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2017 (4) TMI 539 - HC - VAT and Sales TaxDetention of goods - Local sale or inter-state sale - Jurisdiction - According to the learned counsel, the transaction in issue was an inter-state sale, and since, the appellant was registered with the relevant authorities, i.e. sales tax authorities in the State of Karnataka, Central Sales Tax, if any, payable, would be payable to the said authority. Held that - The respondent, however, via the impugned notice, rejected the stand taken by the appellant and proceeded, instead, to impose tax, as if, a local sale transaction had been entered into between the appellant and BCPL. Furthermore, the respondent came to the conclusion that the appellant had employed fraud and therefore, penalty had to be levied. Consequently, penalty was levied, which was quantified at twice the amount of the tax arrived at by the respondent. Authorities directed to release the goods on furnishing of bank guarantee.
Issues:
Challenge to goods detention notice under Article 226 of the Constitution, jurisdiction of the respondent, inter-state sale transaction, imposition of tax and penalty, release of detained goods. Detailed Analysis: 1. Challenge to Goods Detention Notice: The appellant approached the court challenging a goods detention notice dated 18.02.2017 issued by the respondent. The learned Single Judge disposed of the writ petition with liberty for the appellant to represent before the respondent regarding the grounds for detention mentioned in the notice. The Single Judge directed the respondent to dispose of the representation within seven days, allowing the appellant to either accept liability and pay tax or challenge it before the appropriate forum. 2. Jurisdiction of the Respondent: The appellant contended that the respondent, a check-post officer, did not have jurisdiction to determine tax on an inter-state sale transaction. The appellant argued that as a registered dealer in Karnataka, any Central Sales Tax payable would be to the Karnataka authorities. The appellant claimed that the respondent overstepped his role by acting as an Assessing Officer under the Tamil Nadu Value Added Tax Act, 2006. 3. Inter-state Sale Transaction: The appellant, a dealer in solar power panels, imported goods from China and sold them to a Tamil Nadu-based dealer. The goods were being transported to Tamil Nadu when they were intercepted, leading to the detention notice. The appellant asserted that the transaction was an inter-state sale originating in Karnataka, making it not liable for local tax in Tamil Nadu. 4. Imposition of Tax and Penalty: The respondent, through the impugned notice, rejected the appellant's claims and imposed tax as if it were a local sale, also levying a penalty for alleged fraud. The appellant was asked to pay a substantial amount to release the detained goods, comprising tax and penalty totaling to ?25,63,701. 5. Release of Detained Goods: The court acknowledged that the detained goods could be released upon the appellant furnishing security for the tax amount as per Section 67(4) of the TNVAT Act. The appellant agreed to provide a bank guarantee for the tax imposed, while reserving the right to challenge the tax and penalty later. 6. Judgment: The Writ Appeal was allowed, setting aside the impugned notice and directing the release of detained goods upon the appellant furnishing a bank guarantee equivalent to the tax amount. The appellant was granted liberty to challenge the tax and penalty before the appropriate authority, with the bank guarantee remaining active until a decision was made. The case was closed with no costs awarded. This detailed analysis covers the key issues raised in the legal judgment, outlining the arguments presented, the court's findings, and the final decision rendered by the Madras High Court.
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