2015 (7) TMI 1366 - HC - VAT and Sales Tax

Detention of vehicle - Jurisdiction - power to issue SCN - Challenge on the sole ground that the Checkpost Officer by stepping into the shoes of the assessing officer has straight away issued the notice on the basis that the petitioner has evaded the payment of tax under Section 67(3) (b) of the TNVAT Act 2006 without there being any deduction thereon by following the due process of law - HELD THAT - In the present case a perusal of the impugned notice would show that he has detained the vehicle not for want of any of the documents. On the other hand by stepping into the shoes of the assessing officer he has reached a conclusion that the petitioner has evaded tax under Section 67 (3)(b) of TNVAT Act. This Court has time and again by various rulings held that the checkpost officer has no authority to pass any order detaining the goods on any flimsy reason. However in the present case the second respondent has passed the order almost assessing the tax payable by the petitioner without any valid reason. In my considered view the same is not capable of being fortified by this Court. As the second respondent has got power to detain the goods only for the limited purpose of ascertaining whether there has been sale or purchase of goods carried on and whether there has been any attempt to evade payment of tax due thereon in the present case on the face of the impugned order he has not verified whether the vehicle carried the goods along with the requisite documents as per Section 68 of the TNVAT Act. As there is no reference whatsoever made and the goods have been transported along with all the requisite documents the detention is unfounded - Petition allowed - decided in favor of petitioner.

Summary

Issues:
Detention of goods by Checkpost Officer without valid reason under TNVAT Act, 2006.

Analysis:
The petitioner, a registered dealer, filed a writ petition challenging the notice issued by the Checkpost Officer alleging tax evasion under Section 67(3)(b) of the TNVAT Act, 2006. The petitioner had purchased granite slabs from a dealer in Kerala at a concessional rate of 2% CST against Form C declaration. During verification at the checkpost, the Checkpost Officer detained the goods claiming tax evasion without proper documentation. The High Court noted that the Checkpost Officer exceeded his authority by assessing tax without valid reasons, contrary to established legal principles. The Court referred to previous rulings emphasizing that the Checkpost Officer cannot detain goods on flimsy grounds. The Court highlighted the importance of possessing necessary documents during transit as per Section 67(5) and Rule 15(3) of the TNVAT Act, which the petitioner had in this case. The Court cited a circular by the Principal Secretary/Commissioner of Commercial Taxes stating that the movement of goods with a valid invoice does not constitute an offense under the Act unless there is an attempt to evade tax payment. The Court also referenced judgments from other High Courts reiterating that demanding compounding fees at checkposts without proper assessment is impermissible.

The Court held that the Checkpost Officer's detention of goods lacked merit as the necessary documents were in possession of the vehicle driver during interception. The Court emphasized that the Checkpost Officer's authority is limited to verifying the presence of goods and tax evasion attempts, which were not adequately established in this case. Consequently, the Court quashed the proceedings initiated by the Checkpost Officer and directed the immediate release of the goods. The writ petition was allowed without costs, and connected miscellaneous petitions were closed.