Transit security demands must be justified at the check-post, with the basis communicated fairly to the transporter.

Under the transit regime in section 76 of the Assam Value Added Tax Act, 2003, security may be required only within the statutory conditions governing transit through Assam, and it cannot be used as a tax at the entry check-post. Fairness, reasonableness and non-arbitrariness require the authority to indicate the basis for demanding security to the affected transporter, although a brief application of mind is sufficient and a detailed speaking order is not expressly required. The transporter is therefore entitled to movement of the goods in accordance with the statutory directions, with the demand for security to be communicated in a fair and non-arbitrary manner.

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Issues: Whether, under the transit regime in section 76 of the Assam Value Added Tax Act, 2003, security could be insisted upon at the entry check-post and whether the affected transporter was entitled to be informed of the reasons for such demand, along with consequential permission for movement of the goods.

Analysis: The statutory scheme permits goods in inter-State trade to pass through Assam on the basis of a transit pass issued at the entry check-post, with verification at the exit check-post and refund of security where lawfully collected. The power to require security is confined to the conditions laid down by the Act and cannot operate as a tax on goods at the entry check-post. While the Act does not expressly require a detailed speaking order, the exercise of State power must conform to the requirements of fairness, reasonableness, and non-arbitrariness. For that reason, the basis for insisting on security must be indicated to the affected person, though only a brief formulation showing application of mind is necessary at the check-post.

Conclusion: The transporter is entitled to movement of the coal in accordance with the statutory directions, and the authorities must act consistently with the requirement that the basis for insisting on security be communicated in a fair and non-arbitrary manner.

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