2013 (3) TMI 589 - HC - VAT and Sales Tax

Jurisdiction to detain the goods and the vehicle - Held that - Action of Mr. Bangar Assistant Excise and Taxation Commissioner is wholly unwarranted perverse and smacks of mala fides. The documents produced by the petitioner shows that the goods have moved from Delhi on the basis of invoice annexure P2 the net price is f.o.r. destination. Annexure P1 is the order placed by Guru Nanak Dev University a statutory incorporated university placing order on the petitioner for purchase of certain goods. Annexure P2 is the invoice of sale of such goods. The suspicion is not on the genuineness of the documents but on the ground that the order was facilitated by Vicky Scientific Company and that the price has not been received. Both the reasons to say the least are not available to return a finding that it is not a case of inter-State sale. The order for purchase can be directly placed by the university as alleged by the petitioner or through the medium of another person as stated by the State. In either case the nature of transaction does not ceases to be in the course of inter-State sale. W.P. allowed.

Summary

Issues:
Detention of goods under the Punjab Value Added Tax Act, 2005 during an inter-State sale on charging Central sales tax; Jurisdiction of authorities to detain goods; Verification of genuineness of documents; Allegations of attempt to evade tax; Previous adverse actions of the officer detaining goods; Compliance with tests for determining inter-State sale.

Analysis:
The judgment pertains to three petitions raising identical questions of law and facts regarding the detention of goods during an inter-State sale under the Punjab Value Added Tax Act, 2005. The petitioner, a registered dealer, sent water purifiers to a university on an f.o.r. basis, charging Central sales tax. The authorities detained the goods, suspecting tax evasion due to non-receipt of payment before delivery. The petitioner argued that the detention caused losses and was unjustified, emphasizing the jurisdictional limits of the VAT Act.

In response, the authorities alleged a potential attempt to conceal an inter-State sale, citing suspicions based on transaction documents and statements. The petitioner contended that the movement of goods from seller to purchaser constituted an inter-State sale, irrespective of pre-payment. The court acknowledged the tests for inter-State sales, emphasizing the movement of goods, transfer of title documents, and conclusion of sale across states.

The judgment highlighted the officer's past adverse actions in similar detentions, indicating a pattern of unwarranted behavior. Despite the officer's denial of direct involvement, the court found the detention unwarranted and indicative of mala fides. Notably, previous judgments criticized the officer's conduct, leading to personal costs imposed on him. The court ordered the release of goods, emphasizing compliance with inter-State sale tests and dismissing suspicions of tax evasion.

Consequently, the court directed the officer to pay costs and demurrage charges personally, highlighting the officer's consistent violations and the need for disciplinary action. The judgment underscored the officer's disregard for legal findings and the law, necessitating action to prevent future misconduct and ensure compliance with legal standards.