Andhra Pradesh HC Rules State Liable for Theft of Seized Goods; Rejects ‘Sovereign Immunity’ Defense
Case: GRM Jewellers Vs. The Assistant Commissioner of State Tax & Ors.
The High Court of Andhra Pradesh has delivered a significant judgment holding the State government constitutionally liable to compensate a taxpayer for goods lost or stolen while in official custody. The Court ruled that the doctrine of “Sovereign Immunity” cannot shield the State from the negligence of its officials.
Key Highlights
- Background: The petitioner, a bullion merchant, had 105 kg of silver and ₹2.05 lakhs in cash seized by authorities during transit. The petitioner subsequently paid the applicable tax, penalty, and fine (approx. ₹39.20 lakhs) to redeem the goods, and a release order was issued.
- The Incident: When the petitioner attempted to collect the released goods, they were informed that a theft had occurred at the police station where the goods were stored. Consequently, the petitioner received only 81.567 kg of silver, resulting in a shortfall of 23.44 kg of pure silver.
- State’s Argument: The State relied on the Supreme Court judgment in Kasturi Lal Ralia Ram Jain vs. State of UP, arguing that the seizure and custody of goods were “sovereign functions” and thus the State was immune from liability for any loss.
- Court’s Verdict: The High Court rejected this defense, observing that the doctrine of sovereign immunity has been significantly diluted and cannot override claims based on “constitutional tort,” especially when official negligence infringes upon fundamental rights (specifically Article 19(1)(g)).
- Final Order: The Court directed the Revenue authorities to either return the balance 23.44 kg of pure silver or pay its current market value to the petitioner.