The main legal point established in the judgment is the requirement for the Commissioner to record reasonable grounds to believe that a person or dealer is attempting to avoid or evade tax before taking any coercive actions under Section 60(2) of the DVAT Act.

1. The Petitioner, a partnership firm, carries on the business of transportation goods of dealers registered under the Delhi Value Added Tax Act, 2004 (DVAT Act) as well as registered dealers of other States. The Petitioner, whose registered office appears to be in Kanpur Uttar Pradesh, has one of its godowns at Gali No. 8, Swaroop Nagar, Delhi 110042.

2. The case of the Petitioner is that at around 12 midnight on 2nd/3rd July 2016, the Assistant Commissioner (AC)/Value Added Tax Officer (VATO) Ward-208 along with other officers visited the abovesaid godown/premises of the Petitioner in Swaroop Nagar and finding that the premises was locked, sealed the premises. The Petitioner states that on 8th July 2016, it moved an application before the AC for de-sealing the premises, pointing out that the Petitioner is a transporter and not a dealer. The Petitioner stated that the goods lying at its premises are value added tax (VAT) paid goods and traceable to bona fide dealers registered under the DVAT Act.

3. The Petitioner states that on 11th July 2016, the premises was de-sealed for a few hours. The statement of the Branch Manager of the Petitioner was recorded. The original invoices and other relevant documents relating to the stocks in the premises were seized. The original documents lying in the premises were taken into custody by the AC. On the same day, a notice under Section 59 of the DVAT Act was issued, requiring the Petitioner to produce the complete books of accounts before 3.30 pm which was within a few minutes of the issuance of the notice, and which was drawn up in the premises itself. Immediately thereafter, the premises was re-sealed under Section 60 of the DVAT Act for alleged non-compliance and failure to produce the books of accounts.

4. The Petitioner states that thereafter it sent a letter on 12th July 2016 by speed post and visited the office of the AC on 13th July 2016 seeking de-sealing of the premises. An application was filed on 19th July 2016 for de-sealing of the premises. When no action was taken, the present petition was filed on 29th July 2016.

5. When the petition was listed first for hearing on 1st August 2016, notice was issued and the VATO concerned was asked to remain in Court along with records on the following date. On 2nd August 2016, the following order was passed:-

“1. Mr. Yogesh Pal Singh, Assistant. Commissioner (AC)/VATO, Ward-208 is present with the relevant file.

2. The Court has perused the file. There are only two orders sheets in the file. The first is dated 13th July 2016 recording the presence of the Mr. Rajiv Tripathi, Manager of the Petitioner and the Power of Attorney (POA) holder. The order requires the Manager to produce a set of documents and adjourns the case for 4pm on 14th July, 2016. However, there is no record of proceedings drawn up for 14th July 2016. The next order is of 18th July 2016, which records the presence of a Chartered Accountant representing A.H. Products Ltd., one of the dealers whose goods have been detained in the godown of the Petitioner. The order notes that the said person did not have a POA but had submitted the purchase register up to July, 2016. The case is then adjourned to 11am on 20th July, 2016.

3. The file contains a copy of a letter received on 19th July, 2016 from Mr. Rajiv Tripathi of the Petitioner seeking one weeks time to produce the necessary documents. Significantly, there is no noting in the file regarding the visit to the Petitioners premises around midnight on 2nd July 2016; on moving an application by the Petitioner on 8th July 2016 for de-sealing; the de-sealing that took place for a brief while on 11th July 2016 and the re-sealing that took place on the same date.

4. The Petitioner states that it was served a notice under Section 59 of the Delhi Value Added Tax Act, 2004 (DVAT) on 11th July, 2016, requiring the Petitioner to produce complete books of accounts of the firm before 3.30 p.m. on that very date failing which the action unde