2017 (2) TMI 1330 - HC - VAT and Sales Tax

Release of detained goods - Movement of goods for the purpose of repair - whether there is sale or branch transfer? - Held that - the petitioner is directed to deposit for the moment a sum of ₹ 5,00,000/- with the second respondent. Upon deposit of the said amount, the second respondent will release forthwith, the detained goods - It is made clear that payment of tax and the factum of furnishing of a personal bond, will be, without prejudice to the rights of the petitioner to challenge both the imposition of tax and compounding fee, by taking recourse to an appropriate remedy, in accordance with the provisions of the Act - petition disposed off.

Summary

Issues: Second round of litigation, direction to rule on representation, movement of goods not involving sale, imposition of tax and compounding fee, detention of goods, expedite release of goods.

Analysis:
In this case, the petitioner initiated a second round of litigation after a previous writ petition. The court had directed the respondent to rule on the representation submitted by the petitioner regarding the movement of goods. The court noted that the movement of goods from Chennai to Delhi did not involve a sale, as confirmed by the respondent in their order. The petitioner's claim that the goods were received for repair and not for sale was supported by the observations made by the respondent in their order.

The court highlighted that the respondent's view that the movement of goods required a sale or branch transfer seemed unsustainable. The petitioner argued that goods can be moved for repair purposes, which should not be excluded from the concept of 'movement of goods.' Despite this, the respondent imposed a tax amount and a compounding fee on the petitioner, demanding a significant sum. The petitioner expressed concern over the prolonged detention of goods, causing harm to their interests.

To expedite the release of the detained goods, the petitioner agreed to deposit a certain amount towards tax as a show of good faith, without waiving their rights and contentions. The court directed the petitioner to deposit a specific sum with the second respondent for the immediate release of the goods. Additionally, the petitioner was required to provide a personal bond for the remaining tax and compounding fee amount.

The court clarified that the payment and bond submission did not prejudice the petitioner's right to challenge the tax and fee imposition through appropriate legal remedies as per the law. The writ petition was disposed of based on these terms, with no costs awarded. The connected miscellaneous petition was also closed as a result of the judgment.