Limited checkpost detention power cannot replace assessment when goods move with valid documents and no tax evasion basis exists.

The Madras HC held that checkpost detention under the Tamil Nadu VAT Act is confined to verifying whether goods are supported by prescribed transit documents and whether there is a genuine attempt to evade tax. Where the goods were accompanied by an invoice and supporting papers, the officer could not proceed as if making an assessment or infer evasion without a legally sustainable basis. Detention in such circumstances exceeded the statutory limits governing checkpost action, and the proceedings were quashed with directions for release of the goods.

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Issues: Whether the checkpost officer could detain the goods and infer evasion of tax under the Tamil Nadu Value Added Tax Act, 2006 without absence of requisite transit documents, and whether the detention proceedings were sustainable.

Analysis: The goods were accompanied by invoice and other supporting documents. The statutory scheme permits detention only for the limited purpose of verifying whether the goods are covered by the prescribed documents and whether there is any attempt to evade tax. On the facts, the checkpost officer proceeded as if making an assessment and concluded evasion of tax without first establishing non-availability of required documents or any other legally sustainable basis. The movement of goods with valid documents did not justify invoking the detention power in the manner adopted. The impugned proceedings were therefore contrary to the statutory limits governing checkpost action.

Conclusion: The detention order was quashed and the goods were directed to be released forthwith. The issue was decided in favour of the assessee.

Ratio Decidendi: A checkpost officer may detain goods only for the limited statutory purpose of verifying transit documents and detecting a genuine attempt to evade tax, and cannot assume the role of the assessing authority or sustain detention when the goods are accompanied by valid documents.

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