2013 (4) TMI 631 - HC - VAT and Sales Tax

Composition of offence in terms of Section 72 of TNVAT Act, 2006 - as per the GD Notice the consignment moved from Tamil Nadu to Andhra Pradesh, but the documents as verified showed that the goods had moved from Chennai to Nellore with an invoice raised by the dealer at Kohlapur to Nellore - the goods were detained - Held that - Petitioner is entitled to approach the authority and pay the tax or security as may be required under protest and seek release of the detained goods. If the petitioner pays the tax as required under Section 67(4) of the TNVAT Act, 2006, the authority is bound to release the goods forthwith. Insofar as composition of offence is concerned, a detailed procedure has been prescribed for composition and an opportunity should be given before passing an order under Section 72 of the TNVAT Act, 2006. The said section prescribes that an order should be passed on composition either way on merits and the petitioner is entitled to pursue the same on merits, if aggrieved. In such view of the matter, the petitioner is given liberty to seek release of the goods & insofar as composition of the offence, as per notice issued, it has to be dealt with independently.

Summary

Issues:
1. Challenge to tax and compounding fee imposed on goods detained.
2. Interpretation of Section 70(2) of the Tamil Nadu Value Added Tax Act, 2006.
3. Application of Circular Act Cell-IV/69980/2000 issued by the Commissioner of Commercial Taxes.
4. Procedure for composition of offense under Section 72 of the Tamil Nadu Value Added Tax Act, 2006.

Analysis:
1. The petitioner filed a Writ Petition challenging the tax and compounding fee imposed on detained goods. The goods were detained under GD Notice due to discrepancies in the documentation regarding the consignment's movement from one state to another. The petitioner sought to quash the GD Notice and the Notice for composition of offense issued on 3.11.2012, demanding tax and compounding fee. The petitioner's request for release of goods was not acknowledged, leading to the Writ Petition seeking relief through a certiorarified mandamus.

2. The Court referred to Section 70(2) of the Tamil Nadu Value Added Tax Act, 2006, which mandates obtaining a transit pass when goods are transferred from one state to another. The Court emphasized the necessity of complying with this requirement and rejected the petitioner's argument citing a circular issued in 2000, stating that it holds no legal force post the enactment of the 2006 Act. The petitioner was granted an opportunity to approach the competent authority for the release of goods by paying the required tax under Section 67(4) of the Act.

3. The petitioner was advised to pay the tax or security as demanded under Section 67(4) to secure the release of detained goods. Compliance with this provision would bind the authority to release the goods promptly. Additionally, the Court highlighted the importance of following the prescribed procedures under Section 72 of the Act for the composition of the offense. The petitioner was granted the right to contest the composition order on merits if dissatisfied.

4. Regarding the composition of the offense, the Court explained that the procedure outlined in Section 72 of the Act must be followed diligently. The petitioner was directed to address the composition issue separately, ensuring that the goods detained would be released upon payment of the demanded tax under Section 67. The Writ Petition was disposed of with no costs, granting the petitioner liberty to seek the release of goods by complying with the statutory provisions.