Bank guarantee for release of seized stock upheld where tax liability exceeded seized assets and statutory remedy was available.

A writ challenge to the requirement of a bank guarantee for release of seized stock was held inappropriate where the Income-tax Act provided an efficacious statutory remedy under section 132(11), especially because the dispute depended on factual issues already addressed in the section 132(5) determination. On that basis, relief under article 226 was declined. The Court also stated that when the assessed tax liability recorded under section 132(5) exceeds the value of the seized goods, the Department may retain the goods and require a bank guarantee for their release, subject to the section 132(12) order. The bank guarantee condition was therefore not illegal.

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Issues: Whether the writ petition challenging the condition requiring a bank guarantee for release of seized stock was maintainable in view of the remedy available under the search and seizure provisions of the Income-tax Act, and whether the Department could retain the seized goods when the assessed tax liability exceeded their value.

Analysis: An order under section 132(5) had already determined the petitioner's tax liability at a figure far above the value of the assets seized and retained. In that situation, the grievance involved disputed questions of fact and the petitioner had an efficacious statutory remedy before the authority concerned under section 132(11). On that footing, the Court held that the challenge could not appropriately be examined in writ proceedings under article 226. The Court further held that where, on the section 132(5) determination, the tax liability exceeds the value of the seized goods, the Department is entitled to retain the goods and insist on a bank guarantee for their release, subject to the order under section 132(12).

Conclusion: The bank guarantee condition was not illegal, and the writ petition was not maintainable in view of the alternative statutory remedy; the challenge failed.

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