Non-taxable goods and way-bill requirements: final seizure cannot rest on suspicion without factual determination.

Goods claimed as non-taxable cannot be finally seized for absence of a way-bill unless the authority first determines, on relevant facts, that the claim is not acceptable. Where polyester yarn is asserted to be hosiery yarn for non-taxable use, rule 99 of the West Bengal Value Added Tax Rules does not require a way-bill for non-taxable goods, and mere suspicion is insufficient to sustain a final seizure. If doubt remains about ultimate use, the authority may take precautionary measures, record the facts for assessment, retain samples, and permit later verification. The seizure was therefore unsustainable and was set aside, with release of the goods subject to such safeguards.

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Issues: Whether polyester yarn claimed to be hosiery yarn and therefore non-taxable under the West Bengal Value Added Tax Act, 2003 could be seized solely for absence of a way-bill, and whether the seizure order was sustainable.

Analysis: Polyester yarn may be used either as hosiery yarn or as non-hosiery yarn. Where the importer asserts that the goods are meant for hosiery manufacture and are non-taxable, the authority must decide that question on relevant facts before proceeding to a final seizure. Under rule 99 of the West Bengal Value Added Tax Rules, no way-bill is required for non-taxable goods. If there is doubt about the ultimate use of the goods, the authority may record the facts for the assessing authority and may take precautionary measures, including obtaining an undertaking and ensuring later verification at the assessment stage. A final seizure cannot be sustained on mere suspicion or conjecture when the statutory claim has not been properly addressed.

Conclusion: The seizure order was unsustainable and was set aside. The authorities were permitted to take precautionary steps and the goods were to be released after retaining samples, with liberty to initiate appropriate proceedings if the goods were later found not to have been used for hosiery purposes.

Ratio Decidendi: Goods claimed to be non-taxable cannot be finally seized for want of a way-bill unless the authority first determines, on relevant facts, that the claim is not acceptable; mere suspicion is insufficient.

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