CA Final · Indirect Tax Laws · Warehousing
Kaveri Traders warehoused imported electronic goods under a bond executed under section 59. It later transferred the whole consignment to a different warehouse. Kaveri has not transferred the goods to any other person. What is the effect on the original bond?
The bond continues in force. Under section 59(4), a bond executed by an importer for goods remains valid even when those goods are moved to another warehouse. A fresh bond is needed only if goods pass to another person, which has not happened here.
- AThe bond lapses and a fresh bond must be executed for the new warehouse
- BThe bond continues in force notwithstanding the transfer of the goods to another warehouseCorrect
- CThe bond continues only if the new warehouse is in the same State
- DThe bond is cancelled automatically and the security is forfeited
Explanation
Section 59(4) provides that a bond executed by an importer continues in force notwithstanding the transfer of goods to another warehouse. The facts say the goods were not transferred to another person, so the transferee bond rule in section 59(5) is not triggered. No same-State condition exists in the text.
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