2007 (10) TMI 574 - HC - VAT and Sales Tax

Detention orders - Release of goods - Held that - As the goods were imported and the goods have been warehoused and yet to be cleared under section 68 of the Customs Act, 1962, for home consumption at the time of passing of the detention order, the authorities under the Tamil Nadu General Sales Tax Act, 1959 have no power to pass an order of detention. Thus the levy is not in accordance with law and hence, the writ petitions are allowed.

Summary

Issues:
Detention of goods under Tamil Nadu General Sales Tax Act, 1959 based on high sea sale agreements, legality of detention orders, authority of customs in relation to taxability, power of the authorities under the Act to detain goods.

Analysis:
The judgment pertains to two writ petitions filed by a manufacturer of jumbo bags using plastic granules, challenging detention orders of goods under the Tamil Nadu General Sales Tax Act, 1959. The petitioner, a recognized export house and registered dealer under sales tax acts, purchased plastic granules through high sea sale agreements. The detention orders were issued based on the premise that the consignors were different entities than the petitioner. The petitioner contended that the goods were purchased on high seas, cleared for warehousing, and not for home consumption, thus not subject to tax under the Act.

The court considered a previous Division Bench decision which highlighted the provisions of the Central Sales Tax Act, 1956, Customs Act, 1962, and the Constitution of India regarding imported goods warehoused but not cleared for home consumption. The Division Bench held that authorities under the Sales Tax Act lacked power to detain goods still under customs control. It was emphasized that penal provisions could not be invoked when goods were yet to be cleared for home consumption. The court found the facts of the present case similar to the Division Bench case and ruled in favor of the petitioner, stating that the detention was not lawful. The court allowed the writ petitions, emphasizing that the issue could be revisited post-clearance of goods in accordance with statutory provisions.

In conclusion, the court allowed the writ petitions, highlighting that the detention orders were not in accordance with the law. The judgment emphasized the importance of considering statutory provisions post-clearance of goods for taxability issues. The court's decision was based on the interpretation of relevant legal provisions and previous case law, ensuring the protection of the petitioner's rights in the matter.