Provisional release of detained transit goods allowed on security while valuation dispute awaits adjudication on merits.

Detention of goods in transit under Rajasthan VAT was held fit for provisional release because the genuineness of the transaction and alleged undervaluation required adjudication by the assessing authority on merits. Balancing revenue protection against undue hardship, the Court permitted release on adequate security while preserving the authority's power to decide the dispute after reply and enquiry. The detained truck and goods were ordered to be released on furnishing a bank guarantee for 50% of the goods' value and two solvent local sureties for the remaining 50%, and the petitioner was directed to appear before the assessing authority, which had to decide the matter within ten days of the reply.

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Issues: Whether the detained truck and goods were liable to be released pending adjudication, and on what terms security could be accepted.

Analysis: The detention arose under the transit detention provisions of the Rajasthan Value Added Tax law, but the dispute on genuineness of the transaction and the alleged undervaluation required examination by the assessing authority on merits. Pending that determination, the competing interests of revenue protection and avoidance of undue hardship to the petitioner had to be balanced. The Court applied the security mechanism under the Rules and held that release could be ordered against an appropriate safeguard, while leaving the merits of the allegation to be decided by the assessing authority after reply and enquiry.

Conclusion: The detained goods and truck were directed to be released on furnishing a bank guarantee for 50% of the value of the goods and two solvent local sureties for the remaining 50%, and the petitioner was required to appear before the assessing authority, which was directed to decide the matter within ten days of the reply.

Ratio Decidendi: Where detention of goods in transit is disputed and the merits of the liability require adjudication, provisional release may be ordered on adequate security, with the assessing authority retaining the power to decide the controversy on merits.

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