2017 (8) TMI 1259 - HC - VAT and Sales Tax

Registration under TNVAT Act - Whether sale and purchase activity was carried from its registered office situated in Tamil Nadu - IEC code taking in the name of registered office - Detention of goods - Held that - The admitted position is that the petitioner which has unincorporated joint venture is not a registered dealer in the State of Tamil Nadu under the provisions of Tamil Nadu Value Added Tax Act or the Central Sales Tax Act. However, the petitioner is a registered dealer under the provisions of the Andhra pradesh Value Added Tax Act. The import has taken place in the project work done by the petitioner at in the State of Andhra Pradesh. Therefore, it is to be seen as to whether merely because a branch or liaison office established in Chennai, would run the transaction as a sale within the State - the answer would be negative. Thus, there is nothing on record to show that the joint venture with address at Chennai had sold the goods to the Joint venture with address at Andhra Pradesh. It may not be true that the Import and Export Code has been obtained in the name of the petitioner joint venture, giving the Chennai address, that by itself will not create a doubt in the transaction nor permit the transaction as a sale within the State of Tamil Nadu. For such interpretation given, it would be contrary to the section 5 (2) of the Central Sales Tax Act which provides that a sale or purchase of goods shall be deemed to be take place in the course of import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents or title to the goods before the goods have crossed the customs frontiers of India. I have no hesitation to conclude that there is no element of sale within the State of Tamil Nadu and the respondent cannot instruct upon the petitioner to register themselves under the TNVAT Act and merely because the Import and Export Code is from the office in Tamil Nadu cannot be a feature to doubt any transaction - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to goods detention notice under Tamil Nadu Value Added Tax Act, 2006 and penalty imposition for imported goods transferred to Andhra Pradesh.

Analysis:
The petitioner, an Unincorporated Joint Venture undertaking, challenged a goods detention notice levying tax and penalty on goods imported and transferred to Andhra Pradesh for a construction project. The petitioner, a registered dealer under Andhra Pradesh Value Added Tax Act, imported goods from Germany for the project. The respondent detained the goods citing evasion of tax due to the petitioner not being a registered dealer in Tamil Nadu. The petitioner contended that the goods were not for sale in Tamil Nadu but for direct consignment to Andhra Pradesh, hence not subject to Tamil Nadu tax laws.

The respondent passed an order demanding tax payment and compounding fees, which was challenged in a writ petition. The petitioner argued that the goods were meant for Andhra Pradesh project, falling under an exempted transaction. The respondent justified the tax levy based on the transaction pattern, registration details, and Chennai presence of the joint venture partners. The court analyzed the joint venture agreement, import details, and delivery location to determine the nature of the transaction.

The court found that the goods were intended for the Andhra Pradesh project, with no evidence of a sale within Tamil Nadu. The Import and Export Code registration in Chennai did not imply a taxable transaction in Tamil Nadu. Referring to the Central Sales Tax Act, the court concluded that the transaction did not qualify as a sale within Tamil Nadu, rendering the impugned order unsustainable. The court allowed the writ petition, setting aside the order, and directed the petitioner to seek a refund for the tax remitted.