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of <h1>Detention Without Notice Violates Trade Freedom: Analysis of Tax Liability and Transit Pass Compliance</h1> <h3>ON. Guganbabu Versus The Commercial Tax Inspector And Others</h3> ON. Guganbabu Versus The Commercial Tax Inspector And Others - [2015] 76 VST 97 (Ker) Issues:1. Detention of goods and vehicle at check post due to failure to surrender transit pass.2. Legality of detention without issuance of notice under Section 47(2).3. Interpretation of Sections 48(1), (2), and (3) of the Act.4. Compliance with statutory provisions for smooth transportation of goods.5. Joint and several liability of persons involved in the transportation of goods.Analysis:1. The petitioner challenged the detention of goods and the vehicle at the check post due to the failure to surrender a transit pass issued for an earlier transport. The notice was issued against the driver, but the registered owner, who is before the Court, was also involved. The Court noted that while no notice under Section 47(2) was issued, the detention was made based on the failure to surrender the transit pass. The department was entitled to take proceedings under Section 48(3) deeming the owner, driver, or person in charge as an assessee in default for presuming the sale to have been made within the State.2. The Court emphasized that the technical difficulty of e-tokens not being generated due to the system configuration cannot be a valid reason for detaining vehicles at the check post without proper notice. The statutory provisions aim to ensure revenue collection and facilitate the movement of goods. The detention without a notice under Section 47(2) would violate statutory prescriptions and Article 301 of the Constitution of India, which guarantees the freedom of trade and commerce.3. Sections 48(1), (2), and (3) of the Act were analyzed in detail. These sections deal with obtaining and surrendering transit passes for goods transported through the State. Failure to surrender the transit pass at the exit check post presumes that the goods were delivered within the State for sale, making the persons involved jointly and severally liable for tax and penalty. The provisions protect the State's interest by ensuring compliance with documentation requirements.4. The Court highlighted the importance of compliance with statutory provisions to facilitate smooth transportation of goods and to prevent illegal detentions. The judgment referenced a Full Bench decision that emphasized the need for regulations that promote the free flow of goods and trade. It was noted that restrictions obstruct trade, while regulations promote it, in line with Article 301 of the Constitution.5. The judgment directed the registered owner to appear before the Commercial Tax Officer for proceedings under Section 48(3) regarding joint and several liability. It clarified that the notice issued against the driver cannot be enforced if the driver of the subsequent consignment was not involved in the earlier transportation. The Department was given the liberty to initiate proceedings against the owner of the goods due to the joint and several liability of persons involved in the transportation.In conclusion, the Court's judgment addressed the legality of detention, compliance with statutory provisions, and the joint liability of persons involved in the transportation of goods, emphasizing the need for proper procedures to ensure smooth movement of goods and to uphold constitutional principles.
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