2017 (8) TMI 677 - HC - VAT and Sales Tax

Detention of goods - non-production of Transit Declaration Form (TDF) - presumption that goods were intended to be sold within the State only - Held that - Pursuant to Section 52 read with Rule 55(5) of the Rules, Commissioner prescribed TDF to be downloaded from the website vide circular dated 3 September 2013 for the purpose of carrying goods through the State of Uttar Pradesh. It provides that at the time of entry of the goods in the State, TDF is to be downloaded and duly filled, inter alia, giving the route through which the vehicle carrying the goods into the State of Uttar Pradesh mentioning two important place through which the goods would pass, the entry and exit points, the time of entry and the proposed time of exit which should not be exceed four days from the entry. Any deviation or any default in carrying the TDF would attract the presumption provided in Section 52 read with Rule 58. There were conflicting decisions with regard to the issue - in some decisions it was held that downloading TDF as mandated by the circular is impracticable, therefore, in absence of TDF the goods cannot be seized, whereas in other decisions it was held that under the Act it is mandatorilly required that TDF must accompany the consignment on entry into the State - In view of the conflicting decisions rendered with regard to the scope of Section 52 read with Rule 58 requires to be clarified by a Larger Bench. Matter referred to Larger Bench to decide the issue whether the Transit Declaration Form (TDF) is mandatory requirement in view to the circular issued by the Commissioner read with Section 52 of the Act and Rule 58 of the Rules or in the alternative upon non-production of the TDF on interception of the goods whether a presumption that the goods are meant for sale within the State can mandatorily be drawn in view of Section 52 read with Rule 58 and the circular dated 3 September 2013 issued by the Commissioner.

Summary

Issues:
1. Interpretation of Section 52 of the Value Added Tax Act, 2008 regarding the requirement of Transit Declaration Form (TDF) for goods passing through the State of Uttar Pradesh.
2. Conflict between judgments in M/s Prakash Transport Corporation vs. CCT and M/s S.B. International Gularbhoj vs. The Commissioner, Commercial Tax Lucknow on the seizure of goods for non-production of TDF.
3. Clarification needed on the mandatory nature of TDF and the presumption drawn under Section 52 read with Rule 58 and circular dated 3 September 2013.

Analysis:
The judgment concerns the challenge to an order seizing goods under the Value Added Tax Act, 2008 due to the absence of the Transit Declaration Form (TDF) accompanying the goods passing through Uttar Pradesh. The revisionist argued that the provision mandating TDF production is impractical, citing the decision in M/s Prakash Transport Corporation vs. CCT. This decision highlighted that the Act does not provide for the seizure of goods solely for the absence of TDF, emphasizing practical challenges faced by drivers in producing TDF. However, a conflicting view from M/s S.B. International Gularbhoj vs. The Commissioner, Commercial Tax Lucknow held that TDF is mandatory, and its subsequent downloading upon seizure does not dilute the presumption required under Section 52. This conflict led to a reference to a Larger Bench for clarification on the correct legal position.

The judgment delves into the interpretation of Section 52 of the Act, emphasizing the requirement for goods passing through Uttar Pradesh to be accompanied by prescribed documents, failing which a presumption arises that the goods are meant for sale within the State. The Commissioner's circular mandated the downloading of TDF from the website upon entry into the State, with specific details to be filled to avoid the presumption of intended sale within the State. The Court acknowledged the practical challenges faced by drivers in accessing and producing TDF, questioning the feasibility of such requirements in the context of trade and commerce.

The conflicting judgments in Prakash Transport and S.B. International highlight the divergent views on the seizure of goods for non-production of TDF. While Prakash Transport emphasized the impracticality and absence of legal basis for seizure, S.B. International stressed the mandatory nature of TDF and the preservation of the presumption under Section 52. The need for a Larger Bench to resolve this conflict underscores the significance of clarifying the legal position on TDF requirements and the consequences of non-compliance under the Act and relevant rules.

In conclusion, the judgment raises crucial issues regarding the practicality and legal basis of requiring TDF for goods passing through Uttar Pradesh, leading to a reference for clarification by a Larger Bench. The conflicting interpretations in Prakash Transport and S.B. International underscore the need for a definitive legal stance on the seizure of goods for non-production of TDF, aligning with the statutory provisions and ensuring clarity in enforcement under the Value Added Tax Act, 2008.