2014 (9) TMI 638 - HC - VAT and Sales Tax

Detention of goods - Movement of goods with intention of evasion of tax - Held that - Petitioner is ready and willing to pay onetime tax and in respect of compounding fee, he is ready to furnish personal bond and has also drawn the attention of this Court to the provisions of Section 67(4) of the Tamil Nadu Value Added Tax Act, 2006, and would submit that as per the said provision, if the tax is paid or the security is furnished, then the goods so detained shall be released forthwith and in the light of the same, though there is no necessity on his part to pay the compounding fee, since the goods have been detained so longer, he is ready and willing to furnish personal bond for the compounding fee, without prejudice to his rights. The petitioner without prejudice to his rights and contentions, shall pay a sum of ₹ 50,440/- (Rupees fifty thousand four hundred and forty only) being onetime tax, as demanded in the impugned notice, and insofar as the compounding fee of ₹ 1,00,880/-, he shall offer personal bond to the satisfaction of the respondent, both within a period of one week from the date of receipt of copy of this order and on such compliance, the respondent is directed to release the goods detained, in terms of the impugned notice, forthwith - Decided partly in favour of assessee.

Summary

Issues:
1. Detention of goods for alleged tax evasion by using inter-state invoice.
2. Representation submitted by the petitioner for release of the detained goods.
3. Contentions regarding tax payment and compounding fee by both parties.
4. Legal provisions under the Tamil Nadu Value Added Tax Act, 2006.
5. Previous judgments related to similar issues and their impact on the current case.

Analysis:
The judgment revolves around the detention of goods by the respondent on the grounds of alleged tax evasion through the use of an inter-state invoice. The petitioner, in response, submitted a detailed representation stating that the goods were legitimately transported from Tamil Nadu to Karnataka for a local sale. The petitioner highlighted their compliance with Karnataka VAT rules and provided necessary documentation, including an E-Sugam and the invoice, to support their claim. The petitioner sought the release of the goods by filing a writ petition, challenging the impugned notice dated 15.7.2014.

The petitioner's counsel argued that the representation clearly demonstrated their intent to abide by the law and pay the due taxes. Additionally, reference was made to previous judgments where similar issues were considered, and the impugned orders were quashed, subject to certain conditions. The petitioner requested the court to follow a similar approach in this case.

On the other hand, the respondent contended that the petitioner's actions were aimed at evading tax in Tamil Nadu, emphasizing that the goods should have remained within Karnataka. The respondent proposed that the petitioner should pay the demanded tax and provide a bank guarantee for the compounding fee.

After considering the arguments and examining the case's circumstances, the court issued a final order. The petitioner was directed to pay a specified one-time tax amount and offer a personal bond for the compounding fee within a week. Upon compliance with these conditions, the respondent was instructed to release the detained goods promptly. The judgment relied on Section 67(4) of the Tamil Nadu Value Added Tax Act, 2006, which allows for the release of detained goods upon tax payment or providing security.

In conclusion, the court disposed of the writ petition, emphasizing the petitioner's obligation to pay the specified tax and offer a personal bond for the compounding fee to secure the release of the detained goods. The judgment balanced the interests of both parties while upholding the legal provisions and previous judicial decisions related to similar matters.