2017 (10) TMI 1382 - HC - VAT and Sales Tax

Detention of goods - levy of one time tax and compounding fees - respondent suspected the nature of transaction that there is a likelihood of disposal of the imported goods within the State of Tamil Nadu and the concern with office at Kottivakkam being not registered in the Tamil Nadu - Held that - Petitioner has placed necessary records to show that the consignment left customs barrier and reached Pondicherry in the same vehicle and adequate proof has been shown that the equipment is now with the petitioner. Thus, merely because the address of the notified party is in Chennai cannot be a sole reason to disbelieve the contention raised by the petitioner especially when the petitioner has been able to produce sufficient records to establish the genuinity of their transaction. The detention notice and consequential compounding order are completely not sustainable - petition allowed.

Summary

Issues:
Challenge to detention notice and consequential order based on suspicion of disposal of imported goods within the State of Tamil Nadu due to address discrepancy in commercial invoice.

Analysis:
The petitioner challenged a Good Detention Notice and subsequent order rejecting objections and imposing tax and compounding fee. The goods imported from Brazil were detained based on suspicion of disposal within Tamil Nadu due to an address discrepancy in the commercial invoice. The petitioner contended that the consignee was in Pondicherry, not Chennai, and the equipment was for their own use in Pondicherry. The petitioner argued that the officer lacked tangible material to suspect sales within Tamil Nadu and that the goods were for their factory in Pondicherry. The petitioner provided evidence that the equipment reached Pondicherry and was in their possession, demonstrating the genuineness of the transaction. The court found the detention and compounding orders unsustainable, quashing them and directing the refund of the one-time tax paid by the petitioner.

Conclusion:
The High Court allowed the writ petitions, quashing the Good Detention Notices and consequential orders. The respondent was directed to refund the one-time tax paid by the petitioner within twelve weeks. No costs were awarded, and the connected miscellaneous petitions were closed.