2016 (11) TMI 1263 - HC - VAT and Sales Tax

Release of attached warehoused goods - Castor Seeds - upon raiding such godown it was found that the petitioner has stored the said goods without proper documentation with an intention to evade payment of duty - Held that - the petitioner s estimated tax interest and penalty liability works out to 1, 54, 36, 314/. This takes into account maximum imposable penalty at one and a half times the tax. So far assessment is not yet made the final liability could be ascertained. In the meantime if the petitioner secures the full amount the interest of the Revenue would be sufficiently safeguarded. Counsel for the petitioner also offered to give unconditional bank guarantee of 1, 55, 00, 000/to the department. In our opinion subject to such bank guarantee being furnished the goods could be released. The petition is disposed of with the direction that if the petitioner gives the bank guarantee from a scheduled bank to the department of sum of 1.55 crores to be recovered by the department with the tax when interest and penalty liabilities are crystallized the goods lying in the warehouse of M/s Edelweiss Integrated Commodity Management Limited shall be released - decided partly in favor of petitioner.

Issues:
1. Detention of goods by State VAT authorities for alleged duty evasion.
2. Petitioner's request for release of perishable goods.
3. Concerns raised by the AGP regarding the release of goods.
4. Court's assessment of the petitioner's liabilities and conditions for release of goods.

Analysis:
1. The petitioner sought the High Court's intervention to lift the attachment on Castor Seeds detained by State VAT authorities at a warehouse, alleging duty evasion. The goods were stored without proper documentation, leading to their detention since 19.12.2015.

2. Emphasizing the perishable nature of the goods, the petitioner, through counsel, highlighted the risk of quality deterioration and the commitment to deliver the goods before Diwali. Requesting the release of goods under suitable conditions to fulfill the commitments made to buyers.

3. The AGP contended that the time available for authorities to respond was limited, and the goods were not highly perishable. Expressing concerns about the petitioner's actions, the AGP argued that releasing the goods without safeguarding the Revenue's interest was not advisable.

4. The Court, considering the limited time available and the petitioner's incomplete submission of facts, declined immediate release of goods. The Court reviewed a statement provided by the petitioner to the VAT authorities, estimating tax, interest, and penalty liabilities at ?1,54,36,314. The petitioner was offered the goods' release upon payment of this amount, which was refused.

5. Acknowledging the pending assessment and the petitioner's liability estimation, the Court proposed the release of goods upon furnishing an unconditional bank guarantee of ?1,55,00,000 to secure the Revenue's interest until final liabilities are determined. The Court directed the release of goods upon provision of the bank guarantee from a scheduled bank.

6. Consequently, the petition was disposed of with the condition that the petitioner provides a bank guarantee of ?1.55 crores to be recovered by the department against the tax, interest, and penalty liabilities when finalized, leading to the release of goods from the warehouse.

7. The petition was disposed of accordingly, with direct service permitted for compliance with the Court's directions.

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