Transit goods detention and release: rebuttable presumption, security for tax liability, and reduced entry tax security.

Seized goods in transit were held releasable where transport documents supported movement from Haryana to Uttarakhand through Uttar Pradesh, and the absence of a downloaded transit declaration form was not treated as conclusive proof of an intra-State sale. The statutory scheme was treated as creating only a rebuttable presumption, to be assessed with the surrounding papers. The authorities could secure the revenue by demanding security equivalent to the tax leviable on the goods, while the remaining protection could be furnished by security other than cash or bank guarantee. The entry tax security was found excessive and reduced to 20%, with liberty to furnish a bank guarantee if other security was unavailable.

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Issues: Whether seized goods in transit were liable to continued detention and, if release was warranted, what security could be demanded for their release, including the security pertaining to entry tax.

Analysis: The goods were accompanied by transport documents showing movement from Haryana to Uttarakhand through Uttar Pradesh. The absence of a downloaded transit declaration form by itself was not treated as conclusive of sale within the State. The statutory scheme was treated as creating only a rebuttable presumption, and the presence of other relevant documents was held sufficient to justify release of the goods on security. Relying on the earlier view that transit documentation must be assessed with the surrounding papers, the Court held that the tax authorities could secure the revenue by taking security equivalent to the tax leviable on the goods, while the balance could be protected by security other than cash or bank guarantee. For entry tax, the demanded security was found excessive and was scaled down.

Conclusion: The seizure was not sustained in the form insisted upon by the authorities, and the goods were directed to be released on furnishing security equivalent to the tax leviable on the goods and security other than cash or bank guarantee for the remaining amount. The entry tax security was reduced to 20 per cent, with liberty to furnish a bank guarantee if other security was not available.

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