Inter-State trade documentation cured technical defects and defeated seizure and penalty under West Bengal VAT rules.

Seizure of goods and penalty for alleged breach of West Bengal VAT documentation rules were examined in light of a consignment supported by multiple transport and commercial papers. The transaction was found to be an inter-State movement from West Bengal to Assam, with Central sales tax charged, so no West Bengal VAT liability arose on the movement. The absence of a West Bengal VAT registration number or a West Bengal VAT invoice was treated as insufficient, by itself, to justify seizure or penalty where the invoice, consignment note, packing list, goods receipt memo, test certificate, road permit and inspection note together disclosed the true nature of the supply and showed bona fides.

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Issues: Whether the seizure of goods and the penalty imposed for alleged violation of section 81 of the West Bengal Value Added Tax Act, 2003 read with rule 108 of the West Bengal VAT Rules, 2005 were sustainable when the consignment was supported by several transport and commercial documents and the movement was in the course of inter-State trade.

Analysis: The documents produced at the time of interception were considered together, including the invoice, consignment note, packing list, goods receipt memo, test certificate, road permit and inspection note. The goods were purchased in West Bengal and were being sent to Assam in the course of inter-State trade, with Central sales tax charged accordingly. No VAT was payable under the West Bengal Act on such movement, and the absence of a West Bengal VAT registration number or a tax invoice charging West Bengal VAT did not justify seizure or penalty. The authorities erred in isolating technical defects without considering the cumulative effect of all accompanying documents, which disclosed the true nature of the transaction and showed bona fides.

Conclusion: The seizure and the penalty orders were unsustainable and were rightly set aside, with release of the goods directed.

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