Transit goods seizure requires evidence of diversion, not mere document discrepancies during interstate movement.

Goods in transit through Uttar Pradesh could not be seized merely because of discrepancies in transit documents or physical verification. The HC applied section 52 of the U.P. Value Added Tax Act, 2008 and Rule 58 of the U.P. Value Added Tax Rules, 2008 to hold that interception and verification are permissible, but an adverse presumption of local sale requires material showing actual diversion, unloading in the State, or conduct indicating evasion. In the absence of such evidence, seizure on suspicion was arbitrary, and limiting relief to reduction of security was erroneous. The transit goods were ordered to be released forthwith without security.

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Issues: Whether goods in transit through the State could be seized and security demanded merely because of discrepancies in description or quantity in the transit documents and physical verification, in the absence of material showing unloading within the State or diversion for local sale.

Analysis: The goods were covered by transit declaration documents and were being carried from outside Uttar Pradesh to another State. The governing scheme under section 52 of the U.P. Value Added Tax Act, 2008 and Rule 58 of the U.P. Value Added Tax Rules, 2008 permits interception and verification, but a presumption of sale within the State must rest on material indicating actual diversion or conduct showing evasion. Mere discrepancies in description, quantity, or particulars of consignor and consignee, without evidence that the goods were unloaded inside the State or otherwise diverted, were held insufficient to justify seizure on an adverse presumption. The seizure on such suspicious presumption was treated as arbitrary, and the Tribunal was found to have erred in confining relief to reduction of security instead of invalidating the seizure.

Conclusion: The seizure and demand of security were not sustainable, and the goods were directed to be released without security.

Final Conclusion: The revision succeeded, the Tribunal's order was set aside, and the seized transit goods were ordered to be released forthwith without security.

Ratio Decidendi: In transit of goods through the State, seizure cannot be sustained on mere discrepancies in transit documents unless there is material showing actual diversion, unloading, or intent to effect local sale within the State.

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