2017 (3) TMI 340 - HC - VAT and Sales Tax

Seizure - penalty - vehicle was intercepted by the mobile squad, the details of purchaser and seller, who were situated in other States, were not found to be registered and their TIN number was found wrong at the website concerned - Held that - the very transaction of sale is doubted for the reason that description of purchaser and seller does not match with the records, and the details furnished relates to some other person, this Court would not be justified in holding that proceedings for penalty cannot be initiated at all. The interest of the assessee can always be protected, but the interest of revenue has also to be safeguarded - this Court would not be justified in holding at this stage that no penalty proceedings can be initiated - revision disposed off.

Summary

Issues:
Seizure of goods during transportation, conditional release upon deposit, existence of consignor/consignee registration, legality of imposed conditions, relevance of transaction doubts, initiation of penalty proceedings, interest of revenue protection.

Analysis:
The judgment involves a case where goods were seized during transportation, and their release was made conditional upon a deposit due to discrepancies in the details of the purchaser and seller. The tribunal had reduced the liability, but the dealer was aggrieved by the conditions imposed for the release of goods and filed a revision. The revisionist relied on a previous decision stating that consignor or consignee registration is not relevant for seizing goods in transit to prevent tax evasion. The Standing Counsel argued that the transaction was sham and fraud vitiates all, emphasizing the need to protect the revenue's interest and the possibility of initiating penalty proceedings.

The Court considered the arguments and held that when the transaction of sale is doubted due to discrepancies in purchaser and seller details, penalty proceedings cannot be ruled out. While the interest of the assessee can be protected, the revenue's interest must also be safeguarded. Despite the precedent supporting the revisionist's contention, the Court emphasized that in this case, where the transaction itself is doubted, no final opinion on penalty proceedings can be made at this stage. The Court directed that if the assessee furnishes an indemnity bond for the demanded amount, the goods should be released without further deposit, subject to future legal proceedings.

In conclusion, the revision was disposed of with the direction that the goods would be released upon furnishing an indemnity bond for the demanded amount, acknowledging the need to balance the interests of the assessee and the revenue while considering the doubts surrounding the transaction and the possibility of penalty proceedings at a later stage.