Pre-sale seizure and security under sales tax law upheld where imported goods lacked declaration and tax evasion was suspected.

Section 28-A of the U.P. Sales Tax Act, 1948 was read as applying at a pre-sale stage where goods are brought into the State in connection with business and the officer is satisfied that the movement may evade tax. Goods imported without the prescribed declaration could therefore be seized even though no sale had yet occurred. Import of raw material for manufacture and export fell within the wide statutory meaning of business. The constitutional challenge to section 28-A, including sub-section (4-A), was rejected, and the security demand was upheld because the order recorded reasons and matched the statutory ceiling linked to possible penalty.

---

---

Issues: (i) whether goods imported into the State without the prescribed declaration could be seized under section 28-A of the U.P. Sales Tax Act, 1948 even though no sale had yet taken place; (ii) whether import of raw material for manufacture and export was in connection with business so as to attract section 28-A; (iii) whether section 28-A, including sub-section (4-A), was beyond legislative competence or violative of Articles 14 and 19(1)(g) of the Constitution of India; and (iv) whether the demand of security at 40 per cent of the value of the goods was arbitrary or unsupported by reasons.

Issue (i): whether goods imported into the State without the prescribed declaration could be seized under section 28-A of the U.P. Sales Tax Act, 1948 even though no sale had yet taken place.

Analysis: Section 28-A contemplated movement of goods into the State at a stage anterior to actual sale. The provision applied where the goods were liable to tax, were brought from outside the State, and were transported in connection with business. Detention was permitted where the officer was satisfied that the movement was in an attempt to evade assessment or payment of tax due or likely to be due. The absence of an actual sale did not defeat the power of seizure.

Conclusion: The seizure was valid notwithstanding the absence of a completed sale, and this contention failed.

Issue (ii): whether import of raw material for manufacture and export was in connection with business so as to attract section 28-A.

Analysis: The statutory definition of business was wide and included trade, commerce, manufacture and transactions ancillary or incidental thereto. The goods had been imported for manufacture of scarves for export, which squarely fell within the expression business. The provision also covered cases where goods were brought otherwise than in connection with business, showing that the statutory scheme was broad enough to apply to the petitioner's case.

Conclusion: The import was in connection with business and section 28-A applied against the petitioner.

Issue (iii): whether section 28-A, including sub-section (4-A), was beyond legislative competence or violative of Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The validity of the amended provision had already been upheld by a Division Bench after considering the relevant objections. A subsequent Bench could not reopen the same question merely because one argument or sub-provision was not separately discussed earlier. The challenge to legislative competence and constitutional validity was therefore not available in these proceedings.

Conclusion: The constitutional challenge to section 28-A was rejected.

Issue (iv): whether the demand of security at 40 per cent of the value of the goods was arbitrary or unsupported by reasons.

Analysis: Section 13-A(6) empowered the officer to demand security sufficient to cover the penalty likely to be imposed, and section 15-A(1)(o) read with clause (ix) contemplated a penalty up to 40 per cent of the value of the goods in such cases. The order recorded reasons regarding the unexplained import, absence of intimation, absence of registration, lack of documents and the inference of possible tax evasion. The security demand therefore rested on statutory authority and recorded reasons.

Conclusion: The demand of security was not arbitrary and was upheld.

Final Conclusion: The impugned seizure and security demand were sustained, and the writ petition was dismissed.

Ratio Decidendi: The power of seizure under section 28-A of the U.P. Sales Tax Act, 1948 can be exercised at a pre-sale stage where goods are imported into the State in connection with business without the prescribed declaration and the officer is satisfied that the movement is linked to possible tax evasion.

---