(1) If the Government considers that with a view to prevent or check avoidance or evasion of tax under the Act in any place or places in the State it is necessary so to do, then it may by notification in the Government Gazette, direct the setting up of Check Posts at such place or places and notify the area of the Check Posts, (hereafter referred to as the notified area), and erect barriers where necessary for the purpose of regulating the passage of goods across such notified area.

Provided that the Check Posts established under the Jammu and Kashmir General Sales Tax Act, 1962, shall be deemed to have been established under this sub-section on the appointed day.

(2) No person shall transport within the State across or beyond the notified area any consignment of goods exceeding such quantity or value as may be prescribed, by any vehicle or any other mode of conveyance unless he is in possession of-

(a) either a bill of sale or delivery note or declaration or certificate of ownership containing such particulars as may be prescribed; and

(b) a way bill in such form and containing such particulars as may be prescribed.

Explanation: The term goods referred to in this sub-section shall not include luggage of persons who cross the notified area.

(3) Notwithstanding the provisions of sub-section (2), the Government may, in addition to the requirements under sub-section (2), by notification require a person importing such goods as may be notified from time to time to furnish such declaration and in such manner as may be prescribed.

(4) (a) In any notified area or at any other place, an officer Incharge of the said area or the Commissioner or any other officer, not below the rank of Inspector, duly authorized by the Commissioner, may require-

(i) the driver or any other person in charge of the vehicle or any other conveyance, as the case may be, to stop the vehicle or conveyance, and put it stationary, as long as may be necessary, for the purpose of examining the goods under transport and other contents of the vehicle including records relating to the goods which are in the possession of the driver or such other person;

(ii) any person in charge of a godown or any other premises of transport agency, clearing or forwarding agency, other than a rail head or a post office, to produce for inspection transport receipts, account books and other documents concerning the goods carried, transported, loaded, unloaded, consigned or received for transport maintained in the ordinary course of business and in the prescribed manner.

(b) The Commissioner and any other authority or officer referred to in clause (a) of this sub-section shall for the purpose of investigation have powers to -

(i) search the vehicle or conveyance and the driver or other person incharge of the vehicle or conveyance;

(ii) break open any package or packages under transport in a vehicle or found in godown or premises of the transport agency or the clearing or forwarding agency;

(iii) examine on oath the driver or owner of the vehicle or conveyance or the person incharge of the transport agency or clearing or forwarding agency;

(iv) seize the goods; and

(v) seize the receipts, account books and other documents:

Provided that before seizing, the authority/officer shall record the reasons in writing and make an inventory of the goods seized, a copy of which shall be handed over to the driver or owner of the vehicle or the person incharge of the transport agency or clearing or forwarding agency as the case may be. The seized records shall be impounded, in the prescribed manner and retained so long as their retention may be necessary for the purpose of the Act.

(5) (a) The goods, covered by sub-section (2) whether found in vehicle or other conveyance , or godown or any other premises of any transporter, clearing or forwarding agency, or any other place, but which are not supported by documents which are fake , false or suspected to be fake or false in respect of the particulars contained therein, shall be seized by the Officer Incharge, Notified Area or any other officer or authority referred to in sub-section(4) after recording reasons in writing and the owner of such goods shall be liable to penalty which shall be equal to double the amount of tax leviable on such goods. The value of goods under this sub-section shall mean the invoice value or market value whichever is higher:

Provided that the goods liable to seizure and /or seized may, subject to the security furnished in prescribed form for a value equal to the amount of maximum leviable penalty, be released.

(b) No order of penalty under clause (a) shall be made unless the affected person is given a reasonable opportunity of being heard. The goods for the value equal to the penalty or the security furnished under sub-section (5), as the case may be, shall not be released unless the amount of penalty levied is paid.

Explanation :- Where the goods as per the accompanying documents are undervalued, the penalty under this sub-section shall be calculated on the differential amount of tax that would have been evaded.

(6) The officer who detained or seized the goods may release them temporarily on cash or other prescribed security being furnished by the person concerned to the extent of the penalty leviable if such officer is satisfied, that it is necessary to do so in the public interest or such other circumstances and subject to such other conditions as may be prescribed.

(7) Nothing contained in sub-section (5) or sub-section (6) shall apply in the case of goods transported, which are exempt from tax under any of the provisions of the Act without any condition or restriction.

(8) No dealer or any other person, including a carrier of goods or agent of a transporter or booking agency acting on behalf of a dealer, shall take delivery of , or transport, from any vehicle or other conveyance, station ,airport, or any other place, whether of a similar nature or otherwise, any consignment of goods, the sale of which is taxable under the Act, except in accordance with such conditions, as may be prescribed, with a view to ensuring that there is no evasion of tax.

(9) (a) The transport agency, by whatever name called, or the owner/Incharge of the vehicle/carrier/conveyance (by whatever name called) which has booked the goods referred to in sub-section (5) for transport and delivery to the consignee or to which is attached the vehicle which has carried or is carrying those goods, shall be liable to pay, by way of penalty a sum not less than 25% but not more than 50% of the invoice value or the market value of such goods, whichever is higher:

Provided that if the vehicle is not attached to any transport agency or has no place of business in the State, a person deemed to be an agent of such transport agency available in the State or the owner of the vehicle, shall be liable to the said penalty:

Provided further that before levying penalty the affected person shall ordinarily be given an opportunity of not less than 7 days, unless there are reasons to be recorded in writing for giving a shorter notice, to prove to the satisfaction of the concerned officer that the lack of supporting documents specified in sub-section (1) or the fakeness or falsity thereof was not within his knowledge. A certified copy of the order of levying penalty or dropping the proceeding shall be issued to the said person:

Provided also that the vehicle, which has carried or is carrying goods without documents as specified in sub-section (2), shall not be released unless security equivalent to penalty leviable under clause (a) or clause (b) is furnished. The security thus furnished shall be adjusted against the penalty leviable or refunded after determining the liability or otherwise under the said clauses.

Explanation: The lack of supporting documents or the fakeness or falsity thereof shall be deemed to be within the knowledge of the owner of the vehicle or conveyance if he without reasonable cause fails to comply with any of the requirements of the provisions contained in this section.

(b) Where a transport agency (by whatever name called) to whom goods are handed over on supardnama, in accordance with the rules issued under the Act releases such goods without obtaining the release order from the Competent Authority, such transport agency shall be liable to a penalty equal to four times the amount of tax leviable on such goods.

(10) Where the taxable good are transported on behalf of an unregistered dealer, or a registered dealer in whose registration certificate the goods transported are not covered, the officer incharge of the special investigation unit (SIU) or notified area or check post or barrier or any officer authorized under sub-section(4) shall detain and seize the goods, unless the dealer, the driver of the vehicle or conveyance or any other person incharge of the goods furnishes security in the prescribed form for an amount equal to double the amount of tax leviable on such goods. The security thus furnished shall be adjusted against the tax, penalty, interest, fee or any other sum that may be payable by such dealer under the provisions of the Act. The excess amount of security, if any, shall be refundable in the manner laid down in this Act. The provisions relating to detention and search of goods contained in this section shall, in so far as may be applicable, apply for the purposes of this sub-section:

Provided that if the said dealer fails to obtain a certificate of registration under the Act within a period of 90 days from the date of deposit of security and the Assessing Authority has no information in his possession that the dealer is carrying on regular business of selling taxable goods, the amount of security deposited shall be deemed to be the tax payable by the dealer and no claim for refund of such amount or any part thereof shall be entertained.

Explanation: - For purpose of this sub-section, the value of goods shall mean the invoice value or market value of the goods, whichever is higher.

(11) The officer referred to in sub-section (10) shall maintain a register in the prescribed form containing the names and the addresses of the dealers against whom action has been taken and such other particulars as may be prescribed. He shall also furnish such information in this behalf as may be prescribed, to the Deputy Commissioner Commercial Taxes having jurisdiction over the place of business of the said dealer.

(12) If the goods seized under sub-section (5) or sub-section (10) are not claimed within a period of 90 days from the date of seizure, or in the case of perishable goods in a lesser period as determined by the authority making the seizure, such goods shall be sold by auction in the prescribed manner and the sale proceeds thereof as reduced by the amount of penalty and security payable under the Act besides other expenses incurred on unloading, handling and auctioning, shall be deposited in the treasury under appropriate head of account. This amount shall be refundable to the owner of such goods on an application made in prescribed form and in prescribed manner within a period not exceeding 90 days from the date of auction. In case no claim of ownership is made within the said period, the amount shall be forfeited to the Government. No interest shall accrue on such amount:

Provided that if the goods seized under sub-section (5) or sub-section (10) are handed over to a transport agency on supardnama, the officer Incharge referred to in this section shall transfer the goods with relevant documents for disposal to the appropriate authority having jurisdiction over the area, or any other officer authorized in this behalf by the Commissioner, who shall take cognizance of the cases referred to him and finalize in accordance with the provisions of the Act as soon as he receives documents of seizure from the officer Incharge of notified area.