2015 (5) TMI 632 - HC - VAT and Sales Tax

Detention of goods - first respondent erroneously treated the transfer as inter state sale without even conducting any enquiry or appreciating the contents of the documents produced to substantiate their claim - Levy of compounding fees - Held that - Court is of the view that the petitioner cannot be left without any remedy, as the petitioner states that the goods are not liable for detention or for levy of any compounding fee. The petitioner would state that there are sufficient documents to show that the transaction is not in violation of the provisions of the TNVAT Act, more particularly, when the consignor and the consignee have furnished the TIN numbers and the goods were also accompanied by proper records. - Court is of the view that the petitioner should be granted an opportunity to contest the matter on merits. However, in order to safeguard the interest of the Revenue, the petitioner should be directed to remit the tax demanded. - writ petition is disposed of by directing the petitioner to pay the tax of ₹ 75,222/- within a period of three weeks from the date of receipt of a copy of this order and on such payment, the respondents are directed to release the goods. Insofar as levy of compounding fee is concerned, it is open to the petitioner to file revision under Section 54 of the Act within a period of three weeks after the goods are released - Decided conditionally in favour of assessee.

Summary

Issues:
Challenge to goods detention order based on lack of valid records and absence of TIN number, CST registration number. Dispute over compounding fee imposed for non-production of invoice and purchase order.

Analysis:
The petitioner contested a goods detention order dated 26.11.2012, arguing that the goods were detained due to alleged lack of valid records during transportation from Ahamedabad to Villupuram. The petitioner claimed that the transfer was wrongly treated as an inter-state sale without proper enquiry or consideration of the documents provided. It was emphasized that the consignee did not possess a TIN number, and CST registration number was not mentioned in the stock transfer records. The petitioner objected to the imposition of a compounding fee of Rs. 2,000 for failure to produce certain documents, stating that circumstances beyond their control led to this omission. The goods were intended for transportation to Villupuram from Chennai under a specific way bill, with proper documentation, challenging the basis for detention and fee under the Tamil Nadu Value Added Tax Act, 2006.

In response, the first respondent justified the goods' detention, stating that during a vehicular check at the Checkpost, defective documents were found accompanying the vehicle, leading to the detention order. A notice was issued to the consignor offering the opportunity to compound the offense by paying Rs. 2,25,666, comprising tax and a compounding fee. Despite this offer, the petitioner refused and pursued the writ petition.

Upon review of the arguments and available documents, the Court acknowledged the petitioner's claim that the goods were not liable for detention or the compounding fee. Noting the presence of sufficient documentation showing compliance with TNVAT Act provisions, particularly regarding TIN numbers and accompanying records, the Court deemed it necessary to grant the petitioner an opportunity to contest the matter on merits. However, to protect revenue interests, the Court directed the petitioner to remit the demanded tax amount of Rs. 75,222 within three weeks. Upon payment, the respondents were instructed to release the goods. Additionally, the petitioner was allowed to file a revision under Section 54 of the Act within three weeks after the goods' release to challenge the compounding fee levy, which would be reviewed on its merits and in accordance with the law. No costs were awarded, and connected miscellaneous petitions were closed as a result of the judgment.