HC orders erring VAT officials to pay damages for illegal detention of vehicle

HC orders erring VAT officials to pay damages for illegal detention of vehicle

New Delhi, Jan 13 (KNN)  In a landmark judgment, Allahabad High-court has directed the state VAT officials of Uttar Pradesh to pay damages from their personal account for illegal detention of a vehicle and the seizure of goods.

The recent judgment came on the writ filed by Sandeep Bulk Carriers against State of UP and others (Writ Tax No. 478 dated 19th Dec 2014). The honourable Court has been quite critical of the arbitrary functioning of the VAT Department especially of the higher authorities and the Tribunal and the way they ‘mechanically’ endorsed the demand of tax from the line officers. 
“In our opinion the time has come when these illegalities by the authorities of detaining and seizing must be strongly checked, otherwise the law will continue to be violated by such authorities,” the order notes.

The Micro, Small and Medium Enterprises (MSMEs) have been consistently rating harassment in the hands of the state tax officials as the single biggest nuisance in doing business.  

In the instant case, the Bitumen loaded tanker was detained by the authorities in the night apparently due to mistaken identity in Mathura. However, the vehicle continued to be detained even after presenting all necessary proof and documents. Further, a demand of cash security of Rupees four lakh eighty thousand was handed to the owner for release of the goods.

The Industry associations have welcomed the judgment. According to the national MSME body FISME, when the goods are seized in UP due to alleged evasion of tax and if one wants to contest the authorities, one has to pay up 40 per cent of the demand to go to the next level of Appeal.  It is a big deterrent and is routinely used by authorities to extract rent.  

Now, after the reprimand, the State seems to have woken up and has assured the Honourable Court that appropriate law and guidelines would be issued to check on arbitrary exercise of power or negligent action of authorities so as to minimize the possibility of harassment of people.

The Court further observed, “We are inclined to grant compensation to the petitioners in these cases instead of relegating the petitioner to file Civil Suits as we want to stop the illegal practice of detaining and seizing of the vehicle by the U.P. Trade Tax Authorities.”

It directed the officials to pay the amount of compensation to the petitioner by account payee bank draft within two weeks.



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