Transit seizure powers cannot justify confiscatory recovery without proven tax liability or legally sustainable evidence of evasion.

Transit seizure powers enacted to curb sales tax evasion were held valid only as ancillary measures, not as authority for confiscatory seizure or monetary exaction where tax liability or evasion is not established. The Punjab and Haryana High Court held section 14-B(8) of the Punjab General Sales Tax Act, 1948 ultra vires to the extent it authorised seizure and release on payment of money in the circumstances described, and ruled that the check-post officer lacked jurisdiction on the facts because the record did not show taxable liability in the State or deliberate evasion. The seizure and recovery were therefore quashed and the amount ordered refunded.

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Issues: (i) whether the power of seizure and release on payment of money under section 14-B(8) of the Punjab General Sales Tax Act, 1948 was ultra vires the State Legislature; (ii) whether, on the facts, the officer-in-charge of the check post had jurisdiction to seize the goods and demand payment for their release.

Issue (i): whether the power of seizure and release on payment of money under section 14-B(8) of the Punjab General Sales Tax Act, 1948 was ultra vires the State Legislature.

Analysis: The power to legislate on taxes on sale or purchase of goods includes ancillary or incidental provisions for preventing evasion of tax, but such power does not extend to confiscatory or penal seizure of goods carried in transit merely because prescribed documents are not produced or contain an incorrect declaration. The impugned provision was held to be materially indistinguishable from the provision struck down by the Supreme Court in the Madras case, and the distinction between seizure and confiscation was rejected as insubstantial where the practical effect and monetary exaction were the same.

Conclusion: The provision was ultra vires and any action taken under it was without authority of law.

Issue (ii): whether, on the facts, the officer-in-charge of the check post had jurisdiction to seize the goods and demand payment for their release.

Analysis: The statutory machinery was meant to prevent evasion of sales tax, but the record did not establish that any sales tax was payable on the goods in transit or that there was a deliberate attempt to evade tax. The goods were being moved from one office to a depot, and the incorrect valuation in the transit declaration, by itself, did not establish taxable liability or evasion. In the absence of a finding that the goods were liable to tax in the State, the officer could not assume jurisdiction to seize the goods or impose any sum for their release.

Conclusion: The officer had no jurisdiction to seize the goods or to demand any amount for their release.

Final Conclusion: The seizure and monetary exaction were quashed and the amount recovered was ordered to be refunded, with costs.

Ratio Decidendi: A transit seizure provision enacted as a revenue-evasion measure is valid only so far as it is ancillary to tax collection; it cannot authorise confiscatory seizure or monetary exaction in the absence of demonstrated tax liability or a legally sustainable basis for inferring evasion.

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