Transit seizure under VAT requires missing documents or positive evidence of local sale, not mere suspicion

Goods in transit under the Uttar Pradesh VAT regime may be seized only where prescribed documents are absent or defective, or where positive facts justify the statutory presumption of intra-State sale. The commentary states that seizure is not sustainable when the transit declaration and accompanying documents are in order, the declared exit time has not expired, and there is no finding of loading or unloading within the State. Suspicion, past conduct of the transporter, or alleged discrepancies in documents are said to be insufficient without material evidence meeting the statutory threshold.

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Issues: Whether goods in transit could be seized under the Uttar Pradesh Value Added Tax regime before the expiry of the declared exit time in the transit declaration form, and whether the seizure could be sustained in the absence of any finding that the goods were not accompanied by the prescribed documents or were loaded or unloaded within the State.

Analysis: The statutory scheme under sections 50 and 52 of the Uttar Pradesh Value Added Tax Act and rule 58 of the Uttar Pradesh Value Added Tax Rules permits seizure only where the prescribed documents are absent or defective, or where circumstances justify the statutory presumption that the goods are meant for sale within the State. The goods in question were accompanied by the relevant documents and the declared transit form showed an exit time that had not yet expired when detention took place. There was no finding that the goods were unloaded or loaded within the State, nor that the documents were missing, incomplete, or irregular. Past conduct of the transporter, alleged discrepancies in the sequence of bilty and invoice, and doubts about the consignment were held insufficient to justify seizure in the face of the existing transit documents and the absence of positive evidence of local sale.

Conclusion: The seizure was without jurisdiction and illegal. The order of seizure, the order rejecting the representation, and the appellate order upholding the seizure were set aside, and the assessee's revision was allowed while the Department's revision failed.

Final Conclusion: Goods moving through the State cannot be seized merely on suspicion when the transit declaration and accompanying documents are in order and the declared exit time has not expired.

Ratio Decidendi: Seizure of goods in transit cannot be sustained unless there is non-compliance with the prescribed transit documents or positive evidence showing loading, unloading, or other material circumstances attracting the statutory presumption of intra-State sale.

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