2005 (9) TMI 593 - HC - VAT and Sales Tax

Court rules excessive security demand unjust under A.P. VAT Act. Authorities can't demand tax and penalty simultaneously. Vehicle released upon tax payment.

Sujana Enterprises Versus Assistant Commercial Tax Officer (Int.) Fac, Chittoor and another

Sujana Enterprises Versus Assistant Commercial Tax Officer (Int.) Fac, Chittoor and another - [2005] 142 STC 598 (AP), [2006] 3 VST 65 (AP) Issues: Detention of goods under VAT Act, legality of demand for security, release of detained vehicle and consignmentIn this case, the petitioner, a business dealing in granite and granite tiles, sold a consignment to a buyer in another state. The consignment was detained by the tax authorities on suspicion of irregularities in the accompanying documents, such as undervaluation and inaccurate quantity description. The authorities invoked section 45(6) of the A.P. Value Added Tax Act, 2005 to detain the vehicle and goods. The petitioner challenged this detention through a writ petition, arguing that the demand for security in the show cause notice was illegal under section 45(3)(b)(ii) of the Act. The petitioner contended that the demand for security exceeding the actual tax liability was unjustified. The court analyzed the relevant provisions of the Act and held that at the stage of detention based on suspicion of tax evasion, the authorities cannot demand both tax and penalty simultaneously. The court directed the release of the detained vehicle and consignment upon the petitioner depositing the actual tax amount of Rs. 13,021 with the authorities. The writ petition was allowed, and the vehicle was ordered to be released upon compliance with the deposit requirement.