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CMA Final · Indirect Tax Laws and Practice · Inspection, Search, Seizure, Arrest and Prosecution

Goods valued at Rs 8,00,000 are seized from Kaveri Enterprises. The Act and rules allow provisional release in certain ways. Which of the following is a permitted basis for provisional release under section 67(6)?

Provisional release is allowed on execution of a bond and furnishing of security in the prescribed manner and quantum, or on payment of the applicable tax, interest and penalty. Section 67(6) names no market-value payment, fixed guarantee percentage or unsecured undertaking.

  1. AExecution of a bond and furnishing of security as prescribed, or payment of applicable tax, interest and penaltyCorrect
  2. BOnly payment of the full market value of the goods
  3. COnly a bank guarantee of 150% of the value of the goods
  4. DA written undertaking to pay tax once the notice is issued, with no security

Explanation

Section 67(6) allows seized goods to be released provisionally either on executing a bond and furnishing security in the prescribed manner and quantum, or on paying the applicable tax, interest and penalty. It does not mention market value, a fixed 150% guarantee, or an unsecured undertaking, so those options are wrong.

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