2017 (2) TMI 1332 - HC - VAT and Sales Tax

Compounding fee - inter-state sale or not - petitioner says that the first respondent ought not to have proceeded to pass the impugned compounding notice, and, on the other hand, should have awaited the completion of exercise initiated to tally the IMEI numbers - Held that - The petitioner s claim that the mobile phones had been received at its Chennai unit from its unit in Manaser, for the purpose of repair, has not been dealt with by the first respondent, while issuing the impugned notice. Furthermore, as pointed out correctly by the learned counsel for the petitioner, the impugned notice, which is dated 10.01.2017 was passed, at a point in time, when, the first respondent had not completed the exercise of tallying the IMEI numbers. The first respondent is directed to rule on the representation dated 25.01.2017, preferred before it by the petitioner - petition allowed by way of remand.

Summary

Issues:
Challenge to compounding notice dated 10.01.2017 regarding tax payment and compounding fee. Allegation of erroneous conclusions by first respondent regarding inter-state sale and IMEI numbers. Failure to consider petitioner's claim of transferring mobile phones for repair.

Analysis:

The petitioner contested a compounding notice issued by the first respondent, demanding tax payment of Rs. 26,88,518/- and a compounding fee of Rs. 53,77,036/-. The petitioner argued that the detained consignment of mobile phones was transferred for repair purposes from its facility to Chennai. However, an error in documentation led to the assumption of an inter-state sale, which the petitioner deemed incorrect.

The petitioner further highlighted discrepancies in the IMEI numbers between the certificate and outer box labels, which the first respondent wrongly concluded did not match. The petitioner asserted that the first respondent prematurely issued the compounding notice without completing the IMEI number verification exercise. Despite a representation made by the petitioner, no response was received.

Upon review, the court found that the IMEI numbers of all 4350 mobile phones matched the list provided by the petitioner's Executive Director. The court noted that the first respondent failed to address the petitioner's claim of transferring the phones for repair. It was acknowledged that the compounding notice was issued before completing the IMEI number verification.

Consequently, the court directed the first respondent to rule on the petitioner's representation dated 25.01.2017 and scheduled a hearing for the petitioner's authorized representative. The first respondent was instructed to issue a speaking order by a specified date, ensuring prompt resolution. The writ petition was closed accordingly, with no costs imposed.

This judgment resolves the issues raised by the petitioner regarding the compounding notice, erroneous conclusions on inter-state sale and IMEI numbers, and the failure to consider the purpose of transferring the mobile phones for repair. The court's directive aims to provide a fair opportunity for the petitioner to present their case and obtain a reasoned decision from the first respondent.