accounting,
the authority referred to in clause (a) shall release the
goods on the condition that the dealer or such person
deposits a security equivalent to three times the amount
of tax calculated on the value of the goods, either in the
form of cash, to be deposited in the Government
Treasury, or in the form of bank guarantee acceptable to
the authority.
(d) If the goods seized under clause (a) are not claimed
by any person, the authority referred to in the said clause
shall arrange for the safe custody of goods.
(e) In case the penalty imposed under clause (b) is not
paid or the goods remain unclaimed for a period of thirty
days or more from the date of seizure, the goods so
seized shall be sold by auction in the prescribed manner
and the sale proceeds shall be appropriated towards the
amount of penalty imposed under clause (b); and the
balance of the sale-proceeds, if any, shall be deposited in
the Government Treasury and shall be refunded to the
lawful claimant in the prescribed manner :
Provided that in the case of goods of a perishable nature,
the prescribed authority may decide to sell the goods by
auction before a period of thirty days.
(f) In case where the goods have been released on the
deposit of a security as mentioned in clause (c) and
evidence regarding proper accounting of goods, to the
satisfaction of the authority referred to in clause (a), is
not produced within thirty days from the date on which
the security is deposited, the amount of security shall
stand forfeited to the State Government :
Provided that in case evidence or document to the
satisfaction of the authority mentioned in clause (a)
regarding the proper accounting of goods is produced
within the said period of thirty days, the security shall be
released in the prescribed manner.
(5) (a) The power conferred under sub-sections (3) and
(4) shall include the power to break open the lock of any
box or receptacle or door of any other place or premises
Patna High Court MA No.678 of 2023 dt.02-04-2025
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goods may be kept or are reasonably suspected to be
kept.
(b) The powers conferred under sub-sections (3) and (4)
shall also include the power to seal any box or receptacle,
godown or building where any accounts, registers or
other documents or goods may be kept or are reasonably
suspected to be kept.
(6) An authority appointed under Section 10 may require
the assistance of any person, public servant or police
officer in making a search and a seizure or for safe
custody of goods seized under this Section, and such
person, public servant or police officer shall render
necessary, assistance in the matter.
(7) Where any books of account, other documents,
money or goods are found in the possession or control of
any person in the course of any search under sub-section
(2) or sub-section (3), it shall be presumed, unless it is
proved to the contrary, that such books of account,
documents, money or goods belong to such person.
(8) The provisions of the Code of Criminal Procedure,
1973 (2 of 1974), relating to searches and seizure shall
apply, so far as may be, to searches and seizure under this
Section.
61. Restriction on movement of goods. – (1) A person
transporting goods –
(a) from any place outside the State of Bihar to any place
inside the State of Bihar, or
(b) from any place inside the State of Bihar to any place
outside the State of Bihar, or
(c) from any place within the State of Bihar to any other
such place, shall carry a declaration in such form as may
be prescribed supported by a cash memo, retail invoice,
bill or tax invoice, as the case may be, in case the
movement is as a result of sale or a challan in case the
movement is otherwise than as a result of sale, in respect
of goods which are being transported on a goods carrier,
vehicle or a vessel or is otherwise in transit or in transit
storage and shall produce such cash memo or bill or tax
invoice or challan, as the case may be, along with the
aforesaid form of declaration on demand before the
prescribed authority:
Provided that the Commissioner may exempt, by
notification in the Official Gazette, consignments below a
particular value or quantity from the requirement of this
Patna High Court MA No.678 of 2023 dt.02-04-2025
13/16sub-section in so far as it relates to carrying of a
declaration.
(2) Any authority or officer who may be authorised by
the State Government in this behalf may, for the purpose
of verifying whether any goods are being transported in
contravention of the provisions of sub-section (1)
intercept, detain and search any goods carrier, vehicle or
vessel and may also search the warehouse or godown or
any other such place of transit storage, where goods are
kept in course of transportation and if the said authority
is satisfied on such verification and search that
transportation of goods is being made in contravention of
the provision of sub-section (1), he may seize any such
goods together with any container or material for the
packing of such goods:
Provided that a list of all the goods seized under this sub-
section shall be prepared by such officer and be signed by
the officer, the dealer or the person in-charge of goods
and not less than two witnesses and a copy of the seizure
list shall be made over to the dealer or the person in
charge of the goods, as the case may be.
(3) The provisions of Section 56 shall, mutatis mutandis,
apply in matters relating to such seizure, penalty,
security, release and confiscation of goods.
Further, Rule 35 of the Rules of 2005, which prescribes the
manner in which the authorization is to be issued, is being quoted
hereunder for a ready reference:-
“35. Inspection, Search and Seizure. – (1) When any
accounts, registers or documents are inspected or
examined by any authority or Inspector appointed under
Section 10, or any officer empowered under Section 86,
such officer, authority or inspector shall affix his
signature and official seal at one or more places thereon.
(2) Where any authority or an Inspector appointed under
Section 10 or any officer empowered under Section 86,
conducts a search under sub-section (3) of Section 56 or,
as the case may be, a seizure of goods under sub-section
(4) of Section 56, he shall, so far as applicable, follow
the procedure prescribed in the Code of Criminal
Procedure, 1973 (Act 2 of 1974):
Patna High Court MA No.678 of 2023 dt.02-04-2025
14/16Provided that a list of all the goods seized shall be
prepared by the authority specified in sub- rule (1) and
be signed by the said authority, the dealer or the person
in charge of the goods or the person incharge of the
premises, and not less than two witnesses.
(3) When any accounts, registers or documents of a
dealer seized by any authority appointed under Section
10 or any officer empowered under Section 86, have to
be returned to the dealer, such return may be made after
taking such extracts therefrom as may be considered
necessary. The authority making the return shall affix its
signature and official seal on such accounts, registers or
documents and the dealer shall give a receipt, in
acknowledgment, which shall mention the number and
particulars of the places where the signature and the seal
have been affixed on the accounts, register or
documents returned to him.
(4) The Commissioner may, by an order in writing,
empower any officer, ordinarily not below the rank of a
Deputy Commissioner, to authorise the conduct of any
inspection, search or seizure.
(5) The authority empowered under sub-rule (4) shall
examine the information available and after such further
enquiry, as may be deemed fit, and upon being satisfied
that it is in the interest of revenue so to do, issue the
letter of authorization.
1
[(6) The notice under clause (b) of sub-section (4) of
Section 56 shall be in form N-XVI.”
18. Having gone through this statutory provisions as
recorded hereinabove, we are of the considered opinion that sub-Rule
(5) of Rule 35 of the Rules of 2005 is crystal clear. It clearly provides
that the authority empowered under Sub-Rule (4) shall examine the
information available and after such further inquiry, as may be
deemed fit, and upon being satisfied that it is in the interest of
revenue so to do, issue the letter of authorization.
1. Sub-rule (6) Ins. By S.O. 41 dated 4. 5. 2006.
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19. In this case since no issue has been raised with regard
to the power of the Joint Commissioner of Commercial Taxes
(Patna Division) in terms of sub rule (4) of Rule 35, we have
proceeded to consider the matter taking it that the Joint
Commissioner of Commercial Taxes (Patna Division) has been duly
empowered by the Commissioner, to authorize the conduct of any
inspection, search or seizure as envisaged under Sub-Rule (4) of
Rule 35.
20. To us, it appears that sub-Rule (5) imposes a duty
upon the authority empowered under Sub-Rule (4) to examine the
information available but in this case, when the proposal was
placed before the Joint Commissioner, Commercial Taxes, Patna, he
simply wrote “कृपया उपरोकत कायारलय टटपपणी अं श ‘क’
अनु मोदनारर।।”.
21. Apparently, there is no examination of the
information available and no further inquiry has been held. The
Additional Commissioner, Central Investigation Bureau did no
better. He has simply put his signature and thereby the proposal has
been taken to be approved.
22. In our considered opinion, the mandate of Sub-Rule
(5) of Rule 35 is something much more than what have been
appearing for the records. It is evident that this provision
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specifically talks of issuance of ‘letter of authorization’. The words
of the statues are clear, hence, there is no difficulty in taking a view
that the authorization should be issued in form of a letter. A post
facto approval in the file cannot be taken as a compliance with the
mandate of Sub-Rule (5) of Rule 35 of the Rules of 2005.
23. We are, therefore, of the considered opinion that no
illegality or infirmity may be found in the impugned order. No
substantial question of law is arising out of the impugned order.
24. This appeal has no merit. Accordingly, it is
dismissed.
(Rajeev Ranjan Prasad, J)
( Sourendra Pandey, J)
Jyoti/-
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