2004 (11) TMI 546 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Authority to Detain Goods
2. Compliance with Documentation Requirements
3. Allegation of Under-Invoicing
4. Applicability of State Act to Inter-State Transactions
5. Petitioner's Offer to Sell Goods to the Department

Issue-Wise Detailed Analysis:

1. Authority to Detain Goods:
The petitioner contended that there is no power under the State sales tax law to detain goods, although the authorities can seize goods and take further action, including confiscation, if the goods are unaccounted for. The detention notice issued on July 27, 2004, was argued to be without legal authority. The respondent maintained that the detention was justified under Section 29 of the State Act due to suspicion of under-invoicing and evasion of sales tax.

2. Compliance with Documentation Requirements:
The petitioner argued that the transportation of laminated sheets was covered by relevant documents, including the invoice, lorry receipt, and advance way bill, and no irregularities were found during the inspection. However, the respondent found discrepancies: the vehicle was carrying 1167 laminated sheets, but documents were available only for 760 sheets. Additionally, the consignment was not supported by an advance way bill, and the vehicle bypassed designated check-posts.

3. Allegation of Under-Invoicing:
The respondent alleged that the sale price of the goods in the invoice was significantly lower than the prevailing market price, suggesting under-invoicing to evade sales tax. The petitioner quoted a sale price of Rs. 220 per laminated sheet, whereas the market price was around Rs. 400 per sheet. The petitioner's response to the department's request for a quotation was seen as an acceptance of the offer to sell the goods at Rs. 220 per sheet plus 12% APGST.

4. Applicability of State Act to Inter-State Transactions:
The petitioner argued that Section 38 of the State Act prohibits the applicability of the State Act to inter-State purchases or sales. The goods in transit could not be subjected to the jurisdiction of the State authorities. The court noted that Section 28A of the State Act empowers authorities to initiate proceedings for goods sold or purchased below fair market value, even if in transit or in possession of the seller or buyer.

5. Petitioner's Offer to Sell Goods to the Department:
The petitioner provided a quotation of Rs. 220 per laminated sheet plus 12% sales tax in response to the department's request. The court observed that the petitioner accepted the offer to sell the goods at the quoted price. The petitioner's claim was limited to 760 laminated sheets, despite the vehicle carrying 1167 sheets. The court ruled that the petitioner is entitled to the price for 760 laminated sheets at the quoted rate.

Conclusion:
The court upheld the respondent's authority to detain the goods under Section 29 of the State Act due to discrepancies in documentation and suspicion of under-invoicing. The petitioner's argument regarding the inapplicability of the State Act to inter-State transactions was dismissed in light of Section 28A. The petitioner's acceptance of the offer to sell the goods at Rs. 220 per sheet plus 12% sales tax was acknowledged, and the petitioner was entitled to this price for 760 laminated sheets. The writ petition was disposed of accordingly, with no costs awarded.