2013 (4) TMI 675 - HC - VAT and Sales Tax

Detention orders - transit pass not shown by assessee - Held that - As per Section 70(2) of TNVAT Act, 2006 petitioner has to necessarily obtain a transit pass in the prescribed form and in the prescribed manner, thus the plea of the petitioner that the Circular Act Cell-IV/69980/2000 dated 23.11.2000 issued by Commissioner of Commercial Taxes, Chennai stating no transit pass is required will apply, does not merit consideration as it will have no force in law after coming into force of the 2006 Act. Therefore, the above said plea is rejected. However, an opportunity is given to the petitioner to approach the competent authority for release of goods in terms of Section 67(4) of the TNVAT Act, 2006 on payment of tax. If the petitioner pays the tax as required under Section 67(4) of the Tamil Nadu Value Added Tax Act, 2006, the authority is bound to release the goods forthwith. Composition of offence - A detailed procedure has been prescribed for composition and an opportunity should be given before passing an order under Section 72 of the TNVAT Act, 2006. The said section prescribes that an order should be passed on composition either way on merits and the petitioner is entitled to pursue the same on merits, if aggrieved. Thus composition of the offence, as per notice issued, it has to be dealt with independently.

Summary

Issues:
Challenge to goods detention notice based on a circular issued by the Commissioner of Commercial Taxes, Chennai; Interpretation of relevant provisions of the Tamil Nadu Value Added Tax Act, 2006; Demand for tax and compounding fee for release of detained goods; Procedure for composition of offense under Section 72 of the Tamil Nadu Value Added Tax Act, 2006.

Analysis:
The petitioner filed a Writ Petition challenging a goods detention notice dated 6.11.2012, arguing that it was contrary to a circular issued by the Commissioner of Commercial Taxes, Chennai. The petitioner relied on Section 88(3)(i) of the Tamil Nadu Value Added Tax Act, 2006, which states that certain provisions of the previous Act would continue in force unless inconsistent with the new Act. However, Section 70(2)(a) of the 2006 Act mandates obtaining a transit pass for goods transferred to another state, rendering the petitioner's argument invalid. The court held that the circular from 2000 would not apply after the enactment of the 2006 Act, but granted the petitioner an opportunity to seek release of goods by approaching the competent authority under Section 67(4) of the Act and paying the due tax.

Regarding the demand for tax and compounding fee, Section 67(4) of the Act allows for payment of tax or security for the release of detained goods. The petitioner was advised to pay the required tax under protest to secure the release of goods promptly. Furthermore, the judgment addressed the composition of offense under Section 72 of the Act. It was highlighted that a detailed procedure, similar to Section 46 of the Tamil Nadu General Sales Tax Rules Act, should be followed, and the petitioner was entitled to contest the matter on its merits if aggrieved. The court granted the petitioner the liberty to seek release of goods by complying with Section 67(4) through tax payment alone, while the composition of the offense was to be handled separately.

In conclusion, the Writ Petition was disposed of with the directive that the detained goods would be released upon payment of the demanded tax in accordance with Section 67 of the Tamil Nadu Value Added Tax Act, 2006. The judgment did not impose any costs on either party.