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2013 (12) TMI 214 - HC - VAT and Sales TaxPenalty u/s 57 (15) Madhya Pradesh Value Added Tax Act, 2002 goods detained being not supported by the documents - Held that - After the order imposing the penalty against the petitioner was passed - The petitioner had opted to pay a lump sum amount as per Section 57 (17) of the Act and paid the penalty amount - once the petitioner had paid the penalty imposed upon it by the Check Post Officer, it was incumbent upon the Check Post Officer to have exercised its power under Section 57 (11) of the Act to release the goods seized by it in favour of the transporter. Dues of tax against the seller - Before expiry of period of Notice of Demand issued to seller, as required under Section 27 of the Act read with Rule 41 of the MP VAT Rules, 2006 the goods were already sold by M/s. Shri Hari Enterprises to M/s. Mahajan Traders and its ownership no more remained with M/s. Shri Hari Enterprises - the seller having already received the price of the goods and having handed over the goods to the petitioner / transporter for being delivered to the buyer, the goods could not have been detained by the Check Post Officer for realization of the tax assessed by it against the seller - The amount of tax against M/s. Shri Hari Enterprises was crystalized and became payable after the sale of the goods was already complete - The action of the revenue in not releasing the goods in favour of the petitioner / transporter is violative of Section 57 (11) of the Act Revenue is directed to release the tankers with goods Decided in favour of Petitioner.
Issues Involved:
1. Legality of detaining goods by the Check Post Officer after the penalty was paid. 2. Entitlement of the petitioner to the release of goods under Section 57 (11) of the Madhya Pradesh Value Added Tax Act, 2002. 3. Validity of detaining goods for the recovery of tax dues from the seller. Issue-wise Detailed Analysis: 1. Legality of Detaining Goods by the Check Post Officer After the Penalty Was Paid: The petitioner, a transporter, was carrying goods (Palm Oil) for delivery when the tankers were stopped by the Commercial Tax Officer due to lack of proper documentation. A penalty was imposed under Section 57 (8) of the Madhya Pradesh Value Added Tax Act, 2002, and the petitioner opted for composition of the penalty under Section 57 (17) and paid the amount on 20.09.2013. Despite this, the Check Post Officer refused to release the goods, directing the petitioner to unload the tankers and take only the empty tankers. The court found that once the petitioner had paid the penalty, it was incumbent upon the Check Post Officer to release the goods under Section 57 (11) of the Act. 2. Entitlement of the Petitioner to the Release of Goods Under Section 57 (11) of the Madhya Pradesh Value Added Tax Act, 2002: Section 57 (11) of the Act mandates the release of goods in favor of the transporter upon payment of the imposed penalty. The court held that the Check Post Officer's failure to release the goods after the penalty was paid was a violation of this provision. The court emphasized that the petitioner's compliance with the penalty payment should have resulted in the immediate release of the seized goods. 3. Validity of Detaining Goods for the Recovery of Tax Dues from the Seller: The respondents argued that the goods were detained to recover tax dues from the seller, M/s. Shri Hari Enterprises, which had not paid the required tax. However, the court noted that the goods were sold by M/s. Shri Hari Enterprises to M/s. Mahajan Traders before the expiry of the Notice of Demand period. Therefore, the ownership of the goods had transferred, and the seller had no right over them at the time of detention. The court concluded that the tax liability crystallized after the sale, making the detention for tax recovery from the seller invalid. Conclusion: The court allowed the petition, directing the respondents to release the tankers with goods in favor of the petitioner forthwith, finding the detention of goods post-penalty payment and for tax recovery from the seller to be illegal and violative of Section 57 (11) of the Act.
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