2015 (3) TMI 132 - HC - VAT and Sales Tax

Detention of goods along with the truck - Failure to produce the proof of goods tax - Violation of principle of natural justice - no reason assigned for detention of goods under section 31(6) of the State Act - Inter state Sale or Intra state Sale - Held that - In view of the findings recorded by the authorities that the goods were loaded at Faridabad and were within the State of Haryana at the time when they were intercepted and moreover when there were two sets of documents i.e. invoice and GR dated November 23 2007 the plea of the appellant that the destination of the goods was Bhiwadi outside the State of Haryana had rightly been rejected by them. The findings of fact cannot be said to be perverse or erroneous in any manner as the same were recorded not on the basis of the statement of the driver but on the basis of the preliminary enquiry conducted as noticed in the assessment order. In such a situation no question of law much less substantial arises for consideration in this appeal - Decided against assessee.

Issues Involved:
1. Legality of the order upholding tax and penalty under the Haryana Value Added Tax Act, 2003.
2. Classification of the transaction as inter-State trade and commerce versus sale in transit.
3. Legality of the order in the absence of a finding of an attempt to evade tax.
4. Validity of the initiation of proceedings based on the detention notice.
5. Authority to detain goods under section 31(6) for mere verification.

Detailed Analysis:

Issue 1: Legality of the order upholding tax and penalty under the Haryana Value Added Tax Act, 2003
The appellant contended that the transaction was inter-State trade and not subject to Haryana VAT. However, the Assistant Excise and Taxation Commissioner (AETC) determined that the transaction was an attempt to evade tax. The AETC conducted an inquiry and found that the goods were loaded from the appellant's godown in Faridabad, indicating that the delivery was taken within Haryana, thus nullifying the claim of sale in transit. The appellate authority and the Tribunal upheld this finding, confirming that the transaction was not a sale in transit but an inter-State sale, and thus subject to Haryana VAT.

Issue 2: Classification of the transaction as inter-State trade and commerce versus sale in transit
The appellant argued that the transaction was a sale in transit under section 6(2) of the Central Sales Tax Act, 1956, which exempts subsequent sales from tax. However, the authorities found that the goods were delivered and loaded at the appellant's godown in Faridabad, as evidenced by the driver's statement and the inquiry report. The presence of two sets of documents-one indicating movement from Korba to Faridabad and another from Faridabad to Bhiwadi-further supported the conclusion that the appellant had taken delivery in Haryana, disqualifying the transaction as a sale in transit.

Issue 3: Legality of the order in the absence of a finding of an attempt to evade tax
The appellant claimed that there was no finding of an attempt to evade tax. However, the authorities found that the appellant failed to produce proper and genuine documents, and the goods were not accompanied by the required VAT D-3 forms. The Tribunal noted that the preparation of a second set of documents suggested an attempt to disguise the transaction as a sale in transit. The authorities concluded that the appellant attempted to evade tax by misrepresenting the nature of the transaction.

Issue 4: Validity of the initiation of proceedings based on the detention notice
The appellant contended that the detention notice did not provide a valid reason for detaining the goods. The Tribunal, however, found that the detention was justified under section 31(6) of the Haryana VAT Act, which allows for detention if the checking officer suspects that the goods are not covered by proper documents or there is an attempt to evade tax. The AETC had reasons to suspect the transaction's legitimacy, warranting the detention for verification.

Issue 5: Authority to detain goods under section 31(6) for mere verification
The appellant argued that goods cannot be detained under section 31(6) for mere verification. The Tribunal clarified that section 31(6) permits detention if the documents are not proper or genuine, or if there is a suspicion of tax evasion. The AETC's suspicion about the transaction's nature and the presence of two sets of documents justified the detention for verification purposes. The Tribunal concluded that the detention was in accordance with the provisions of section 31(6).

Conclusion:
The authorities, including the Tribunal, found that the appellant's transaction was not a sale in transit but an inter-State sale subject to Haryana VAT. The detention of goods and the imposition of tax and penalty were justified based on the findings of improper documentation and an attempt to evade tax. The appeal was dismissed, with the Tribunal affirming the legality and correctness of the orders passed by the lower authorities.

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