Valuation disputes cannot justify seizure of identifiable goods in transit; tax must be determined at assessment, not seizure.

For a registered dealer, goods in transit that are identifiable by quantity and description cannot be treated as unaccounted merely because the invoice value is alleged to be understated; valuation disputes belong to assessment, not seizure. The High Court held that the statutory power of seizure and penalty applies only where goods are not properly accounted for, so seizure and penalty based solely on undervaluation were unsustainable. It also held that tax cannot be levied at the seizure stage because the Act contemplates determination of tax at assessment. The seizure, penalty, and tax levy were set aside, and the tax amount deposited was left open for adjustment in assessment.

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Issues: (i) Whether goods in transit could be treated as not properly accounted for, and therefore liable to seizure and penalty, merely because the invoices reflected an allegedly incorrect or undervalued sale price though the quantity and description of the goods were known; (ii) Whether tax could be levied at the stage of seizure of the goods.

Issue (i): Whether goods in transit could be treated as not properly accounted for, and therefore liable to seizure and penalty, merely because the invoices reflected an allegedly incorrect or undervalued sale price though the quantity and description of the goods were known.

Analysis: The statutory power of seizure and penalty under the Act is confined to cases where the goods are not properly accounted for. Where the dealer is registered and the total quantity and variety of the goods in transit are identifiable, a mere dispute as to valuation does not convert the goods into unaccounted goods. Questions relating to sale price and assessment of taxable value belong to the assessment stage, not the seizure stage, and the Court held that reading the seizure power to include valuation disputes would be inconsistent with the statutory scheme.

Conclusion: The goods could not be treated as unaccounted merely on the ground of undervaluation, and the seizure and penalty were unsustainable in law.

Issue (ii): Whether tax could be levied at the stage of seizure of the goods.

Analysis: The Act contemplates levy and determination of tax at the stage of assessment, not at the stage of seizure. Since the amount demanded as tax was imposed while the goods were under seizure, the levy was held to be beyond the statutory scheme and unsupported by the Act.

Conclusion: Tax could not be levied at the seizure stage, and the levy order was set aside.

Final Conclusion: The writ petition succeeded, the seizure, penalty, and tax levy were set aside, and the amount deposited toward tax was left open to adjustment in the petitioner's assessment.

Ratio Decidendi: For a registered dealer, where the goods in transit are identifiable by quantity and description, a dispute only about valuation does not amount to non-accounting of goods; seizure and penalty cannot be used as substitutes for assessment, and tax cannot be levied at the seizure stage.

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