Provisional release of intercepted transit goods was upheld despite disputed invoice details and pending factual examination.

Goods in transit covered by a valid Transit Declaration Form and intercepted before expiry of the exit period could be provisionally released on reasonable security, even though the authorities suspected the transit claim on the basis of allegedly forged invoice details. The Court held that the factual dispute whether the consignments originated from within Uttar Pradesh or were received from outside the State had to be tested on evidence in appropriate proceedings and should not be pre-judged. The absence of a statutory requirement to carry consignor and consignee particulars, unlike in the Rajasthan law, was not by itself conclusive against the assessee. The conditional release order directing deposit of 10% of the estimated value was therefore sustained as a balanced interim measure.

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Issues: Whether seized goods in transit, supported by a valid Transit Declaration Form and found en route before expiry of the exit period, could be directed to be released on deposit of 10% of the estimated value notwithstanding departmental suspicion based on allegedly forged invoice details; and whether the absence of a statutory requirement in the Uttar Pradesh enactment to carry consignor and consignee details was ative.

Analysis: The goods were being transported under a valid Transit Declaration Form and were intercepted while still en route, before the period for exit from the State had expired. The Court held that the factual dispute whether the goods were actually loaded from within Uttar Pradesh or received from outside the State could only be determined on evidence and should not be prejudged in a manner that would affect any future penalty proceedings. Although the authorities were entitled to examine the genuineness of the inter-State transit claim, the absence of a provision comparable to the Rajasthan statute meant that failure to carry consignor and consignee particulars was not, by itself, conclusive. At the same time, the presence of allegedly forged Tin numbers in most of the supporting invoices was a relevant circumstance for scrutinising the claim. Balancing these considerations, the Court found the Tribunal's direction for release on deposit of 10% of the estimated value to be legally sustainable, with the balance protected by further security as permissible in law.

Conclusion: The direction to release the goods on deposit of 10% of the estimated value was upheld; the matter was answered against the State and in favour of the assessee only to that extent.

Final Conclusion: The Tribunal's conditional release order was maintained as a balanced interim measure, leaving the merits and any penalty proceedings open for decision in accordance with law.

Ratio Decidendi: Where goods in transit are intercepted under a valid transit declaration and remain en route within the permitted time, provisional release may be ordered on reasonable security even if the authorities dispute the genuineness of the transit claim, because the underlying factual controversy must be tested on evidence in the appropriate proceedings.

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