Local market value governs seizure for alleged undervaluation; prices from other markets cannot justify detention of goods in transit.

Seizure of goods in transit under the U.P. Value Added Tax Act is justified only where the invoice or accompanying documents disclose undervaluation of more than fifty per cent against the value prevalent in the relevant local market area at the time of transaction. The applicable benchmark is the local market value where the transaction took place, not prices from other markets. Because the Department produced no material showing the Ghaziabad market value on the transaction date, reliance on prices elsewhere could not support seizure. The seizure was therefore illegal, and release of the goods without security was upheld.

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Issues: Whether seizure of goods in transit was justified when undervaluation had to be tested with reference to the local market area where the transaction took place.

Analysis: Under section 48(1)(iii) of the U.P. Value Added Tax Act, seizure is justified only when the tax invoice or accompanying document shows undervaluation of goods by more than fifty per cent of the value prevalent at the relevant time in the local market area where the transaction took place. The relevant benchmark is the market value in that local market area, and not the price obtainable in some other market. As the Department failed to place material showing the value of the goods in the Ghaziabad market on the date of transaction, reliance on prices from other places could not sustain the seizure.

Conclusion: The seizure was illegal and the Tribunal was correct in directing release of the goods without security.

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