2018 (2) TMI 1297 - HC - VAT and Sales Tax

Detention of goods - Capsule manufacturing equipment Omega 20 extruder - stock transfer - detention on the ground that the said consignment was not accompanied with advance CST waybill of Andhra Pradesh - Held that - the officer concerned is empowered to exercise the power of detention of goods only where he is prima facie satisfied that the movement of goods is covered by the transaction of sale or purchase and that there is an attempt on the part of the person concerned to evade the tax - When Section-45 of the Act and Rule-55 of the Rules are read together, it is clear that wherever there is any movement of goods in pursuance of sale or purchase, the dealer of that particular State has to generate e-waybill, both for importing into the State or sending outside the State, as the case may be. Therefore, a transaction of sale or purchase is a sine quo non for attracting the provisions of Section-45 of the Act and Rule-55 of the Rules. It is not in dispute that the petitioner is neither a manufacturer nor a purchaser of the detained goods. It was only the machinery which was sent by the petitioner from its Unit at Bachupally to its Manufacturing Unit at Pydibhimavaram for the purpose of erection. This stand of the petitioner is not contradicted by the respondents. There is not even an allegation that the transaction involved sale or purchase of the detained goods (machinery) - This being the admitted position there is no obligation on the part of the petitioner to generate e-waybill of the Commercial tax Department of the State of Andhra Pradesh as, ipso facto Rule-55 of the Rules is not attracted. The detention of goods in the instant case is wholly without any sanction of law and the same is, accordingly, declared as illegal and unauthorised - petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Legality of goods detention for not generating an advance CST waybill.
2. Applicability of Section-45(7)(a) of the Andhra Pradesh Value Added Tax Act, 2005.
3. Interpretation of Rule-55 of the Andhra Pradesh Value Added Tax Rules, 2005.
4. Examination of whether the transaction involved sale or purchase of goods.
5. Validity of the penalty imposed for non-compliance with procedural requirements.

Detailed Analysis:

1. Legality of Goods Detention for Not Generating an Advance CST Waybill:
The petitioner, a manufacturer of bulk drugs and formulations, transported machinery from its unit in Bachupally, Telangana to its unit in Pydibhimavaram SEZ, Andhra Pradesh. The goods were detained by respondent No.1 for not being accompanied by an advance CST waybill of Andhra Pradesh. The petitioner immediately generated the waybill online after the detention, arguing that the delay was a technical lapse. The court found that the detention of goods without an advance CST waybill was a technical issue and not a willful violation.

2. Applicability of Section-45(7)(a) of the Andhra Pradesh Value Added Tax Act, 2005:
Respondent No.1 cited Section-45(7)(a) of the Act, which allows the collection of tax and a penalty if goods are carried without proper documentation. The petitioner contended that this provision is applicable only when there is a sale or purchase of goods and the tax has not been paid or properly accounted for. The court agreed with the petitioner, stating that Section-45(7)(a) is relevant only where the goods are transported as part of a sale or purchase transaction.

3. Interpretation of Rule-55 of the Andhra Pradesh Value Added Tax Rules, 2005:
Rule-55 mandates that any dealer importing or exporting goods must generate an e-waybill through the official website of the Commercial Taxes Department. The petitioner argued that Rule-55 is applicable only in cases involving the sale or purchase of goods. The court concurred, emphasizing that the rule aims to prevent tax evasion and is applicable only to transactions involving sale or purchase.

4. Examination of Whether the Transaction Involved Sale or Purchase of Goods:
The petitioner provided evidence, including proforma invoices and e-waybills, showing that the machinery was transferred "free of charge" from one unit to another within its own operations. The court noted that there was no sale or purchase involved in this transaction, and the machinery was merely being transported for installation and use in another unit. This fact was not disputed by the respondents.

5. Validity of the Penalty Imposed for Non-Compliance with Procedural Requirements:
The respondents argued that the petitioner was liable to pay tax and a penalty for not generating the required e-waybill. However, the court found that since the transaction did not involve a sale or purchase, the petitioner's failure to generate the e-waybill did not attract the provisions of Section-45 or Rule-55. The court declared the detention of goods as illegal and unauthorized, directing the respondents to refund the amount deposited by the petitioner along with interest and costs.

Conclusion:
The court allowed the writ petition, declaring the detention of goods as illegal and unauthorized. The respondents were directed to refund the sum of ?5 lakhs with interest and costs, and the State Government was instructed to initiate proceedings against the concerned officer for the illegal detention. The court emphasized that the provisions of Section-45 and Rule-55 are applicable only to transactions involving the sale or purchase of goods, and not to internal transfers within a company's operations.