Release of seized goods on reduced security permitted where the Tribunal may vary the statutory maximum under VAT law

Security for release of seized goods under the U.P. Value Added Tax Act is limited to an amount sufficient to cover the likely penalty, and the 40% figure operates only as a statutory ceiling. Where the Commissioner or Deputy Commissioner orders release on security, that order is appealable, and the Tribunal may confirm, cancel, vary, or set it aside and direct fresh consideration. On that scheme, the Tribunal may reduce the security below 40% of the estimated value if the circumstances justify a lesser amount.

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Issues: Whether the Tribunal had the power, while dealing with an appeal against an order directing release of seized goods on furnishing security, to reduce the security from 40% of the estimated value of the goods to a lesser amount.

Analysis: The statutory scheme under the U.P. Value Added Tax Act permits seizure where goods are not duly accounted for or are undervalued, and authorises imposition of penalty up to 40% of the value of the goods. The power to require security for release of seized goods is therefore confined to an amount sufficient to cover the likely penalty and represents only the maximum permissible security. The Commissioner or Deputy Commissioner may, for recorded reasons, direct release on a lesser amount or without deposit, and an order made under that provision is appealable. In appeal, the Tribunal has express power to confirm, cancel, vary, or set aside the order and direct fresh consideration. On that scheme, the Tribunal is not bound to insist on security at the full ceiling of 40% and may order release on a lesser security.

Conclusion: The Tribunal was competent to direct release of the seized goods on security of less than 40% of the estimated value, and the revisions failed.

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