2013 (5) TMI 428 - HC - VAT and Sales Tax

Petitioner was asked to pay tax or to furnish a security in the form, prescribed under Rule 35(4) of the Tamil Nadu General Sales Tax Rules, 1959 for not remitting the Entry Tax at 13% under Section 3(1) of the Tamil Nadu Tax on Entry of Motor Vehicles carrying excavator into Local Areas Act, 1990, before 20.09.2005, to the Commercial Tax Officer II, Theni, Petition was filed for the release of the vehicle. Court passed the interim order. Respondent submitted that the respondent has rightly exercised his power under Section 42(3)(b) of the Act for imposition of tax. He has also given an option for compounding the offence. For the abovesaid reason, he prayed for dismissal of the writ petition. Held that - It is well settled that the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, is not applicable to the excavator and therefore, the Entry Tax for excavator has not been paid. The contention of the petitioner that he had already paid Central Sales Tax at the time of purchase of the excavator from Dharwad, has not been disputed by the respondent by filing any counter affidavit. As levy of Entry Tax is not applicable to the excavator, the impugned notice is liable to be set aside on the ground of jurisdiction and accordingly, set aside. The writ petition is allowed.

Summary

Issues:
1. Interpretation of TNGST Act and Rules regarding the imposition of tax.
2. Validity of the notice issued by the Deputy Commercial Tax Officer.
3. Applicability of Entry Tax on the purchase of an excavator.
4. Enforcement of Section 44 of the TNGST Act.
5. Legal consequences of non-compliance with tax regulations.

Analysis:

1. The petitioner challenged the proceedings directing payment of tax under the TNGST Rules for not remitting Entry Tax on a purchased excavator. The petitioner contended that the Tax on Entry of Motor Vehicles Act did not apply to the excavator, citing relevant legal decisions. The respondent detained the vehicle for non-payment, invoking Section 42(3)(b) of the TNGST Act, claiming the petitioner violated Section 44 by lacking proper documents during transportation.

2. The petitioner argued that the impugned notice was illegal as the excavator was exempt from Entry Tax. The absence of a counter affidavit disputing the petitioner's Central Sales Tax payment strengthened this argument. The court noted the notice's sole basis was non-remittance of Entry Tax, which did not apply to the excavator. Consequently, the court set aside the notice on jurisdictional grounds.

3. The Deputy Commercial Tax Officer justified the tax imposition under Section 42(3)(b) due to the petitioner's alleged non-compliance with Section 44. The respondent offered the petitioner the option to compound the offense, emphasizing the need for proper documentation during transportation to avoid tax evasion.

4. The court highlighted the importance of complying with Section 44, requiring owners to carry specific documents during transportation. Failure to adhere to these requirements could lead to penalties under Section 45(4)(a), emphasizing the legal consequences of non-compliance with the TNGST Act and Rules.

5. Ultimately, the court allowed the writ petition, ruling in favor of the petitioner and closing the connected miscellaneous petition without costs. The judgment underscored the inapplicability of Entry Tax to the excavator and the necessity for proper legal justification before imposing taxes under the TNGST regulations.