Seizure of disputed goods sustained, with release allowed on non-cash security pending tax proceedings.

Where material existed to support seizure of goods during a tax inspection, the dealer's challenge to the stock position was left for assessment or penalty proceedings rather than treated as a basis to invalidate the seizure. The authority's security-demand order was therefore not interfered with, but the goods were ordered to be released against security equivalent to the tax involved, provided it was furnished other than in cash or bank guarantee.

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Issues: Whether the seizure and security-demand order under the U.P. VAT Act called for interference, and whether the seized goods should be released on furnishing security other than cash.

Analysis: The record showed discrepancies in the stock of dry chilly found during inspection, and the explanation offered by the dealer was not accepted at that stage. The Court treated the dealer's contention that the books of account and invoices fully supported the stock position as a matter to be examined in assessment or penalty proceedings, if any, and not as a ground to hold that there was no material for seizure. At the same time, the Court considered that the ends of justice would be met by permitting release of the goods against security equivalent to the tax involved, but not in cash.

Conclusion: The seizure and security requirement were not set aside, but the goods were directed to be released on furnishing security other than cash or bank guarantee for an amount equivalent to the tax involved.

Final Conclusion: The revision was disposed of by sustaining the authority's power to secure the disputed goods while granting the assessee release on a non-cash security basis.

Ratio Decidendi: Where some material exists to support seizure of goods in a tax inspection, the dispute over the correctness of the stock position should ordinarily be left to assessment or penalty proceedings, while release may be ordered on appropriate non-cash security.

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