2017 (8) TMI 760 - HC - VAT and Sales Tax

Determination of intra-sale or inter-state sale - Compounding - case of respondent is that the subject matter transaction is a sale taken place within the State of Tamil Nadu attracting the tax under the Value Added Tax at the rate of 5% and not the Inter State Sale as claimed by the petitioner - Held that - It is not the case of the first respondent that the necessary documents are not available in the vehicle which transported the goods. On the other hand it is admitted by the first respondent that the consignor is the Steel Authority of India Limited Salem - it is evident that the goods were moving from Salem to Pondicherry and such movement is supported by the material documents viz. Invoice Consignment Note and Transit Pass. When those material documents are evidently showing the Inter State sale the first respondent that too being a Check Post Official is not justified in over stepping his role and coming to the conclusion as if the sale is local sale which in my considered view is not the role of the Check Post Official and on the other hand it is for the Assessing Officer of the concerned assessment circle to consider and decide - the first respondent is directed to release the goods forthwith - petition allowed - decided in favor of petitioner.

Summary

Issues:
- Challenge to compounding notice for tax payment
- Dispute over nature of sale: Inter State sale or local sale
- Role of Check Post Official in determining nature of sale

Analysis:
1. The petitioner contested a compounding notice demanding tax payment based on the allegation that Value Added Tax was not collected as required for a sale within Tamil Nadu, instead of Central Sales Tax. The petitioner argued that the transaction was an Inter State sale as the goods were moving from Salem to Pondicherry, supported by relevant documents like the invoice, Consignment Note, and Transit Pass.

2. The petitioner's counsel emphasized that the first respondent, a Check Post Official, exceeded their authority by determining the nature of the sale as local without considering the evidence presented. It was argued that only the Assessing Authority of the seller, Steel Authority of India Ltd., could make such a determination.

3. In response, the Government Advocate for the respondents pointed out that the purchaser's address in the invoice was listed as Chennai, leading the first respondent to believe the sale occurred within Tamil Nadu. However, the Court noted that the dispatch address on the same invoice indicated the goods were destined for Pondicherry, not Chennai, supporting the petitioner's claim of an Inter State sale.

4. After hearing both sides, the Court found that the first respondent erred in treating the sale as local without proper consideration of the supporting documents. The Court held that the Check Post Official's role did not extend to determining the nature of the sale and directed the release of the goods. The Court suggested referring any remaining doubts to the jurisdictional Assessing Officer of the seller for clarification.

5. Consequently, the writ petition was allowed, the impugned proceedings were set aside, and the first respondent was instructed to release the goods. The Court clarified that any further inquiries regarding the nature of the sale should be directed to the appropriate Assessing Officer. No costs were awarded, and the related petitions were closed.