2016 (7) TMI 1158 - HC - VAT and Sales Tax

Detention of goods to verify the genuineness - vehicle carrying prefabricated steel structurals and other allied articles - movement of goods from Andra Pradesh to Tamil Nadu - Held that - It is not disputed by the respondents that the goods were accompanied with the documents mentioned in Section 69. Furthermore, the respondents does not dispute that the goods moved from State of Telangana to Tamil Nadu. In such circumstances, when there is no doubt that the transaction is an interstate transaction, then, in terms of Section 9(1) of the CST Act, the tax so leviable on the transaction shall be collected by that Government in accordance with sub-section (2) of Section 9 in the State from which the movement of the goods commenced which in the instant case is State of Telangana. Therefore, the impugned Goods Detention notices are liable to be set aside.

Summary

Issues:
Interstate transaction taxation jurisdiction under CST Act, 2006; Detention of goods under TNVAT Act, 2006; Applicability of compounding fee for unregistered dealer; Availability of alternate remedy before Revisional Authority.

Interstate Transaction Taxation Jurisdiction under CST Act, 2006:
The petitioner, a registered dealer in Telangana, engaged in manufacturing prefabricated steel structurals, had goods detained while transporting to Tamil Nadu. The petitioner contended that as the goods were taxed in Telangana, the transaction falls under the exclusive jurisdiction of Telangana for Central Sales Tax collection. The Court noted that the goods were accompanied by required documents and moved from Telangana to Tamil Nadu, making it an interstate transaction. The Court held that tax leviable on such transactions should be collected by the originating State, Telangana, under Section 9(1) of the CST Act, rendering the detention notices invalid.

Detention of Goods under TNVAT Act, 2006:
The respondents detained the goods alleging the petitioner, an unregistered dealer, engaged in an interstate transaction without proper registration. The petitioner argued that they had paid the demanded tax and compounding fee under protest for earlier detentions due to deadlines. The Court found that the goods were accompanied by required documents, and the transaction was interstate. It held that the detention notices were unjustified as the petitioner had complied with the necessary regulations.

Applicability of Compounding Fee for Unregistered Dealer:
The respondents alleged the petitioner was an unregistered works contractor engaging in unregistered transactions with a company, thus liable for tax and compounding fee under TNVAT Act. The Court observed that the petitioner had paid the demanded amounts under protest to meet deadlines, and the allegations were based on incorrect interpretations of the law. It ruled that even if the allegations were true, the transaction was not taxable in Tamil Nadu, thus quashing the compounding notices.

Availability of Alternate Remedy before Revisional Authority:
The respondents suggested the petitioner approach the Revisional Authority for disputed facts. The petitioner argued that no disputed facts existed, and the matter concerned jurisdiction under CST Act. The Court agreed, stating that the petitioner need not pursue an alternate remedy as the impugned notices lacked jurisdiction, and the transaction was not taxable in Tamil Nadu. Consequently, the Writ Petitions were allowed, and the detention notices were quashed without costs.