2015 (9) TMI 414 - HC - VAT and Sales Tax

Detaining of Goods - Documents not accompanied with goods - Levy of tax and compounding fee - Petitioner goods were intercepted and respondent detained on ground that documents were not accompanied goods Therefore, impugned detention notice was issued were goods were detained and authority demanded tax together with compounding fee Held that - respondent detained goods when goods were diverted to some other place, while all relevant documents show that goods were meant to be delivered at petitioner s factory Admitted fact that goods were not accompanied by any of documents as required under Act and Rules framed thereunder Court not inclined to permit petitioner to take away goods without complying requirements under detention notice Thus, petitioner directed to pay tax and compounding fee as demanded by respondent On such payment, goods in question shall be released Decided in favour of Petitioner.

Summary

Issues: Detention of goods for diversion without proper documentation, demand for tax and compounding fee, legality of detention notice, payment requirements for release of goods.

Detention of Goods for Diversion without Proper Documentation:
The petitioner, a registered dealer, purchased body cast from outside the State under the CST Act, 1956, for radiographic testing by job-workers. The goods were intercepted en route to Trichy instead of the petitioner's factory in Coimbatore, leading to detention for lack of accompanying documents. The petitioner argued that no sale was involved, only a service job, and the diversion was for labor work. The respondent contended that the diversion violated VAT rules and was an offense under the Act. The court noted the absence of required documents and the questionable diversion, denying interim relief to quash the detention notice.

Demand for Tax and Compounding Fee:
The detention notice demanded tax and compounding fee due to the diversion without proper documentation. The petitioner argued against the compounding fee, claiming no offense was committed. The respondent highlighted the violation of VAT rules and the cessation of business by the service provider in Trichy. The court upheld the demand for tax and compounding fee, directing the petitioner to pay within two weeks for the release of goods, without prejudice to the right to file a revision before the Joint Commissioner.

Legality of Detention Notice:
The petitioner challenged the detention notice, claiming no tax evasion and asserting the diversion was for labor work. The respondent justified the detention based on the absence of required documents and alleged willful suppression of transaction. The court found the petitioner failed to establish a prima facie case for interim relief and upheld the detention, emphasizing compliance with tax and compounding fee requirements for release.

Payment Requirements for Release of Goods:
The court directed the petitioner to pay the demanded tax and compounding fee within two weeks for the release of goods, allowing the right to file a revision before the Joint Commissioner. The payment was mandated without prejudice to the petitioner's rights, emphasizing compliance with the detention notice conditions. The writ petition was disposed of with no costs, enabling the release of goods upon payment and reserving the right for further legal recourse through revision before the Joint Commissioner.