In M/s.Trans ACNR Solutions Pvt Ltd v. Deputy Commercial Tax Officer, held that VAT Authorities cannot impose tax and compounding fee simultaneously for not having Transmit pass at the time of Stock Transfer under the Tamil Nadu VAT Act.
The petitioners in the instant case, are dealers in bus Air Conditioner and its parts and accessories. At the time of stock transfer of goods to their Ernakulam branch, the dealer omitted to obtain transit pass from the entry point check post of the state of Tamil nadu. Though all other required documents were submitted before the authority, they refused to accept the same and detained the goods 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 Tamil nadu for not possessing the transit pass.
Against the action of the authority, the petitioner approached the High Court by stating 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.
The Department, on the other hand, argued that since the petitioner did not produce the transit pass at the exit point of this state, the goods carried by them shall be deemed to have been sold within the state of Tamilnadu under section 70(1)(c) of the TN VAT Act, 2006, and consequently, the petitioner is liable to pay tax and compounding fee.
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.
The bench observed that the deemed sale contemplated under section 70(1)(c) cannot be an irrebuttable presumption. It was said that 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.
“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 in-charge 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.”
Allowing the petition, the bench said that the respondent-authority in the impugned order itself admitted the availability of other 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.”
Read the full text of the Judgment below.
