Preventive stop-delivery powers require recorded reasons and specific tax evasion risk; blanket export embargoes are unauthorized.

The Gujarat High Court held that the power to stop delivery of goods under the sales tax law is exceptional and can be used only where the authority has recorded reasons to believe that tax has been or is likely to be evaded against a specific dealer. Because the exporter was not shown to be liable to sales tax and there was no allegation of evasion or attempted evasion by it, the stop-delivery order could not stand and was quashed. The Court also held that blanket instructions preventing release of castor oil for export without prior tax authority approval were beyond section 59 and unlawful, so those directions were also quashed.

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Issues: (i) whether the stop-delivery order passed under section 59(5A) of the Gujarat Sales Tax Act, 1969 could be sustained against an exporter who was not shown to be a dealer liable to sales tax or to have evaded, or attempted to evade, tax; and (ii) whether the general instructions issued to the handling agent preventing release of castor oil for export without prior tax authority instructions were authorised under section 59(4) of the Gujarat Sales Tax Act, 1969.

Issue (i): whether the stop-delivery order passed under section 59(5A) of the Gujarat Sales Tax Act, 1969 could be sustained against an exporter who was not shown to be a dealer liable to sales tax or to have evaded, or attempted to evade, tax.

Analysis: The extraordinary power to stop delivery of goods is conditioned by a reasonable belief that tax is or is likely to be evaded, and by recorded reasons. The material showed that the petitioner was only an exporter and no sales tax was leviable on the export transaction. The record did not disclose any allegation that the petitioner had evaded or attempted to evade tax. The stated object was to verify possible purchase tax liability of castor-seed sellers and oil millers, against whom action could be taken. In these circumstances, the drastic action against the exporter was unsupported by the statutory preconditions and was also taken without notice or opportunity of hearing to the affected party.

Conclusion: The stop-delivery order could not be sustained and was liable to be quashed, in favour of the assessee.

Issue (ii): whether the general instructions issued to the handling agent preventing release of castor oil for export without prior tax authority instructions were authorised under section 59(4) of the Gujarat Sales Tax Act, 1969.

Analysis: Section 59(4) contemplates action against a particular dealer where the Commissioner or delegate has reason to believe that tax has been evaded or is likely to be evaded, together with reasons recorded in writing. It does not authorise a blanket direction applicable to all exporters or consignments. The impugned general instructions were therefore beyond the statutory power and not saved by section 59.

Conclusion: The general instructions were without authority of law and were liable to be quashed, in favour of the assessee.

Final Conclusion: The impugned stop-delivery order and the sweeping release restrictions failed on statutory preconditions and procedural fairness, so the writ petition succeeded and the challenged directions were set aside.

Ratio Decidendi: A drastic preventive power to stop delivery of goods under the sales tax law can be exercised only against a specific dealer on recorded reasons showing actual or likely tax evasion, and not by issuing a general embargo against an exporter who is not shown to be liable to tax.

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