M/S. Vigneswara Traders vs. The State Of A.P.

Held

The Court directed the respondents to release the seized rice to the petitioner upon furnishing immovable property security for Rs. 12,50,000/- to the satisfaction of the respondents. The Court further directed the 2nd respondent to release the 4.50 quintals of broken rice and the raw rice seized from the lorry and the mill upon the furnishing of such security. The Court did not explicitly address the legality of the seizure or the petitioner's arguments regarding the PDS rice classification in detail, but the operative direction for release on security implies a resolution of the dispute in favor of the petitioner's claim for release of goods, albeit with a substantial security. The ratio decidendi appears to be that goods seized under suspicion, even if alleged to be PDS rice, can be released upon furnishing adequate security, balancing the revenue's interest with the petitioner's right to conduct business.

Facts

The petitioner, M/s. Vigneswara Traders, a GST-registered firm dealing in rice, filed a writ petition challenging the seizure of 32.76 quintals of raw rice and 4.50 quintals of broken rice, along with a lorry, on September 7, 2021. The seizure was conducted by the 3rd respondent. Subsequently, the 2nd respondent, by an order dated September 24, 2021, directed the petitioner to furnish a bank FDR of Rs. 9,000/- for the release of 4.50 quintals of broken rice. The petitioner contended that no food grain license is required for their business and there are no transport restrictions on rice. They had an order for 320 quintals of rice to be delivered to Chennai Port, for which an invoice was raised. The lorry carrying the rice was seized en route. The petitioner also alleged that rice seized from their mill was wrongly identified as PDS rice, and the analysis report was not yet filed. The petitioner argued that the security demanded for the release of broken rice was unwarranted.

Key Issues

1. Whether the seizure of raw rice and broken rice belonging to the petitioner, and the subsequent demand for bank FDR for its release, was illegal and arbitrary, particularly concerning the allegation that the rice was PDS rice (turning on the provisions of the Essential Commodities Act, 1955, and relevant GST provisions concerning movement of goods). The petitioner argued that no food grain license was required for their business involving paddy and rice, and there were no transport restrictions. They contended that the seized rice was not PDS rice and that the analysis report was pending. They further argued that the demand for security for the release of broken rice was unjustified. The revenue, represented by the learned Government Pleader, contended that the seized rice and broken rice were indeed PDS rice, justifying their seizure and that there was no illegality in the action taken.