2017 (3) TMI 212 - HC - VAT and Sales Tax

Seized goods released by Tax Tribunal with 10% deposit & indemnity bond, balancing interests

The Court allowed the release of seized goods by the Commercial Tax Tribunal upon a 10% deposit and an indemnity bond, balancing the interests of both ... Release of seized goods - invoices mentioned Tin numbers, which were found to be non-existent - the consignor and consignee were all fictitious persons - Held that: - goods were being transported with a valid Transit Declaration Form (TDF), and at the time when goods were seized, it was en-route, as disclosed in TDF, and period for the vehicle to exit had not expired. The interest of the parties would have to be protected, particularly as proceedings u/s 48 are likely to be initiated in the matter. It is found that goods were being transported pursuant to a TDF, and at the time when goods were seized, they were found to be en-route disclosed in the TDF, and time to exit State had not expired - the direction issued by the Tribunal to release the goods upon deposit of 10% amount of the estimated value in cash or bank guarantee cannot be said to be bad in law. Revision disposed off. Issues:1. Dispute over the release of seized goods by the Commercial Tax Tribunal.2. Allegations of tax evasion and forged documents against the transporter.3. Interpretation of relevant provisions under U.P. Value Added Tax Act.4. Comparison with judgments from other High Courts.5. Determination of the genuineness of the goods' origin and transportation route.Analysis:1. The case involves a disagreement between the State and the assessee regarding the release of goods seized by the Commercial Tax Tribunal. The Tribunal allowed the appeal partially, directing the deposit of 10% of the estimated value of the goods for release, with a provision for refund upon evidence of goods crossing the State.2. The State raised concerns about the genuineness of the documents and alleged tax evasion by the transporter. The State insisted on a 40% deposit due to suspicions of forged documents and fictitious consignors and consignees. The transporter defended, stating that the details provided were genuine and beyond their verification scope.3. The Court analyzed the requirement for transporters to provide consignor and consignee details under the U.P. Value Added Tax Act. While no identical provision as in Rajasthan existed, the Court emphasized the need for authorities to verify the origin of goods passing through the state, especially when documents are suspected to be forged.4. Reference was made to judgments from other High Courts, highlighting the distinction in provisions and interpretations. The transporter's counsel relied on previous decisions to argue against the necessity of a deposit or bank guarantee in this case.5. The Court emphasized the importance of determining the actual origin of the goods and the transportation route. While acknowledging the existence of forged documents, the Court noted that the goods were being transported with valid documentation and were en-route as per the Transit Declaration Form. The Court upheld the Tribunal's decision to release the goods upon a 10% deposit, considering the circumstances.In conclusion, the Court disposed of the revision, allowing the release of goods upon a 10% deposit and an indemnity bond. The decision aimed to protect the interests of both parties while acknowledging the potential penalty proceedings that may follow. The Court refrained from making judgments on the case's merits and left room for further examination of legal arguments in future proceedings.