1998 (2) TMI 547 - HC - VAT and Sales Tax

Summary

Issues:
Detention of goods at check-post, Transit pass issuance, Allegations of tax evasion, Power to detain goods on suspicion, Interpretation of sections 29 and 29-B of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:

The writ petition involved a challenge to the detention of goods by the first respondent at a check-post in Andhra Pradesh. The petitioner, a registered dealer, had purchased Sagar brand gutka from a seller in Kanpur and was transporting the consignment to Bidar. The detention was based on suspicion that the goods were intended for sale in Hyderabad, not Bidar. The transit pass obtained by the driver mentioned an exit check-post, Kodikonda, which was not on the route to Bidar, raising suspicion. The detention order cited the suspicion of tax evasion as the reason for holding the goods. The petitioner argued that the detention was baseless as the goods were legitimately meant for Bidar and all necessary documents were provided at the check-post.

The counter filed by the first respondent alleged that the transit pass was obtained through misrepresentation, indicating a suspicious intent to sell the goods in Hyderabad. The respondent contended that the detention was justified under Section 29 of the Act due to the suspicion of diversion of goods for sale in Hyderabad. The court analyzed the relevant sections 29 and 29-B of the Andhra Pradesh General Sales Tax Act, 1957 to determine the legality of the detention. Section 29 allows for inspection of goods in transit and detention if there is suspicion of tax evasion. Section 29-B mandates the issuance of a transit pass if goods are properly accounted for. The court noted that the detention order did not establish any evasion of tax or improper accounting, rendering the detention unjustified.

The court held that the detention order lacked legal basis as the requirements of Section 29(3)(b)(ii) were not met. The officer did not have the authority to detain goods solely on suspicion of diversion for sale within the state. Since the goods were at the stage of obtaining a transit pass, the presumption of sale within the state had not arisen. Consequently, the court quashed the detention order and directed the immediate release of the goods. The writ petition was allowed with costs imposed on the respondents.