2016 (1) TMI 1219 - HC - VAT and Sales Tax

Release of detained goods - demand of security for release - Form Form XXI - Held that - Form XXI was produced. There is no allegation that form-XXI was either bogus or not genuine nor there is any allegation against the assessee that the goods were not be found accounted in his books. On the contrary, the assessee had placed a valid document to show that the goods had duly accounted for. In the absence of any finding being recorded by the Tribunal that any goods have escaped assessment towards taxes, the demand for security is not justified - goods are directed to be released - revision allowed - decided in favor of assessee.

Summary

Issues:
1. Revision filed against an order imposing security on the assessee.
2. Validity of the demand for security based on a notification.
3. Production of Form-XXI and accounting of goods in books.
4. Justification for the demand of security by the assessing authority.
5. Lack of finding by the Tribunal on goods escaping assessment.

Analysis:
The High Court heard the revision filed by the assessee against an order passed by the Tribunal imposing a demand of security amounting to Rs. 1,41,300. The security was demanded for release based on a notification issued by the State Government, restricting the transportation of goods beyond a certain limit without specific documentation. The assessee had made transactions with two different dealers after the issuance of the notification, leading to a seizure and demand for security by the assessing authority. However, the assessee produced Form-XXI and his books of account in response to the show-cause notice, demonstrating proper accounting of the goods in question.

The Court noted that the seizure order acknowledged the production of Form-XXI, without any allegations of its authenticity. There was also no claim that the goods were not properly accounted for in the assessee's books. Since the Tribunal did not find any evidence of goods escaping assessment for taxes, the demand for security was deemed unjustified. Consequently, the Court ruled that the goods should be released to the assessee without the requirement of any security, thereby disposing of the revision filed against the order.

In conclusion, the judgment highlighted the importance of proper documentation and accounting practices in compliance with relevant notifications. It emphasized the need for authorities to establish valid reasons for imposing security demands on taxpayers, especially in cases where there is no evidence of tax evasion or irregularities in accounting. The decision served as a reminder of the principles of fairness and justification in tax-related matters, ensuring that undue burdens are not placed on taxpayers without sufficient cause.