2017 (1) TMI 745 - HC - VAT and Sales Tax

Release of detained goods - Form KK - Form LL - Held that - What has clearly emerged and to that extent it is conceded, even by the petitioner, is that, in one of the Forms, i.e., Form No.FKK28121600008657019, dated 28.12.2016, the basic price was indicated as ₹ 27,01,648/-. Therefore, the respondent is right in contending, that, inadvertently or deliberately, the value was understated. There is material on record, which prima facie, does indicate that the subject goods were imported by SEL from JSL and that, in respect of the subject goods, a certificate has been issued by the Government of India, Ministry of New and Renewable Energy, granting exemption to SEL from payment of additional duty. It is directed to release the subject goods, on deposit of tax, equivalent to 5% of ₹ 10,00,000/-. This payment will be accepted by the respondent to the credit of the dealer i.e., SEL. In addition, a personal bond will be furnished by the authorised representative of the dealer i.e., SEL. On the fulfilment of the aforesaid conditions, the subject goods will be released to the petitioner. Petition allowed - decided partly in favor of petitioner.

Summary

Issues:
Challenge to Goods Detention Notice and Compounding Notice.

Analysis:
The petitioner, a Customs House Clearing and Forwarding Agent, filed a writ petition challenging the Goods Detention Notice and Compounding Notice issued by the respondent. The petitioner acted on behalf of Suzlon Energy Limited (SEL) and alleged that the detention of goods, specifically Hub Body parts of wind operated electricity generators, was due to a discrepancy in values reflected in the forms. The respondent had issued notices to the driver and the petitioner regarding the discrepancy. The petitioner contended that the goods were detained during transportation from Chennai Port to Pondicherry due to the value inconsistency.

The petitioner supported their case with various documents, including purchase orders, invoices, and exemption certificates. However, the respondent, represented by Mr. Venkatesh, argued that the goods were undervalued and raised doubts about the origin of the goods. The respondent also pointed out discrepancies in the declaration made by the driver regarding the goods.

Upon hearing both parties and examining the records, the court acknowledged the understated value in one of the forms and the import of goods by SEL from a specific supplier. The court noted that even if tax liability existed under the TNVAT Act, it should be imposed at a rate of 5% for goods like wind mill components used for electricity generation. The impugned notice sought to levy tax at a higher rate based on the total value of the goods, including duty.

The court, considering the circumstances, directed the release of the goods upon payment of tax at a rate of 5% of the understated value, with a personal bond for the remaining amount. This decision aimed to secure the interest of revenue while allowing for further contentions to be raised before the adjudicating authority by the petitioner or SEL. The judgment concluded by disposing of the writ petition without any costs.

In conclusion, the judgment addressed the challenge to the detention and compounding notices, highlighting the discrepancies in values, import details, and tax implications under the TNVAT Act. The court's decision balanced the interests of the parties involved and provided a resolution for the release of the goods pending further adjudication.