2016 (10) TMI 78 - HC - VAT and Sales Tax

Provisional release of goods - seizure of goods and trucks transported - machinery transported from Jaisalmer to Amreli - declaration in Form No. 403 - will the provisional release of goods be allowed, on non-declaration of form. 403, keeping in view the costly and sophisticated nature of machinery? - Held that - No useful purpose would be served in allowing the machinery and the vehicles to remain idle in open at Tharad since 14.08.2016. Subject to appropriate conditions which would also safeguard the interest of the authorities, the goods released for further movement - The petitioner shall deposit a sum of ₹ 50 lacs with the State authorities subject to final assessment and further right of appeal - The petitioner shall give an undertaking to cooperate with such assessment proceedings and to pay any further tax, interest or penalty, if found finally due and payable pursuant to such orders of assessment subject to further appeal - assessment not to be delayed unreasonably by the authorities - goods and trucks released on fulfillment of above conditions - petition disposed off - decided in favor of petitioner.

Summary

Issues:
Challenge to seizure memos and communication issued by Joint Commissioner of Commercial Tax regarding non-possession of Form No. 403 by truck drivers at check-post.

Analysis:
The petitioner, a Chennai-based company engaged in machinery manufacturing and wind farm installation, challenged the seizure memos and communication issued by the Joint Commissioner of Commercial Tax. The incident occurred when trucks transporting machinery for a project were intercepted by State VAT Authorities at Tharad check-post in Gujarat for not carrying declaration in Form No. 403. The petitioner argued that the slow movement of goods required customers to provide such forms to transporters before crossing check-posts, and the seizure was premature. The petitioner contended that even if transporters should have possessed Form No. 403 before entering the state, it should not result in tax liability if not otherwise payable in Gujarat.

The State authorities argued that the requirement of carrying Form No. 403 was before entering the state, which the transporter did not have at the time of interception. The authorities highlighted a possible tax liability with a penalty of 150% amounting to approximately ?1.21 crores. The High Court acknowledged the situation of costly machinery lying idle since the seizure date and decided to release the goods for further movement. The court noted the principal tax liability of around ?48 lakhs, with a penalty not exceeding 150% of that amount. To secure the basic tax liability, the court directed the petitioner to deposit ?50 lakhs with the authorities, subject to final assessment and the right of appeal.

The court imposed conditions for the release of goods, including the petitioner's cooperation in assessment proceedings and payment of any further tax, interest, or penalty found due after assessment. The authorities were expected not to unreasonably delay the assessment process. Once the conditions were met, the goods and trucks were to be released immediately. The petition was disposed of accordingly, allowing direct service on the same day.