2013 (7) TMI 822 - HC - VAT and Sales Tax

Interception of the vehicle and the goods in the course of transit from outside the State - Respondent seized goods in default of necessary documents - Held that - Course pursued by the respondent cannot be said as arbitrary or illegal, more so, when the only document which accompanied the transport was the Invoice and not even Form 16 - However, the goods need not be detained till the adjudication proceedings are over. Accordingly, the respondent is directed to release the goods detained by them as per Ext. P3 forthwith, on condition that, the petitioner furnishes Bank Guarantee for the amount or sufficient security by way of immovable property to the satisfaction of the department.

Summary

Issues:
Interception of goods in transit, validity of notice under Section 47 (2) of the KVAT Act, proper documentation for goods transport, determination of goods for 'own use,' legality of detention of goods, release of detained goods with conditions, adjudication proceedings.

Interception of Goods in Transit:
The petitioner, a charitable hospital, was aggrieved by the interception of goods during transit from outside the State. The goods, door frames for the hospital, were purchased with tax paid at the prescribed rate. The respondent intercepted the vehicle and issued a notice under Section 47 (2) of the KVAT Act, suspecting tax evasion.

Validity of Notice under Section 47 (2) of the KVAT Act:
The petitioner replied to the notice, arguing that the absence of the 'TIN' of the consignee in the document was not fatal. They cited a previous court decision to support their position. However, the issue extended beyond this, as the notice raised concerns about the lack of proper documentation for goods meant for 'own use.'

Proper Documentation for Goods Transport:
The respondent contended that the goods transported for 'own use' lacked proper accompanying documents, with only an invoice provided initially. The certificate of ownership was produced after the goods were detained. The petitioner's registration certificate listed various goods dealt with by the hospital, raising questions about the purpose of transport and potential tax evasion.

Determination of Goods for 'Own Use':
The court noted the evolving nature of goods dealt with by the hospital and the need to establish whether the transport was for 'own use' or other purposes. The detention of goods was based on suspicions of tax evasion due to inadequate documentation and the evolving nature of goods handled by the hospital.

Legality of Detention of Goods:
The court found the respondent's actions not arbitrary or illegal, given the lack of proper documentation accompanying the transport. However, it directed the release of detained goods pending adjudication, subject to the petitioner providing a bank guarantee or sufficient security. The adjudication proceedings were to continue independently, without influence from previous observations.

Release of Detained Goods with Conditions:
The court ordered the immediate release of the detained goods upon fulfillment of specified conditions, ensuring the rights of the respondents to pursue adjudication proceedings. The adjudicating authority was instructed to decide the matter expeditiously, based on evidence presented during the proceedings.

Adjudication Proceedings:
The writ petition was disposed of, emphasizing the need for a fair and prompt adjudication process. The court's decision aimed to balance the interests of both parties while upholding the law and ensuring a thorough examination of the case during adjudication.