Statutory remedy for VAT seizure must be pursued first, with legality of seizure and penalty to be examined by the competent authority.

A challenge to seizure and detention of goods under the VAT scheme was held to require recourse to the statutory appellate remedy before the authority above the officer who passed the seizure order. Reading the explanation to section 86, the Tribunal indicated that the competent authority must examine both the penalty proceeding and the legality of the seizure if approached in time. The petition was not decided on the merits of the seizure challenge, but the goods were ordered to be released conditionally on furnishing security pending disposal of the statutory proceeding.

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Issues: Whether the petition challenging the seizure and detention of goods could be entertained directly by the Tribunal without first pursuing the statutory remedy before the authority prescribed under the VAT law.

Analysis: The petition was entertained only to the limited extent of considering the statutory scheme. In view of the explanation to section 86 of the VAT Act, the Tribunal held that the petitioner was required to approach the authority above the officer who passed the impugned seizure order. The Tribunal further directed that, if the petitioner approached the competent statutory authority within the stipulated time, that authority should examine not only the penalty proceeding but also the legality of the seizure. Pending such proceedings, conditional release of the seized goods was ordered on furnishing security.

Conclusion: The petition was not decided on the merits of the seizure challenge and the petitioner was relegated to the alternative statutory remedy, with interim release of goods against security.

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