Delhi HC directs the CTT to Ban the Collection of Tax Dues through Cash or Cheque during Search, Seizure or Survey under DVAT Act [DOWNLOAD JUDGMENT]

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The Delhi High Court, while disposing of a Writ Petition filed by a dealer under DVAT Act has directed the CTT to issue an instruction to its officers barring them from the collection of tax dues through cash or cheque during search, seizure or survey. The officers cannot collect tax dues during this time even though the dealer voluntarily pays the same.The facts and the details of the order are given below.

The petitioner M/s Gullu is a sole proprietorship is a registered dealer under the DVAT Act. On 12th February, 2016 the Additional Value Added Tax Officer visited the business premises of the petitioner and asked her to produce the books of accounts including sales invoices. The Petitioner states that at the time of the said inspection, the officer said that the VAT duty on a particular ‘meat’ was chargeable at 12.5% instead of 5%. He further insisted her to pay a cheque of 12 lakhs in favor of the Department at the spot. Otherwise, the business premises of the petitioner would be sealed. The petitioner left with no other choice, handed over the cheque to the officer.

On 16th February 2016, the authorised representative of the Petitioner appeared before the AVATO and submitted that the above proceedings were illegal. On 20th February 2016, the AVATO along with the Assistant Commissioner, Ward-32 again visited the business premises of the Petitioner and informed her that they have worked out a tax demand of Rs. 28.75 lakhs on account of the difference in the rate of tax and that if she did not immediately deposit the said amount, the premises would be sealed.Under such threat the Petitioner states that she was forced to deposit a sum of Rs. 5 lakhs on the spot through the online system, where the challan was printed out from the website of the DT&T.

The petitioner filed a Writ petition before the High Court of Delhi praying for return of the cheque given to the authorities and to restrain them from taking any further coercive action including not sealing the premises of the Petitioner.

The bench comprising of Justices S. Muralidhar and Vibhu Bakhru, after the verification of all the related Circulars and notifications issued directions to the CTT that Within a period of one week from today, and in any event not later than 21st March 2016, the CTT will issue instructions to all the officers of the DT&T that under no circumstances will any officer of the DT&T, who is part of a team or individually tasked with the responsibility of the carrying out a survey or inspection or any sealing, collect any amount by way of any alleged tax dues or security or surety against tax dues either by cheque or cash from any dealer at the time of such survey, inspection or sealing proceedings. Even where a dealer comes forward ‘voluntarily’ to deposit such cheque or cash towards tax dues at the time of such survey or inspection or sealing, the officers of the DT & T will decline to receive such cheque or cash and advise the dealer to make the payment only in the modes permitted in terms of the DVAT Act and DVAT Rules and at the places/counters designated for that purpose. The CTT will make it clear in the instruction that it is not permissible for an officer of the DT & T to collect cheque or cash at the time of the survey, inspection or sealing proceedings under threat of sealing the premises under Section 60 of the DVAT Act. The CTT shall also make it clear that the said instructions shall be strictly complied with; that any infraction thereof will be strictly dealt with including but not limited to disciplinary action against the concerned officer(s).the Court also made it clear that the CTT cannot deligate this powers to any other officers.

Read the Judgment here.

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