Person In Whose Custody The Goods Are Found To Produce Information Within A Reasonable Time: Delhi High Court

The Delhi High Court has held that it would be open for a person found in the custody of goods to produce the relevant information in its possession with respect to the goods within a reasonable time on being required to do so by the Commissioner.

The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that none of the authorities have even examined whether the documents produced by the appellant established the ownership of the goods in question.

The issue raised was whether the goods discovered in the appellant’s godown were liable to be considered the appellant’s goods in terms of Section 3(9) of the DVAT Act.

The appellant/assessee is carrying on the business of transportation of goods under the name and style of his proprietorship concern. The appellant is not a registered dealer under the DVAT Act.

The appellant claimed that he had taken on the rent of a godown. On March 9, 2006, the value-added tax officer (VATO) inspected the godown and found that rubber was stored on the premises.

The VATO issued the ‘Goods Stop Order, noting that the appellant had not produced the documents relating to the goods kept at his place of business and the ownership of the goods could not be verified. Thus, to protect the interest of revenue, the VATO passed an order directing that the goods not be moved. The VATO also directed the appellant to get a confirmation regarding the ownership of the goods with complete documents for release.

The appellant contended that the enforcement officials had not recorded the version of the manager truthfully and had compelled him to sign the statement.

The Appellate Tribunal noted in the order that the appellant had stated in its objection before the OHA that all documents had been produced before the VATO. The representative of the Department asserted that the appellant had not produced any document relating to the goods in the godown "at the time of the visit by the officers of the Department". The Appellate Tribunal found that there was nothing on record to suggest that the submissions recorded in the order passed by the learned OHA were wrong or contrary to the record. The manager of the appellant had not retracted the statement, which was made at the time of inspection. Thus, the Appellate Tribunal concluded that there was nothing on record to rebut the presumption under Section 3(9) of the DVAT Act.

The appellant contended that there was no failure to produce the documents and information in respect of the goods; it was merely a failure to produce at the time of inspection. The appellant produced documents within a reasonable time after the inspection of the godown.

The DVAT Act indicates that if a person who transports or holds goods in custody fails to furnish any information in respect of the goods in his possession, on being required to do so by the Commissioner, it will be presumed that he is the owner of the goods.

The court set aside the order to the extent that it holds that the presumption under Section 3(9) of the DVAT Act is applicable and a penalty is levied under Section 86(14) of the DVAT Act.

The court restored the appellant’s appeal to the Appellate Tribunal and directed the Appellate Tribunal to consider the documents as produced by the appellant and take an informed decision on the appellant’s appeal.

Case Title: Rashtriya Transport Corporation Versus Commissioner Of Delhi Goods And Service Tax

Citation: 2023 LiveLaw (Del) 296

Date: 27.03.2023

Counsel For Petitioner: Rajesh Mahna, Sonia, Mayank, Akshay Bhatia

Counsel For Respondent: Anuj Aggarwal

Click Here To Read The Order