Valid e-transit pass defeats detention and consequential composition proceedings under Tamil Nadu VAT compliance rules.

Where goods were transported outside the State under a valid e-transit pass issued by the competent authority and delivered within the prescribed time, detention could not be justified on the footing of an intrastate sale. The applicable provisions required transport documents to accompany the goods and required the consignor to obtain and deliver the transit pass within the prescribed period; once those conditions were met, the legal basis for detention fell away. As the notice for composition proceedings was only consequential to the detention, it also could not stand. The notices were therefore set aside in favour of the assessee.

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Issues: Whether goods transported outside the State could continue to be detained, and composition proceedings could be sustained, when a valid e-transit pass covering the consignment had been issued by the competent authority and delivered within the prescribed time.

Analysis: Section 69 of the Tamil Nadu Value Added Tax Act, 2006 read with the relevant rules required the transport documents to accompany the goods, while Section 70 of the Tamil Nadu Value Added Tax Act, 2006 required the consignor to obtain a transit pass and deliver or cause to be delivered it to the officer in charge of the last check post within the prescribed period. The e-transit pass in the present case was found to be validly issued, covered the goods in question, and was within the transit period prescribed under Rule 15(17)(c) of the Tamil Nadu Value Added Tax Rules, 2007. Once that requirement stood satisfied, the basis for treating the consignment as liable to detention on the footing of an intrastate sale disappeared. The notice initiating composition proceedings under Section 72 of the Tamil Nadu Value Added Tax Act, 2006 was only consequential to the detention.

Conclusion: The detention notice could not be sustained and was set aside. The consequential composition notice was also liable to be set aside. The result was in favour of the assessee.

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