2007 (8) TMI 702 - AT - VAT and Sales Tax

Summary

Issues:
1. Import of polyester yarn without a way-bill under the West Bengal Value Added Tax Act, 2003.
2. Seizure of imported goods at the Ghoshpukur check-point.
3. Adjudication of imported goods as hosiery yarn or non-hosiery yarn.
4. Compliance with VAT rules regarding non-taxable goods.
5. Rejection of petitioner's claim before goods are resold.
6. Authority to obtain an undertaking from the dealer.
7. Legal steps for penalty if imported goods are not used for stated purposes.

Analysis:
The judgment pertains to a partnership firm registered under the Indian Partnership Act, 1932, engaged in importing hosiery yarn for resale to manufacturers of hosiery goods. The firm imported 201 boxes of polyester yarn for manufacturing hosiery items, claiming exemption from tax under the VAT Act, 2003. The goods were imported without a way-bill, based on the assertion that the polyester yarn was meant for hosiery purposes, as per Schedule A to the VAT Act, 2003. However, the goods were seized at the Ghoshpukur check-point for lacking a way-bill, leading to the firm's appeal before the Tribunal.

The Tribunal emphasized that polyester yarn could be classified as hosiery or non-hosiery yarn. Authorities were directed to ascertain the actual use of the imported yarn before finalizing any seizure order. Rule 99 of the VAT Rules exempts non-taxable goods from requiring a way-bill. Any doubts about the imported goods' usage should be documented and forwarded for careful assessment by the assessing authority. The petitioner, being a reseller, could not have its claim rejected before resale. The concerned officer could request an undertaking from the dealer regarding sales details to ensure compliance.

The Tribunal found the seizure order unsustainable and set it aside. Precautionary steps were advised to ensure the imported goods were sold to hosiery manufacturers. The petitioner was directed to inform the charge office before selling the consignment and prove sales to hosiery manufacturers. If the imported yarn was not used for hosiery purposes, legal action for importing without a way-bill could be initiated. The goods were to be released by the sales tax authorities within 24 hours of the order communication. The application was disposed of without costs, concluding the judgment.