Court allows petitioner to deal with goods freely with bank guarantee covering tax liability until assessments are completed.

The Court refrained from making final observations due to pending assessment but noted the petitioner's bank guarantee covering tax liability. No further conditions were imposed, allowing the petitioner to deal with goods freely as long as the bank guarantee is maintained until assessments are completed. The petition was disposed of with these directions.

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Issues:
Challenging the action of Value Added Tax Authorities in attaching goods on the allegation of duty evasion.

Analysis:
The petitioner, a company trading in non-ferrous metals, challenged the attachment of goods by VAT Authorities alleging duty evasion. The petitioner imports goods from overseas suppliers and sells to domestic buyers after transfer of title at a bonded warehouse. Authorities attached goods worth Rs. 50 crores citing possible tax liability. The petitioner contended no VAT is payable on such transactions, relying on a Supreme Court judgment. Despite cooperation, assessment was incomplete, leading to the petition.

The petitioner argued no breach of VAT Act occurred as goods are transferred at the bonded warehouse to Indian buyers without VAT liability. Authorities claimed a mismatch between imported and sold goods, citing different descriptions. Petitioner provided documents showing synonymous terms used for goods, denying discrepancies. Section 45(1) of VAT Act allows provisional attachment to protect revenue, but extreme caution is required. The Supreme Court precedent supports no VAT liability in such transactions, and goods' nature remained unchanged.

The Court refrained from final observations due to pending assessment but noted the petitioner's bank guarantee covering tax liability. No further conditions were imposed on the petitioner, allowing dealing with goods freely with the bank guarantee maintained. The petitioner was directed to keep the bank guarantee alive until assessments are completed. The petition was disposed of with these directions.

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