2015 (2) TMI 1146 - HC - VAT and Sales Tax

Levy of tax - 20 packages of footwear and 11 packages of shirts were seized - Goods transported through courier without proper documents showing the consignment was meant for the B.S.F. or C.R.P.F. authorities as the transaction was sent through business mail - Held that - the assessing officer assessed the margin of profit at 12.70 per cent. On footwear and 19.51 per cent. at readymade garments. While doing so, the assessing officer did not take into consideration the fact that this transaction between the petitioner and B.S.F. and the C.R.P.F. and there could be no wrong statements in the accounts. The transaction which had taken place at Delhi could not be the subject-matter of the TVAT Act in Tripura. The only fault was that the goods were being transported without proper documents. The tax, payable for sale in Tripura had to be paid by B.S.F. or the C.R.P.F. on the amount which they were to receive and not on the amount which they paid to M/s. Dheer Marketing Company for supply of the shoes and shirts which were supplied from Delhi but sent to Tripura. Whether the sale had taken place at Delhi or whether the sale was an inter-State sale whereby goods moved from one State to the other, the State of Tripura had no right or authority to levy tax on the same. Forfeiture of bank guarantee furnished and levy of penalty - Held that - during this process, great delay occurred and the contract of the petitioner was cancelled and he has finally taken back the goods to Delhi. As the petitioner has suffered enough for his fault, so, no penalty should be imposed upon him. Also the Bank guarantee shall stand automatically discharged. - Petition disposed of

Summary

Issues: Forfeiture of bank guarantee, Tax assessment jurisdiction

Forfeiture of Bank Guarantee:
The petitioner, a company supplying goods to security forces, had its goods seized due to lack of proper documentation during transportation. The tax authorities imposed penalties and demanded tax payment. The petitioner furnished bank guarantees as directed but faced further penalties and demands without proper justification. The assessing officer failed to consider the nature of the transaction and wrongly assessed taxes. The High Court found the tax order to be without jurisdiction, as the sale did not fall under Tripura's tax purview. Despite the petitioner's oversight in documentation, the Court deemed the penalties unjust, considering the cancellation of the contract and the return of goods to Delhi. Consequently, the Court quashed the orders forfeiting the bank guarantee and closed the proceedings, discharging the bank guarantee automatically.

Tax Assessment Jurisdiction:
The High Court highlighted that the transaction between the petitioner and the security forces did not fall under Tripura's tax jurisdiction. It emphasized that tax should be paid by the security forces on the amount received, not on the amount paid to the petitioner for goods supplied from Delhi to Tripura. The Court criticized the assessing officer for not considering these crucial aspects and for imposing penalties without proper reasoning. Despite acknowledging the petitioner's mistake in sending goods without proper documentation, the Court ruled that the tax assessment was unwarranted due to the nature of the sale. The judgment concluded that the petitioner had already faced enough consequences for the oversight, leading to the quashing of the tax orders and closure of the proceedings.