(1) Where in respect of any taxable goods, carried in a goods vehicle or held in stock by any dealer or on his behalf by any other person, or held in the custody of any transporter, the Prescribed Authority or any authority to assist the Commissioner under sub-section (2) of section 3, has reason to believe that the value disclosed in invoice, challan, stock transfer memo or any other related document is lower than the prevailing market price or Maximum Retail Price in case of packaged goods by a difference of thirty per cent or more of the prevailing market price or Maximum Retail Price, as the case may be, such authority, for reasons to be recorded in writing, may purchase such goods. No such order for purchase shall be passed unless the person or dealer being dispossessed of such goods, is afforded a reasonable opportunity of being heard.

Explanation.- ''Prevailing market price'' shall mean the wholesale price at which the goods are generally bought and sold in the nearest wholesale market of the State by the dealers in such goods during the time when proceedings are taken to purchase such goods.

''Maximum Retail Price'' (or 'MRP') shall mean the price marked on the package in which the goods are contained.

(2) The price payable for purchase of such goods shall be the total price as mentioned in the invoice, challan, delivery note, or any other related document, plus the cost of transportation of the goods incurred up to the time of purchase, if any.

(3) The person in possession of such goods, shall be bound to sell the goods to such authority and if he refuses, fails or does not deliver the goods, he shall be liable to a penalty which shall be double the amount of differences between the prevailing market price or Maximum Retail Price in the opinion of such authority and the price offered to such person for purchase of such goods.

(4) The authority purchasing the goods, shall dispose of such goods in public auction and the sale proceeds so realized shall forthwith be paid into the Government account.