Inter-State transit detention for suspected undervaluation is permissible where goods are covered by a separate acquisition power.

Inter-State transit goods may be detained under a separate acquisition provision where the prescribed authority has reason to believe that the sale price is below fair market value and tax evasion is suspected. The exclusion of inter-State sales from tax under the State Act does not bar action under that provision, which expressly extends to goods in transit. On the facts, the mismatch between invoice value and prevailing market value justified summary verification and proceedings. Relief, however, was confined to the quantity specifically covered by the petitioner's own quotation, namely 760 laminated sheets, and not the larger quantity alleged by the department.

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Issues: (i) whether the authorities under the State sales tax law could interfere with goods moving in inter-State transit and detain them for proceedings relating to acquisition on the ground of undervaluation and suspected suppression of turnover; (ii) whether the petitioner was entitled to relief in respect of the consignment only to the extent of the quantity specifically claimed and covered by his quotation.

Issue (i): whether the authorities under the State sales tax law could interfere with goods moving in inter-State transit and detain them for proceedings relating to acquisition on the ground of undervaluation and suspected suppression of turnover.

Analysis: Section 38 of the State Act excludes imposition of tax on inter-State sales or purchases, but it does not bar action under Section 28A where the prescribed authority has reason to believe that goods of fair market value above the statutory threshold were sold or purchased for a consideration lower than fair market price with the object of reducing or evading tax. The power under Section 28A extends expressly to goods in transit. On the facts, the documents disclosed a substantial mismatch between the invoice value and the prevailing market value, and the authority was entitled to make a summary verification and proceed under the Act.

Conclusion: The challenge to the statutory authority of the department failed, and the detention/acquisition proceedings were held to be permissible under the Act.

Issue (ii): whether the petitioner was entitled to relief in respect of the consignment only to the extent of the quantity specifically claimed and covered by his quotation.

Analysis: The petitioner's own letter quoted a sale price for 760 laminated sheets. The Court treated that offer as relevant only to the quantity actually claimed by the petitioner, especially since the counter-affidavit asserted that a larger quantity was found in the vehicle. Relief could therefore not extend beyond the 760 sheets referred to in the petitioner's case and quotation.

Conclusion: The petitioner was entitled only to the quoted price for 760 laminated sheets and not for the entire quantity alleged by the department.

Final Conclusion: The writ petition was not accepted in full, but limited relief was granted by confining the petitioner's entitlement to the quantity specifically covered by his quotation.

Ratio Decidendi: The statutory exclusion of inter-State sales from taxation does not prevent action under a separate acquisition provision that expressly applies to goods in transit where undervaluation and tax evasion are suspected.

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