10 May 2011

Arbitrary detention at check-posts unfair: High Court

Holding that detention at check-post by the local authorities  and demanding of substantially high amounts from the holder of goods was illegal and violative of law, the Punjab and Haryana High Court in a recent decision directed release of the goods while also imposing cost on the government department. The High Court declared that "acting on one technicality or the other with a view to harass and abuse the power of detention of vehicles and goods is not consistent with the fair procedure required to be followed to justify interference with the right of life and liberty of a citizen under Article 21 of the Constitution".

The High Court inter alia observed as under;
6. Learned counsel for the petitioner submits that the action of detaining the goods at the Check Post was arbitrary and malafide. There was no attempt at evasion and even if valuation of the respondents is accepted and it is to be presumed that there was attempt at evasion of tax of about Rs. 27,500/-, there was no justification for demanding Rs. 8 lacs for release of goods. It is further pointed out that the action is highhanded. At best, the Learned counsel for the petitioner submits that the petitioner could be required to furnish bond of Rs. 27,500/- or the information could have been sent to the concerned authority so that the alleged loss of tax could be recovered from the concerned dealer. Reliance is placed on judgment of this Court in Xcell Automation v. Government of Punjab and another [2007] 005 VST 0308 to the effect that power at the Check Post cannot be abused and detention cannot be arbitrarily continued. Even if there was an allegation of attempt at evasion, the goods must be released on reasonable conditions. No justification has been shown for demand of Rs. 8 lacs for release of goods. 
7. We are of the view that the present case is an instance of abuse of authority by the concerned detaining authority at the Check Post. No basis for suspicion of undervaluation has been shown. Even if it is assumed that there was alleged under-valuation and attempt at evasion of tax to the extent of Rs 27,500/-, continued detention of goods and the vehicles for more than a week resulting in loss of more than the amount of alleged evasion of tax cannot be ignored. The detaining authority is expected to act responsibly and pass appropriate order to the extent required for checking the evasion of tax. This has not been done. Continued detention may be permissible only if there is failure on the part of the owner or the transporter to secure the allegedly evaded tax or the amount of penalty which may be entailed under the statutory provisions. Acting on one technicality or the other with a view to harass and abuse the power of detention of vehicles and goods is not consistent with the fair procedure required to be followed to justify interference with the right of life and liberty of a citizen under Article 21 of the Constitution. Department of the State must ensure that drastic power of detaining vehicles and goods at the Check Post is not abused. We find that abuse is taking place frequently without any let or hindrance and the head of the concerned department has failed to check the abuse which calls for interference by this Court.
8. Learned counsel for the petitioners has undertaken to  furnish bank guarantee to the extent of Rs. 50,000/- which will take care of the alleged evasion of tax and on such bank guarantee being furnished, the goods and the vehicles will stand released forthwith. The Bank guarantee will be to indemnify the State of the tax loss, if any determined in appropriate proceedings within six months from today. On expiry of six months, the Bank guarantee will stand discharged subject to tax liability being discharged. It is also made clear that this order will not debar any legal proceedings being taken in the matter, as may be permissible. The detaining authority will pay costs quantified at Rs. 50,000/- in all the three cases together to be deposited with the High Court Legal Aid Committee within one month from today. The amount of costs may be recovered from the person who is responsible for acting illegally. The State will also be at liberty to initiate Learned counsel for the petitioners has undertaken to disciplinary proceedings against persons responsible for the misconduct.

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