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ILLEGAL SEARCH AND SEIZURE BY VAT OFFICERS
A division bench of Delhi High court imposed a penalty of Rs. 75000 on the ground of misconduct while exercising the powers and inspection and seizure under section 59 and 60 of Delhi Value Added Tax (DVAT) Act.
The bench comprising of Justices Sanjiv Khanna and Pratibha M Singh were warned that the department should take care of not repeating such negligence in future and should act with great care and caution.
The petitioners, Teleworld Mobiles Pvt. Ltd approached the Court claiming that they were subjected to an illegal search by the respondents, VAT officials, under sections 59 and 60 of the Delhi Value Added Tax Act.
They contended that
the search was unauthorized since the officials did not carry and show Form DVAT-50 in spite of repeated requests.
operations under Section 60 and Rule 65(1) were undertaken by the non-jurisdictional Assistant Value Added Tax Officer.
Further, non-jurisdictional officers below the rank of Assistant Commissioner were also part of the team. Which had carried on the search operations.
As per the provisions, by issuing Form DVAT – 50, Commissioner can delegate his power for grant of authority.
Also Under Sub – Rule 2, the grant of authority will be to a specific person and for a limited to a period not exceeding 3 years and would expire earlier on retiring, resignation or transfer. Such authority can be extended.
Further, as per Sub-Rule 3, while exercising such power, authorized person to undertake search and survey shall carry Form DVAT-50. He shall also produce the Form at the request of owner/occupier.
The bench noted that Form DVAT – 50 is not required to be filled by the Commissioner when he delegates his power to issue the authorization to Special Commissioner. The Form has to be filled up when power is conferred and authorization is given to a particular officer by name for carrying out audit /enforcement function under Chapter X.
However, the bench ruled that the department should ensure that when Form DVAT50 is shown to the dealer at the time of the search or survey/investigation, signatures of the party ought to have been obtained to avoid controversy.
Pointing out the lapses made by the Officials while exercising their powers for inspection and seizure during the search. The bench imposed the penalty in the form of costs. On the respondents since they have acted contrary to the provisions of the Act and the Rules.
It is not justified to burden with any penalty or cost for the wrongs committed in violation of the provisions of the Act. If the contention and the pleas of the petitioner are reject, they can be burden with tax, interest, and penalty.
In these circumstances. Having held that the respondents have acted contrary to the provisions of the Act and the Rules. We are of the opinion that they must be burden with the penalty in form of costs. This is necessary and require to ensure that such lapses do not happen in future and are not repeat. Such conduct and misconduct cannot be condoned and overlooked.”
Further clarified that imposition of cost would not in any manner affect the adjudication proceedings.