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2016 Supreme(Del) 558
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. MURALIDHAR & VIBHU BAKHRU, JJ.
Larsen and Toubro Ltd. and Anr. - Petitioners
Versus
Govt. of NCT of Delhi and Ors. - Respondents
W.P.(C) 1820, 1821, 1822/2013 & CM No.3490, 3491, 3492/2013 (for stay)
Decided On : 03.02.2016
For the Appellant :Mr. Rajesh Jain with Mr. Virag Tiwari, Mr. K.J. Bhat and Mr. V.K. Jain, Advocates.
For the Respondent: Mr. Gautam Narayan and Mr. Naushad Ahmed Khan, ASCs for GNCTD with Mr. P.R. Meena, Special Commissioner (L&J) and Mr. Manish Verma, Assistant Commissioner (Spl. Zone).
The judgment emphasizes the requirement for the Commissioner's satisfaction and the abuse of power under Section 60 of the DVAT Act, highlighting the need for proper procedures and justifications for sealing actions.
Headnote:
Sealing - Delhi Value Added Tax Act - Section 60
Fact of the Case:
The petitioner, Larsen & Toubro Ltd., filed petitions under Article 226 of the Constitution, aggrieved by the sealing of its three offices in Delhi by the Department of Trade and Taxes (DT&T) Government of the National Capital Territory of Delhi (GNCTD) under Section 60 of the Delhi Value Added Tax Act 2004 ('DVAT Act'). The sealing was based on the failure to produce records as demanded by the notice under Section 59 of the DVAT Act.
Finding of the Court:
The Court found that the sealing action was undertaken mechanically and without the required satisfaction by the Commissioner, as mandated by Section 60(1) of the DVAT Act. The de-sealing order requiring the petitioner to deposit Rs. 600 crores was deemed 'preposterous' and an abuse of power under Section 60(4) of the DVAT Act.
Issues: The issues included the validity of the sealing order, the missing files related to the case, and the unusual haste with which the DT&T proceeded with the inspection and sealing action.
Ratio Decidendi: The Court set aside the sealing and de-sealing orders, emphasizing the lack of satisfaction by the Commissioner for the sealing action and the arbitrary nature of the de-sealing order. It also directed the Commissioner to personally enquire into the missing files and fix responsibility on the officers involved.
Final Decision: The Court directed the release of the deposited sum of Rs. 5 crores to the petitioner and scheduled a further hearing for compliance with its directions and to decide on the costs to be awarded to the petitioner.
1. The background to the present petitions by Larsen & Toubro Ltd. under Article 226 of the Constitution, aggrieved by the sealing by the Department of Trade and Taxes (DT&T) Government of the National Capital Territory of Delhi (GNCTD) of its three offices in Delhi in purported exercise of the powers under Section 60 of the Delhi Value Added Tax Act 2004 ('DVAT Act'), is set out in the order passed on 19th March 2013, the relevant portion of which reads as under:
"These writ petitions are directed against the order dated 16.03.2013 purportedly issued under Section 60 of the Delhi Value Added Tax Act, 2004 whereby the three separate premises of the petitioner at Nehru Place, Moti Nagar and Peera Garhi were sealed by the Value Added Tax Officer (Special Zone). It may be pointed out that the survey was conducted on 15.03.2013 (Friday) when the Value Added Tax Officer arrived at the said premises of the petitioner at about 5.30 p.m. in the evening and demanded important documents. The representative of the petitioner stated that he would provide those documents but that would require some time as information had to be culled out, collated and reconciled before the same could be presented to the department. It was also pointed out that the office of the petitioner had shifted from Okhla Industrial Estate to Nehru Place and that the bulk of documents were lying in boxes. The photographs of the said office were also shown to us which indicate that the process of shifting was going on. Further, the computer systems had also not been connected to their main server in Chennai in order to enable them to collect all the details. The learned Senior Counsel for the petitioner submitted that they would fully cooperate with the respondent in providing any information that they require which they are entitled to seek under the law. For this purpose, they only sought time which the VATO was not willing to grant them. It is, as a consequence of this, that the sealing order dated 16.03.2013 came to be passed in respect of each of the three premises.
The petitioner moved applications for de-sealing of the said premises on 18.03.2013 (Monday), which was the next working day. Apparently those applications have been disposed of by an order dated 18.03.2013 itself by the said VATO in which he has permitted de-sealing but as a precondition to de-sealing under Section 60(4) of the DVAT Act, 2004, he has required the petitioner to deposit a sum of Rs. 600 crores.
The learned Senior Counsel for the petitioner pointed out that the demand for Rs. 600 crores was preposterous and cannot be sustained in law. Prima facie, we agree with the submission made by the learned senior counsel for the petitioner, the security that is required for de-sealing in terms of Section 60(4) has, prima facie, no reference to the expected tax demand.
We are told that the petitioner pays between Rs. 25 to 30 crores by way of value added tax annually. This year, they have already been paid a sum of about Rs. 24 crores for a period of 10 months. The payment for February is to be made in March and the payment for March is to be made on 21st April, 2013.
Mr. Sandeep Sethi, learned Senior Counsel appearing on behalf of the petitioner states that in order to demonstrate its bona fides, the petitioner is willing to deposit a sum of Rs. 5 crores with this Court as security for desealing the premises.
We have also heard Mr. Parag Tripathi, learned Senior Counsel appearing on behalf of the respondent. Taking a prima facie view of the matter and considering the balance of convenience, we feel that the premises belonging to the petitioner ought to be de-sealed immediately. The petitioner shall, however, deposit a sum of Rs. 5 crores within two days with the Registrar General of this Court who shall keep the same in a fixed deposit for a period of 60 days initially.
The respondents are directed to de-seal the said three premises of the petitioner forthwith.
The counter affidavit be filed by th
