Transit pass seizure cannot rest on suspicion where documents show bona fide movement of goods through the State.

Section 28-B of the U.P. Trade Tax Act and Rule 87 were treated as machinery provisions intended to verify bona fide transit of goods through the State and prevent local sale. The High Court held that seizure at the entry stage could not be justified on irrelevant or speculative grounds, such as the absence of an invoice note about transfer to another vehicle or the earlier use of a different vehicle, where the documents and surrounding material showed movement from Rajasthan to Uttaranchal and did not establish a different commodity. The inference of tax evasion based only on suspicion was unsustainable, so the refusal to issue the transit pass and the seizure were quashed and release of the goods was directed.

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Issues: Whether the seizure of goods and refusal to issue a transit pass under Section 28-B of the U.P. Trade Tax Act were justified on the facts of the case.

Analysis: Section 28-B and Rule 87 operate as machinery provisions to ensure that goods moving through the State are actually taken outside the State and are not sold within it. The entry check-post function is to verify the goods and issue the transit pass, while detention or seizure cannot rest on irrelevant circumstances such as the absence of a note in the invoice about transfer to another vehicle or the fact that the goods were carried in a different vehicle earlier. The documents showed movement of goods from Rajasthan to Uttaranchal, and the description of the goods in the challan and packing, read as a whole, did not establish that a different commodity was found. The inference of intent to evade tax was based only on suspicion and irrelevant considerations, and the authority failed to justify seizure on a legally sustainable basis.

Conclusion: The refusal to issue the transit pass and the seizure of the goods were not justified; the order of the Tribunal upholding seizure was incorrect and was liable to be set aside in favour of the assessee.

Final Conclusion: The revision succeeded, the seizure was quashed, and the goods were directed to be released with costs.

Ratio Decidendi: Under Section 28-B and Rule 87, seizure at the entry stage cannot be sustained on irrelevant or speculative grounds when the documents and surrounding material show bona fide transit of goods through the State and no real basis for inferring evasion of tax.

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