2011 (12) TMI 482 - HC - VAT and Sales Tax

Seizure of goods - penalty orders - Held that - The Tribunal in the appeal preferred by the petitioner against the penalty order has granted partial stay of the order passed by the first appellant authority by directing the petitioner to deposit 15 per cent of amount of penalty in cash and furnish the security for the remaining amount which the petitioner had complied with. Thus, the interest of the Revenue has been amply safeguarded as in the event the appellate authority upholds the order of penalty then the amount of penalty can very well be realised from the security furnished by the petitioner. That being the position, we are of the considered opinion that respondent No. 2 ought to have released the goods seized by him on April 4, 2009. We, therefore, allow the writ petition and direct respondent No. 2 to release the seized goods belonging to the petitioner which have been seized on April 4, 2009 forthwith. However, we may make it clear that the security furnished by the petitioner should be to the satisfaction of the assessing authority and if he has accepted the security so furnished only then the goods should be released.

Summary

Issues:
Petition seeking writ to quash order seizing goods and mandamus to release them.

Analysis:
The petitioner, a proprietorship concern under the U.P. Value Added Tax Act, sold lubricant oil to two dealers, intercepted at Mathura, leading to seizure of goods and issuance of show-cause notice. After various proceedings, including representation before Joint Commissioner and appeals, the goods remained seized due to non-compliance with court order. Penalty proceedings concluded with imposition of penalties. Despite depositing 15% of penalty and furnishing security for the rest, the goods were not released by respondent No. 2. The petitioner argued compliance with Tribunal's order justifying release, while respondent No. 2 insisted on further deposit as per court's previous order or pending penalty proceedings.

The court considered the purpose of demanding security for seized goods to safeguard revenue interests in case of tax evasion or penalty imposition. Noting the penalty order and partial stay granted by Tribunal, directing the petitioner to deposit 15% of penalty and furnish security, the court found revenue interests adequately protected. Consequently, the court held that respondent No. 2 should have released the seized goods immediately. The writ petition was allowed, directing respondent No. 2 to release the petitioner's seized goods, subject to satisfaction of the assessing authority with the security furnished. Each party was directed to bear its own costs in this case.