Release of seized gold and jewellery requires first representation to revenue before writ relief is pursued

Where seized gold and jewellery are claimed as stock-in-trade, the High Court held that the grievance should first be placed before the revenue authorities, especially when no prior specific demand for release had been shown and the efficacy of the statutory remedy was in issue. The petitioners were granted time to make a detailed representation on the basis of the proviso to Section 132(1)(iii) of the Income-tax Act, 1961, and the respondents were directed to consider it by a reasoned order after hearing them, including on the claim that the seized articles could not be retained.

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Issues: Whether the petitioners could seek release of seized gold and jewellery in writ jurisdiction without first making a demand before the revenue authorities, and whether the petitioners' contention based on the proviso to Section 132(1)(iii) of the Income-tax Act, 1961 required first-instance consideration by the respondents.

Analysis: The petitioners asserted that the seized gold and jewellery were stock-in-trade and could not be seized under the proviso to Section 132(1)(iii) of the Income-tax Act, 1961. The revenue relied on the existence of an efficacious remedy under Section 132B of the Income-tax Act, 1961. The Court noted that the materials placed did not show any prior specific demand for return of the seized articles on the basis of the said proviso and, in the absence of such demand and refusal, the respondents had to be given the first opportunity to consider the grievance. The petitioners were therefore granted time to make a detailed representation, and the respondents were directed to decide it by a reasoned order after giving an opportunity of hearing, including on the contention under Section 132(1)(iii).

Outcome: The petition was disposed of with directions to make a representation and for the respondents to decide it in accordance with law.

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