2014 (8) TMI 336 - HC - VAT and Sales Tax

Detention of goods - No valid transit pass produced - Held that - Without going into the correctness or otherwise of the order impugned in this writ petition, the respondents are directed to release the goods detained, to the petitioner forthwith, on condition that the petitioner pays the tax amount to be assessed by the authority as contemplated under the Act. Insofar as the compounding fee is concerned, if the authority fixes the compounding fee viz., one time of the tax, the petitioner is directed to produce bank guarantee for the 50% of such amount to be assessed by the authority. If the authority fixes compounding fee, viz., two times of the tax, the petitioner is directed to produce bank guarantee for 50% of such amount and for the remaining 50% of such amount, the petitioner shall produce personal bond. It is made clear that the petitioner company has to subject themselves to the adjudication proceedings that may be initiated by the respondents. - Decided conditionally in favour of assessee.

Summary

Issues:
1. Validity of goods detention notice and consequential order.
2. Requirement of transit pass for imported goods.
3. Authority to release detained goods on payment of tax.
4. Compounding fee and conditions for release of goods.

Analysis:
1. The petitioner, a Private Company engaged in manufacturing railway track and machinery parts, challenged the detention notice and consequential order dated 02.5.2014 and 19.5.2014. The respondent detained the goods for lack of a valid transit pass, while the petitioner claimed the goods were transported with proper documents, making the detention unsustainable in law.

2. The petitioner argued that the goods were transported with proper delivery notes and other required documents. The petitioner expressed readiness to pay the entire tax amount assessed by the authority, without waiving the right to file a revision. The Court considered this contention and heard the Additional Government Pleader for the respondents.

3. Referring to a previous case, the Court directed the release of goods upon payment of tax by the petitioner under protest. Without delving into the correctness of the impugned order, the Court instructed the respondents to release the detained goods to the petitioner immediately, subject to the petitioner paying the tax amount assessed by the authority as per the Act.

4. Regarding the compounding fee, if fixed by the authority at one time the tax amount, the petitioner must produce a bank guarantee for 50% of the sum. If the compounding fee is set at two times the tax, the petitioner must provide a bank guarantee for 50% and a personal bond for the remaining 50%. The petitioner company must also comply with any adjudication proceedings initiated by the respondents. The writ petition was disposed of with no costs, and connected miscellaneous petitions were closed.