1998 (12) TMI 584 - HC - VAT and Sales Tax

Summary

Issues:
Levy and collection of tax at check posts on poultry feed ingredients brought under valid documents.

Analysis:
The petitioners, engaged in the poultry business, challenged the collection of tax on poultry feed ingredients brought from outside the State at check posts despite having valid documents supporting inter-State purchase. They argued that tax collection without establishing a taxable event or intent to evade tax was unjust.

In response, the counter-affidavit claimed that poultry-farm owners might be clandestinely disposing of the purchased ingredients, justifying tax collection at check posts to prevent revenue loss. However, the Court emphasized that tax collection must not be based on presumptions of potential tax evasion and clandestine sales. The authorities were advised to conduct a proper inquiry before levying taxes.

The Court clarified that check-post officials lacked jurisdiction to collect taxes on genuine inter-State purchases supported by valid documents. Only if documents were found to be spurious or lacking, could taxes be imposed after a proper assessment following statutory provisions. Anticipatory tax collection based on suspicions was deemed inappropriate under the law.

The judgment directed check-post officers not to collect taxes on poultry feed ingredients with valid inter-State purchase documents. If doubts arose, officers were required to provide a reasoned order promptly. The petitioners were instructed to produce proof of dealer registration to facilitate transaction monitoring. Refund applications for taxes collected improperly could be filed, with prompt processing by assessing officers.

In conclusion, the writ petitions were disposed of with the mentioned directions, emphasizing adherence to legal procedures and fair tax collection practices without presumptions of tax evasion.