The petitioner is aggrieved against the notice dated 25.03.2017 for composition of offence.
2.The case of the petitioner in short is as follows:
The petitioner is a manufacturer and dealer in bus Air Conditioner and its parts and accessories, having its Head Office in New Delhi. They have their branches at Bangalore, Ernakulam, Chennai and in other places in India. The petitioner's branch in Bangalore, in the course of its business, wanted to stock transfer air conditioner parts and coolant oil to other branch in Ernakulam. Thus, through a Stock Transfer Memo bearing No.0300054 dated 24.03.2017, Bangalore branch valued such stock transfer at Rs.23,21,558/-, uploaded the details of such transfer in Karnataka Commercial Taxes Department to generate e-sugam, obtained e-sugam No.21325701534 and noted the same in the stock transfer memo dated 24.03.2017. A e-Consignment Declaration under the Kerala Value Added Tax was also generated. Thus, the goods were despatched on 24.03.2017. They have to cross the State of Tamilnadu to reach Ernakulam. The first respondent detained the goods on 25.03.2017, on the reason that the goods did not accompany transit pass in Form LL. It is by mistake the driver of the vehicle did not obtain such transit pass from the entry point check post of the state of Tamilnadu. However, all the other required documents are made available before the first respondent to substantiate that the goods are being transported from Bangalore to Ernakulam only by way of stock transfer and that there is no event of sale involved within the state of Tamilnadu. The first respondent refused to accept the documents produced by the petitioner and informed that the goods will be released only if the petitioner pays the tax and compounding fee, by treating the goods, as though, deemed to have been sold within the state of Tamilnadu for not possessing the transit pass.
3.Learned counsel appearing for the petitioner submitted that for not having the transit pass, only a composition fee of Rs.2,000/- can be imposed and collected and hence, the first respondent cannot impose the tax and compounding fee. By relying on a circular No.26/2014, dated 16.06.2014, issued by the Commissioner of Commercial Taxes, Chennai-5, he further submitted that the petitioner is entitled to get the goods released, if the other legally valid and reliable documents are produced to establish the stock transfer from Bangalore to Ernakulam. He also invited this Court's attention to the order made in W.P.No.39776 of 2015 dated 07.01.2016, W.P.No.20634 of 2016 dated 23.06.2016 and W.P.No.1713 of 2016 dated 24.06.2016, arising out of similar circumstances wherein this court directed the release of the goods on payment of Rs.2000/- towards composition fee.
4.On the other hand, the learned Government Advocate appearing for the respondents, based on instructions, submitted that the goods were detained, since the consignor viz., the petitioner did not produce the transit pass at the exit point of this state. Therefore, he contended that as per Section 70(1)(c) of the TN VAT Act, 2006, the goods carried by the petitioner shall be deemed to have been sold within the state of Tamilnadu and consequently, the petitioner is liable to pay tax and compounding fee. He further submitted that the first respondent has not passed the order so far fixing the quantum of tax and compounding fee.
5.Heard both sides.
6.The petitioner, a manufacturer and dealer in bus air conditioners, having its Head Office at New Delhi and branch offices at Bangalore, Ernakulam and Chennai, wanted to stock transfer of air conditioner parts and coolant oil from their Bangalore branch to Ernakulam branch. It is seen that such stock transfer was sought to be made by raising a Stock Transfer Memo No.0300054 dated 24.03.2017 and generating e-sugam No.21325701534. It is also seen that the e-consignment declaration under Kerala Value Added Tax Act was also generated. The above documents, readily available, accompanied the goods sought to be stock transferred.
7.Perusal of those documents filed in the typed set of papers would clearly indicate that the petitioner sought to stock transfer the goods from their Bangalore office to their Ernakulam Office. The only mistake committed by the petitioner, which according to the learned counsel for the petitioner, is due to inadvertence, is in not obtaining the transit pass in Form LL at the entry point check post of the state of Tamil Nadu.
8.Perusal of the circular No.26/2014 issued by the Commissioner of Commercial Taxes dated 16.06.2014 would show that the difficulty faced by the petitioner like persons/transporters for not obtaining the transit pass, has been taken into consideration. Considering such difficulties and the harassment met out by the transporters, the Commissioner of Commercial Taxes issued such circular, by clearly giving certain instructions therein to the officials of the Commercial Taxes Department, as to how to deal with the matters like the one on hand. The said authority, after taking note of the decision made by the Apex Court in the case of Tvl.Sodhi Transport Co. and another vs Uttar Pradesh and another, reported in (1986) 62 STC 381, has specifically observed at paragraph Nos.7. (e), (f) and (g) as follows:
7.(e) Regarding acceptance of other documentary evidences in lieu of surrendering Transit Pass, the Honourable Supreme Court, in the case of Tvl.Sodhi Transport Co. and another vs Uttar Pradesh and another, reported in (1986) 62 STC 381, has held under:-
The transporter concerned is not shut out from showing by producing reliable evidence that the goods have not been actually sold inside the State. It is still open to him to establish that the goods have been disposed of in a different way. He may establish that the goods have been delivered to some other person under a transaction which is not a sale, they have been consumed inside the State or have been redespatched outside the State without effecting a sale within the State, etc.,
f) Therefore, in case of non surrender of transit pass, if a dealer could produce sufficient legally valid and reliable documentary evidence to prove that the goods moved with the transit pass in question had actually crossed the borders of the State, such evidences may be accepted by the assessing authority as an evidence of inter-State movement of goods.
g) However, such acceptance of alternate evidence to surrender of transit pass can be in exceptional cases, where there is sufficient cause for non-submission of transit pass by the transporter. But, this cannot be accepted for repeated violations by the same dealer. Such repeated violations may be brought out in the speaking orders passed by the Enforcement Officers/Assessing Officers.
9.It is also to be noted that the said authority, while passing the said circular, has taken into consideration of Section 70 of the TN VAT Act, 2006, as well, in view of the fact that the said provision of law deals with the issue of transit pass and the consequences of non production of the same.
10.No doubt, the learned Government Advocate strongly relied on Section 70(1)(c) of the TN VAT Act, 2006 to support the impugned order of detention. For the purpose of appreciating his contention, it is better to understand the scope of such provision, which reads as follows:
70.Issue of transit pass .--(1) (a) When a goods vehicle carrying any goods mentioned in the Sixth Schedule, coming from any place outside the State and bound for any other place outside the State, passes through the State, the owner or other person in-charge of such goods vehicle shall obtain a transit pass in the prescribed form and in the prescribed manner from the officer in-charge of the first check post or barrier, after its entry into the State.
(b) The owner or other person in-charge of the goods vehicle shall deliver within the prescribed period, the transit pass to the officer in-charge of the last check post or barrier, before the exit of the goods vehicle from the State.
(c) If the owner or other person in-charge of the goods vehicle fails to comply with clause (b), it shall be deemed that the goods carried thereby have been sold within the State by the owner or person in-charge of the goods vehicle, and such owner or person in-charge of the goods vehicle shall, notwithstanding anything contained in section 3, be jointly and severally liable to pay tax in accordance with the provisions of this Act, irrespective of the quantum of turnover and also penalty which shall be one hundred and fifty per cent of such tax:
Provided that where the goods carried by such goods vehicle are, after their entry into the State, transported outside the State by any other vehicle or conveyance, the onus of proving that the goods have actually moved out of the State, shall be on the owner or person in-charge of the goods vehicle who originally brought the goods into the State.
Explanation. - In a case where a goods vehicle owned by a person is hired for transportation of goods by some other person, the hirer of the vehicle shall, for the purposes of this sub-section, be deemed to be the owner of the goods vehicle.
11.True, Section 70(1)(c) of the Act contemplates deemed sale of the goods carried, if the owner or other person in-charge of the goods fails to produce the transit pass in the prescribed form. In my considered view, the deemed sale contemplated under the above said provision cannot be an irrebuttable presumption and on the other hand, such presumption made only because of non furnishing of transit pass, is always a rebuttable one, if the owner or other person in-charge of the goods, is in a position to satisfy the authorities with other documents legally valid and reliable, to substantiate that the goods are being transferred from one state to another state, through the state of Tamilnadu, not involving an element of sale or purchase within this state. That is why, the Commissioner of Commercial Taxes has chosen to issue the said circular as stated supra. Clause 7(f) of the circular clearly deals with such situation. The decision of the Hon'ble Supreme Court relied on and referred to in the circular also is to the effect that the owner is entitled to establish that the goods have been delivered to some other person under a transaction, which is not a sale by producing reliable evidence. But at the same time, it should be borne in mind that the deemed sale as contemplated under Section 70(1)(c) of the said Act, would come into operation if the owner or other person incharge of the goods is not in a position to satisfy the authorities by production of the legally valid and reliable documents to substantiate that the goods are being transferred from one state to another and that no element of sale or purchase is involved within the state of Tamilnadu.
12.In fact, while considering the similar issue, this court, on earlier occasion, found that the respective petitioners therein are entitled to get the goods released only on payment of Rs.2000/- towards composition fee, of course, after producing the necessary documents establishing the transfer of the goods from one place to another, without there being any act of sale within the state of Tamilnadu.
13.Perusal of the impugned notice clearly indicates that the first respondent has looked into the stock transfer memo dated 24.03.2017 and also e-sugam dated 24.03.2017. Therefore, it is admitted by the first respondent in the impugned order itself about the availability of those documents with the goods. The only reasons stated in the notice is that the petitioner did not produce the transit pass. Therefore, I do not think that the first respondent is justified in detaining the goods any more, if the petitioner pays a sum of Rs.2000/- towards composition fee for not producing the transit pass. Accordingly, the writ petition is allowed and the impugned proceedings of the first respondent is set aside. Consequently, the petitioner is directed to pay a sum of Rs.2000/- (Rupees two thousand only) towards composition fee, K.RAVICHANDRABAABU, J., vri as provided under Section 72(1)(b) of TNVAT Act, 2006, before the first respondent for release of the goods immediately on the receipt of a copy of this order. On receipt of such payment of composition fee, the first respondent shall release the goods forthwith. No costs. The connected miscellaneous petition is closed.
06.04.2017 Note:Issue copy on 07.04.2017.
Speaking/Non Speaking Index : Yes / No To
1.The Deputy Commercial Tax Officer/ Check Post Officer, Pitchanur, Coimbatore 641 105.
2.The Assistant Commissioner (CT), Thiruverkadu Assessment Circle.
W.P.No.8506/2017 http://www.judis.nic.in