2016 (11) TMI 1188 - HC - VAT and Sales Tax

Release of detained goods - the Electronic KK Forms and other documents produced by the petitioner / Transporter, shows that the dealer in West Bengal, has raised a Sale Invoice towards the sale of goods to the dealer in Bangalore and that the import was made at the Chennai Port ended / terminated in the State of Tamil Nadu and the movement of goods commenced / originated from the State of Tamil Nadu - state who can levy the tax - genuineness of transactions - Held that - Considering the fact that even in the impugned detention notice, the respondent does not disbelieve that the movement of goods commenced / originated from the State of Tamil Nadu, thereby showing that the respondent is aware of the fact that the goods have moved from the State of Tamil Nadu to the State of Karnataka, this Court is of the view that an appropriate condition can be imposed to enable the petitioner to get release of the goods, leaving it open to the petitioner to raise all the issues before the concerned Joint Commissioner - the writ petition stands disposed of by directing the petitioner to remit a sum of ₹ 50,000/- Rupees fifty thousand only towards the pending liability and if the same is remitted, the respondent shall forthwith release the goods along with the vehicle and the petitioner is given two weeks time to file a revision before the Joint Commissioner concerned challenging the compounding notice and the payment made by the petitioner pursuant to the order passed by this Court, will be subject to the orders to be passed by the Revisional Authority.

Summary

Issues:
Detention of goods based on tax liability in inter-state sale.

Analysis:
The judgment deals with a writ petition challenging a Goods Detention Notice issued to a transporter regarding the tax liability on goods imported from West Bengal to Bangalore via Chennai. The petitioner, a transporter, was not the purchaser or seller but detained due to discrepancies in documents showing the movement of goods. The respondent contended that tax should be levied by Tamil Nadu as the goods' import ended in that state. However, the goods were imported by a registered dealer in West Bengal, sold to a registered dealer in Bangalore, and taxes were paid accordingly. The court considered whether the transaction, terminating in Tamil Nadu, constituted a sale in that state for tax purposes. The petitioner was advised to challenge the compounding notice through revision before the Joint Commissioner to balance revenue interests with the petitioner's rights. The respondent acknowledged the goods' movement from Tamil Nadu to Karnataka, indicating an inter-state sale subject to 2% tax under the Central Sales Tax Act. The respondent argued for a 14.5% tax rate, amounting to ?1,86,675.

The court noted that the goods' movement originated in Tamil Nadu, allowing the petitioner to seek release by remitting ?50,000 towards the pending liability. The petitioner was granted two weeks to file a revision challenging the compounding notice before the Joint Commissioner. The release of goods was subject to the revisional authority's decision. The judgment disposed of the writ petition, allowing the petitioner to address all issues before the Joint Commissioner, ensuring a fair balance between revenue interests and the petitioner's rights.