2015 (10) TMI 1995 - HC - VAT and Sales Tax

Detention of goods - valuation of the product adopted by the respondent so as to arrive the actual taxes to be paid - Held that - Petitioner along with his counsel is directed to appear before the respondent on 04.09.2015 at 11.00 a.m. with all the documents and substantiate his claim. If the petitioner is able to substantiate his claim with regard to the price to be adopted, the same shall be considered and necessary calculation be arrived at by the respondent and thereafter actual tax to be paid be intimated to the petitioner and on such intimation, the petitioner is directed to pay the taxes forthwith and on such payment, the goods are directed to be released forthwith. It is needless to mention that if the petitioner s claim is not substantiated by documents, the respondent is at liberty to proceed in the manner known to law, as per notice dated 20.08.2015. - Petition disposed of.

Summary

Issues:
Challenge against goods detention notice dated 20.08.2015, Value of the product adopted by the respondent for tax calculation.

Analysis:
1. Challenge against goods detention notice dated 20.08.2015:
The petitioner, a transport company, challenged the detention of goods by the respondent, arguing that the goods were supported by proper sales invoices and bills. The petitioner contended that since both sellers and purchasers were registered dealers under VAT and CST Acts, there was no valid reason for detention under Sections 68 and 69 of the TNVAT Act. The petitioner's counsel argued that the respondent lacked the authority to detain goods moved with proper records, hindering the petitioner's transport business. Additionally, the petitioner highlighted that the goods were being transported from Delhi to Pondicherry, passing through Tamil Nadu, and thus Tamil Nadu had no tax liability. Despite the detention on 02.08.2015, physical verification was only conducted on 13.08.2015, causing financial and mental distress to the petitioner. The petitioner sought the release of goods upon payment of due taxes, which the respondent failed to quantify even after 15 days.

2. Value of the product adopted by the respondent for tax calculation:
The main contention in this aspect was the respondent's valuation of the goods based on commodity code number, resulting in a tax payment demand of Rs. 14.41 lakhs, which the petitioner deemed unsustainable. On the other hand, the respondent defended this valuation, stating it was derived from the Maximum Retail Price (MRP) of the products. The Court directed the petitioner to appear before the respondent with all relevant documents to support their claim regarding the price to be adopted for tax calculation. If the petitioner could substantiate their claim, the respondent was to calculate the actual tax to be paid accordingly. However, if the petitioner failed to provide adequate documentation, the respondent was authorized to proceed as per the notice dated 20.08.2015.

In conclusion, the Court ordered the respondent to quantify the tax due within a week and release the goods upon payment. The assessing authority was instructed to complete the adjudication process within four weeks. The petitioner was directed to address the valuation issue with the respondent, with the outcome determining the tax payment and subsequent release of goods.