2013 (6) TMI 554 - HC - VAT and Sales Tax

Release of Seized of goods - whether the tribunal is legally justified in reducing the security of 40% of the estimated value of the goods to twice the amount of tax imposable on the value of the goods so estimated. - held that - The Act only provides for a maximum of amount of security to be demanded and does not specifies any fixed amount of security. The maximum amount of security demanded is also relaxable at the discretion of the Commissioner/Deputy Commissioner for sufficient reasons to be recorded in writing. Such a decision is even appealable before the tribunal having power to confirm, cancel or vary the order appealed against which, certainly leads to a conclusion that the tribunal is vested with the power to demand lesser amount of security and not to stick at the security of 40% of the estimated value of the goods in directing for release of the same. Tribunal has the authority in exercise of its appellate power to direct for release of the goods on a lesser amount of security than 40% of the estimated value of goods seized. - Decided against the revenue.

Summary

Issues:
1. Whether the tribunal is legally justified in reducing the security of 40% of the estimated value of the goods to twice the amount of tax imposable on the value of the goods so estimated.

Analysis:
The case involved revisions against a tribunal's order allowing seized goods to be released on payment of twice the tax admissible on the estimated value of the goods. The key legal provision under consideration was Chapter VIII of the U.P. Value Added Tax Act, specifically Section 54 which deals with penalties for contraventions related to tax evasion. The Act limits the penalty to 40% of the value of the goods in cases of attempted tax evasion through importation. Furthermore, Section 48 empowers seizing goods if undervalued or unaccounted for, with a penalty not exceeding 40% of the goods' value. The authority seizing goods cannot demand security exceeding 40% of the estimated value for release.

The judgment highlighted that while the Act sets a maximum security amount, it does not specify a fixed amount, allowing flexibility for the Commissioner or Deputy Commissioner to release goods without deposit or with a lesser amount based on recorded reasons. Such decisions are appealable to the tribunal, which can confirm, cancel, or vary the order. The court emphasized the tribunal's authority to demand a lesser security amount than the prescribed 40% of the estimated value for releasing seized goods, based on the circumstances and reasons provided.

The court rejected the revenue's argument that a fixed penalty rate cannot be deviated from, citing a case under the Rajasthan Sales Tax Act, which is not directly applicable in the present matter concerning the security amount for releasing seized goods. The judgment clarified that the dispute was not about the penalty itself but about the security required for releasing goods. Ultimately, the court held that the tribunal, in its appellate capacity, has the power to direct the release of goods with a lesser security amount than the prescribed 40% of the estimated value, based on the circumstances and reasons provided.

In conclusion, the court dismissed the revisions, ruling in favor of allowing the tribunal's authority to determine a lesser security amount for releasing seized goods, rather than strictly adhering to the 40% limit specified in the Act.