High Court Orders Release of Seized Goods for Chennai Company, Sets Deposit Conditions

The High Court released goods seized by State VAT Authorities at a check-post in Gujarat, allowing further movement of machinery for a Chennai-based company. The court directed the petitioner to deposit Rs. 50 lakhs to secure the basic tax liability of around Rs. 48 lakhs, with a penalty not exceeding 150% of that amount. Conditions were imposed for release, including cooperation in assessment proceedings and payment of any additional tax, interest, or penalty. Once conditions were fulfilled, goods and trucks were to be released promptly. The petition was disposed of with immediate effect.

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Issues:
Challenge to seizure memos and communication issued by Joint Commissioner of Commercial Tax regarding non-possession of Form No. 403 by truck drivers at check-post.

Analysis:
The petitioner, a Chennai-based company engaged in machinery manufacturing and wind farm installation, challenged the seizure memos and communication issued by the Joint Commissioner of Commercial Tax. The incident occurred when trucks transporting machinery for a project were intercepted by State VAT Authorities at Tharad check-post in Gujarat for not carrying declaration in Form No. 403. The petitioner argued that the slow movement of goods required customers to provide such forms to transporters before crossing check-posts, and the seizure was premature. The petitioner contended that even if transporters should have possessed Form No. 403 before entering the state, it should not result in tax liability if not otherwise payable in Gujarat.

The State authorities argued that the requirement of carrying Form No. 403 was before entering the state, which the transporter did not have at the time of interception. The authorities highlighted a possible tax liability with a penalty of 150% amounting to approximately Rs. 1.21 crores. The High Court acknowledged the situation of costly machinery lying idle since the seizure date and decided to release the goods for further movement. The court noted the principal tax liability of around Rs. 48 lakhs, with a penalty not exceeding 150% of that amount. To secure the basic tax liability, the court directed the petitioner to deposit Rs. 50 lakhs with the authorities, subject to final assessment and the right of appeal.

The court imposed conditions for the release of goods, including the petitioner's cooperation in assessment proceedings and payment of any further tax, interest, or penalty found due after assessment. The authorities were expected not to unreasonably delay the assessment process. Once the conditions were met, the goods and trucks were to be released immediately. The petition was disposed of accordingly, allowing direct service on the same day.

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