High Court Upheld Order for Goods Release with Bank Guarantee, Dismissed Appeals, and Ruled Against Demurrage Charges

The Division Bench of the High Court upheld the order directing the appellant to release goods upon furnishing a bank guarantee. The court dismissed appeals against this order, confirming the decision. Regarding liability for demurrage charges and penalty, the High Court ruled in favor of the respondent, instructing the release of goods without such charges. The court found the appellant responsible for the delay and directed the release of goods without penalty, upholding this decision on appeal.

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Issues:
- Dispute over releasing goods with bank guarantee
- Liability for demurrage charges and penalty

Analysis:
1. Dispute over Releasing Goods with Bank Guarantee:
The High Court of Madras upheld the order passed by a single judge, directing the appellant to release goods upon furnishing a bank guarantee of Rs. 25,00,000. The respondent-company claimed to have duly furnished the bank guarantee. The State of Tamil Nadu filed appeals against this order, but the Division Bench dismissed them, confirming the High Court's decision. The Division Bench refused to interfere with the interim order, directing the appellant to release the goods as the bank guarantee had already been provided by the respondent. The Division Bench clarified that their decision did not express an opinion on the merits of the dispute and allowed the Division Bench to decide the appeal on its own merits.

2. Liability for Demurrage Charges and Penalty:
The Division Bench of the High Court directed the State of Tamil Nadu to release goods without claiming demurrage and penalty. The respondent-company was instructed to establish their entitlement to benefits under section 5(3) of the Central Sales Tax Act, 1956, regarding the sandalwood purchased by them. The authorities concluded that the respondent was not liable to pay sales tax as the goods were purchased in the course of pre-existing export orders. The appellant argued that the respondent was liable to pay demurrage charges due to delays in goods' release. However, the High Court rejected this argument, stating that the respondent was not responsible for the delay, and the appellant failed to release the goods despite court directions. The High Court directed the appellant to release the goods without any demurrage charges or penalty, as the delay was attributed to the appellant's actions. The Division Bench upheld this decision, dismissing the appeals with no costs and directing the appellants to release the bank guarantee promptly.

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