The petitioner has filed this writ petition challenging the goods detention notice dated 03.04.2017, in and by which the respondent has passed an order levying tax under Section 72 (1)(a) of Tamil Nadu Value Added Tax Act, 2006 and also imposing penalty on the goods which was imported by the petitioner and transferred to the State of Andhra Pradesh.
2. The issue involved in this writ petition lies in a narrow campus. The petitioner is an Unincorporated Joint Venture undertaking and its Joint Venture partner is M/s. L&T Geostructure LLP formed for the purpose of executing the project at Polavaram for construction of Polavaram dam for the State of Andhra Pradesh.
3. The petitioner is a registered dealer under the provisions of Andhra Pradesh Value Added Tax Act and they have obtained import and export code in the State of Tamil Nadu for import of necessary goods for Andhra Pradesh Government's project from the Chennai Sea and Airport.
4. The modus adopted by the petitioner is that their administrative office at Chennai, places purchase order on the foreign importer and its joint venture over seas partner for the goods and materials required for the Andhra Pradesh project. The foreign exporter raises invoices on the petitioner with the address at Chennai and the goods are consigned to the project site at West Godavari District, Andhra Pradesh. The payment are stated to be made online from their centralized accounting system.
5. The petitioner imported spares for machinery from Germany and cleared the consignment from Air Customs on 24.03.2017 vide bill of entry dated 16.03.2017. The petitioner generated the Way bill from the Andhrapradesh Government Commercial Taxes Department website at 19.05 hrs on 24.03.2017 for consigning the goods to Andhra Pradesh project site in Polavaram from the Chennai Airport.
6. It is stated that even before the goods were loaded to the truck for movement to the project site, they were detained by issuance of a goods detention notice dated 24.03.2017. The reason for detention being that on verification of the Commercial invoice, the petitioner is having head office at 979, Mount Poonamallee High Road , Manapakkam, Chennai 22, is not a registered dealer in Tamil Nadu and the goods are to move to their sister concern in West Godavari, Andhra Pradesh, hence, the transaction appears to be one evading payment of duty and thus the goods were detained.
7. The petitioner has submitted a reply contending that the import and export code was taken in Chennai, the purchase order was issued from the administrative office at Chennai, and was given only for the purpose of issuing purchase order and movement of imported materials from the port after following the IEC formalities. Therefore, it is submitted that the question of obtaining registration under the Tamil Nadu Value Added Tax Act by the petitioner does not arise, as the goods imported are directly moving to the project site at Andhra Pradesh and there is no sale involved in the transaction.
8.The respondent passed an order dated 25.03.2017 demanding payment of tax at 14.5% and imposing two times compounding fees. This was challenged by filing a Writ petition in W.P.No.7626/2017, which was allowed by an order dated 27.03.2017, with a direction to the respondent therein to pass a fresh order after giving an opportunity of personal hearing. The petitioner filed additional objections and the respondent offered an opportunity of personal hearing, which according to them was an empty formality and passed the impugned order confirming the proposal.
9. The learned counsel for the petitioner submitted that the goods ought not to have been detained as the same was not meant for sale or transfer within the State of Tamilnadu, but meant for consignment from the Chennai Airport after clearance to the project site at Polavaram, West Godavari District, Andra Pradesh.
10. Further, it is submitted that the respondent ought to have seen that the import and continuous movement of goods are contemplated towards Andhra Pradesh project and it is an import sale falling under Section 5 (2) of the Central Sales Tax Act and it is an exempted transaction. The factum of continuous movement of the goods to Andhra Pradesh is established by the fact that the E-Way bill has been generated from the website of Andhra Pradesh Commercial Taxes Department on 24.03.2017 at 19.05 hours, 5 minutes before the detention notice was issued.
11. The allegation that there is a sale between the petitioner's liaison office in Chennai and the project office in Andhra Pradesh is absolutely false and it is against the principles of law laid down by the Hon'ble Supreme Court in the case of Indure & Co.(34 VST 590) and English Electric Co.(38 VST 475). Therefore, it is submitted that the impugned order is unsustainable.
12. Learned Additional Government Pleader, by referring to the counter affidavit filed by the respondent, has submitted that the petitioner is an unregistered dealer in the State of Tamil Nadu and therefore, the goods were detained and there is evasion of tax to the State of Tamil Nadu. Therefore the respondent was fully justified in passing the impugned order. It is further submitted that the details of the certificate, Import Export Code registration was gathered from the IEC gate website. Therefore, it is seen that the registration was obtained by the petitioner's Head Office located at Chennai, Tamil Nadu State.
13. The stand taken by the petitioner is that the liaison office alone is at Chennai cannot be accepted as all accommodations were done at Chennai and they are not registered dealer under the Tamil nadu Value Added Tax Act and they are using the Chennai address for import purpose and obtained Import Export Code. The Bankers are located in Ramapuram, within the vicinity of the petitioner's Head Office and therefore the transactions is definitely liable to be taxed within the State of Tamil nadu.
14. Further it is submitted that there are two clear transactions viz., (i) Import of goods from Germany and (ii) transport of goods to Andhra pradesh from Tamil Nadu. These two activities are commercial activities and not liaison working and therefore, liable to be taxed within the State of Tamil nadu.
15. I have heard Mrs.Aparna Nandakumar, learned counsel for the petitioner and Mr.S.Kanmani Annamalai, learned Additional Government Pleader for the respondent and carefully perused the materials placed on record.
16. The admitted position is that the petitioner which has unincorporated joint venture is not a registered dealer in the State of Tamil Nadu under the provisions of Tamil Nadu Value Added Tax Act or the Central Sales Tax Act. However, the petitioner is a registered dealer under the provisions of the Andhra pradesh Value Added Tax Act. The reason for passing the impugned order is by analyzing the pattern of the transaction made by the petitioner. In the opinion of the respondent the transactions are clearly two transactions namely one is import transaction and the other is transport of goods from Tamil Nadu to Andhra Pradesh. The respondent has justified in levying the tax and penalty on the transaction by referring three aspects namely obtaining Import and Export Code registration by using the Chennai address. The Customs invoice has been raised in the address at Chennai. One of the joint venture partners namely M/s. L&T Geostructure LLP is situated at Chennai and the Bankers are also in Chennai. Therefore, it is the case of the respondent that it is the Chennai establishment, which imports the goods and from the State of Tamil Nadu, it is transported to the State of Andhra Pradesh project site and therefore, it is a sale within the State.
17. On a perusal of the joint venture agreement dated 16.01.2015, it is seen that the Joint venture agreement has been entered into for design and execution of certain works for the Indirasagar Polavaram Project, Andhrapradesh.
18. Admittedly, the entire activities is to be conducted in the State of Andhra Pradesh, for which purpose the joint venture is entitled to import goods for the project. The bill of entry filed shows that the importer is the joint venture with registered office in Andhra Pradesh and the country of origin of the goods is Germany and to be off loaded in the Chennai Airport. The Customs invoice shows the name of the petitioner/Joint venture as a buyer. However the address of the petitioner is the Chennai address. But what is very important to be noted is that the place of delivery of goods to the petitioner is in the State of Andhra Pradesh. The E-way bill which has been generated from the website of the Commercial tax department of the Government of Andhra Pradesh issued on 24.03.2017 at 19.05 hours shows that the goods are to be consigned to the project at Andhra Pradesh from Chennai. Thus, the cumulative consideration of these documents would clearly establish that the import has taken place in the project work done by the petitioner at in the State of Andhra Pradesh. Therefore, it is to be seen as to whether merely because a branch or liaison office established in Chennai, would run the transaction as a sale within the State.
19. On a factual position, in the instant case, the answer would be negative. Thus, there is nothing on record to show that the joint venture with address at Chennai had sold the goods to the Joint venture with address at Andhra Pradesh. It may not be true that the Import and Export Code has been obtained in the name of the petitioner joint venture, giving the Chennai address, that by itself will not create a doubt in the transaction nor permit the transaction as a sale within the State of Tamil Nadu. For such interpretation given, it would be contrary to the
section 5 (2) of the Central Sales Tax Act which provides that a sale or purchase of goods shall be deemed to be take place in the course of import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents or title to the goods before the goods have crossed the customs frontiers of India.
20. Undoubtedly the sale or purchase has occasioned such import and the goods are to go to the State of Andhra Pradesh. Thus, I have no hesitation to conclude that there is no element of sale within the State of Tamil Nadu T.S.SIVAGNANAM,J.
sli and the respondent cannot instruct upon the petitioner to register themselves under the TNVAT Act and merely because the Import and Export Code is from the office in Tamil Nadu cannot be a feature to doubt any transaction. Thus, for all the above reasons, the impugned order is allowed to be not sustainable. Accordingly, the writ petition is allowed and the impugned order is set aside.
21. As the petitioner has remitted one time tax for release of the goods, it is open to the petitioner to seek for refund of the same by filing the appropriate application before the competent authority. No costs. Consequently connected miscellaneous petitions are also closed. 03.08.2017 sli Index:yes/no Internet:yes To The commercial Tax Officer Air Cargo Vehicle Check Point, Chennai 600 027.
W.P.No.8082of 2017 and W.M.P.Nos.8860 and 8861 of 2017