2016 (7) TMI 219 - HC - VAT and Sales Tax

Detention of movement of goods (consignment) accompanied by the Invoice to unregistered dealers in the Form No.8 or Form No.8B - petition prays to declare that the invoice to be raised on effecting sales to unregistered dealers in terms of Rule 58(10) of the Kerala Value Added Tax Rules, 2005 are in Form No.8 - Kerala Value Added Tax Act, 2003 (KVAT) - Held that - there cannot be any doubt regarding the workability of the Rule. End customer is apparently a person who purchases a product for his own use or is not purchased for resale. If the petitioner or like persons are satisfied that a product is purchased for end use, necessarily they can issue invoice under Form No.8B. Whereas, if the petitioner or like persons are satisfied that the purchase is not for an end customer , they are entitled to issue invoice under Form No.8 It is not an instance where the goods can be detained. It is always open for the officer concerned to make an adjudication without detaining the goods in any manner. The respondent authority shall not detain the goods merely for the reason that the invoice form used is either Form 8 or Form 8B, as far as unregistered dealer is concerned. However it shall be open for the respondents to take appropriate proceedings in accordance with law.

Summary

Issues:
1. Interpretation of Rule 58(10) of the Kerala Value Added Tax Rules, 2005 regarding the format of invoices for sales to unregistered dealers.
2. Clarification sought under Section 94 of the KVAT Act, 2003.
3. Detention of goods consigned to unregistered dealers due to invoice format.

Analysis:
1. The petitioner, a registered dealer, approached the court seeking clarification on the format of invoices for sales to unregistered dealers as per Rule 58(10) of the KVAT Rules, 2005. The petitioner faced detention of goods consigned to unregistered dealers due to conflicting views on the appropriate invoice format, leading to the filing of the writ petition.

2. The petitioner argued that they used to issue invoices in Form No.8 for both registered and unregistered dealers. However, goods consigned to unregistered dealers were detained based on the incorrect invoice format. The court examined Rule 58(10)(i&ii) which mandates the use of Form No.8 for sales to persons other than end customers and Form No.8B for sales to end customers.

3. The court deliberated on the definition of "end customer" and the discretion of the invoice issuer to determine the status of the purchaser. It was clarified that if a product is purchased for end use, Form No.8B should be used, while Form No.8 is appropriate for sales to dealers purchasing for resale. The judgment emphasized that goods should not be detained based solely on invoice format discrepancies.

4. The court declared that invoices for sales to registered and unregistered dealers for resale purposes should be in Form No.8. It was further ordered that authorities should not detain goods solely due to the use of Form 8 or Form 8B for unregistered dealers, allowing for appropriate legal proceedings if necessary. The judgment highlighted the importance of resolving any ambiguities without detaining goods and through proper adjudication processes.