2013 (5) TMI 674 - HC - VAT and Sales Tax

Default of transit pass - Compounding fee for release of the goods vehicle detained - offence stated to have been committed by the petitioner u/s 70(1)(c), 71(3)(d), 71(3)(e) and 71(5)(a) of the Tamil Nadu Value Added Tax Act - Held that - As the the petitioner now pleaded before this Court that the petitioner has valid objections to be filed as against the impugned goods detention notice and notice demanding compounding fee, this Writ Petition is disposed of, with a direction to the petitioner to file their objections to the impugned notices, dated 1.2.2013 respectively, within a period of two weeks from the date of receipt of a copy of this order, and on filing such objections, the respondent shall consider the same, afford an opportunity of hearing to the petitioner and pass appropriate orders, on merits.

Summary

Issues:
Challenge to two proceedings under TNVAT Act - Goods Detention Notice and consequential notice.

Analysis:
The petitioner, a company engaged in IMFL business in Pondicherry, challenged two proceedings by the respondent under the TNVAT Act. The petitioner's case was based on the argument that the goods being transported from Kerala to Pondicherry did not involve any sale within Tamil Nadu, hence the respondent had no jurisdiction to demand tax or compounding fee. The petitioner contended that all necessary documents were in order, including the invoice, excise permit, and consignment declaration form, proving the legitimacy of the transaction and the goods' movement. The petitioner argued that the detention of goods and the demand for a compounding fee were illegal, arbitrary, and against the law due to lack of jurisdiction.

The respondent, in their counter affidavit, argued that the petitioner failed to comply with the provisions of Section 70(1)(a) and (b) of the TNVAT Act, leading to the detention of the goods under Section 70(1)(c). The respondent maintained that the failure to obtain a transit pass at the entry check post in Tamil Nadu deemed the goods to have been sold within the state, making the petitioner liable to pay tax and penalty. The respondent also highlighted that the petitioner had an alternative remedy of revision under Section 54 of the TNVAT Act.

Upon hearing both parties, the Court examined Section 70 of the TNVAT Act, which outlines the issuance of transit passes for goods passing through the state. The Court noted that the petitioner's failure to obtain a transit pass as required under the Act led to the issuance of the impugned goods detention notice. The Court directed the petitioner to file objections to the notices within two weeks and mandated the respondent to consider the objections, provide a hearing to the petitioner, and pass appropriate orders within four weeks. The Court emphasized that the petitioner could take further legal action if an adverse decision was made. The Court disposed of the writ petition with no costs, allowing the petitioner to proceed in accordance with the law based on the outcome of the objection filing process.