2016 (8) TMI 525 - HC - VAT and Sales Tax

Court grants writ petition, quashes tax orders, directs refund claim filing within 3 months, no interest on refund

Swamy Oil Industries Versus The State of Tamil Nadu, The Commissioner of Commercial Taxes, The Deputy Commercial Tax Officer (C.T.)

The court allowed the writ petition, quashed the impugned orders, and directed the petitioner to file a revision claim for a refund of the tax amount and ... Inter-sate sale or not - e-Transit Pass in Form LL - Refund - Compounding fee – Kerela Value Added Tax – coconut oil – detention of goods – verification of genuineness of transactions - Circular No.26/2014 dated 16.06.2014 stating the situation where inspite of genuine transaction assesse could not produce the transit pass – Held that: - in case of non-surrender of transit pass, if a dealer could produce sufficient legally valid and reliable documentary evidence to prove that the goods moved without the transit pass in question had actually crossed the borders of the State, such evidences may be accepted by the Assessing Authority as an evidence of inter-state movement of goods. The officers of the Department were also cautioned that this cannot be accepted for repeated violations. This was the first occasion for the petitioner - genuine transaction – no tax and penalty required to be collected – writ petition allowed – petitioner directed to file revision claim for refund of tax and penalty. Issues:Challenge to order collecting compounding fee and seeking refund.Analysis:The petitioner, a registered dealer under the Kerala Value Added Tax Act and Central Sales Tax Act, filed a writ petition challenging the order collecting compounding fee. The petitioner, a manufacturer of coconut oil, sold the oil from Kerala to other states. The sale of edible oil in Tamil Nadu required an e-Transit Pass as per Section 70 of the Act. The petitioner's consignment was headed to Karnataka and Vijayawada, passing through Kerala and Tamil Nadu check posts. The goods were detained at the Kerala Check Post due to the driver not submitting the Form LL at the Puliyarai Check Post. To release the goods, the petitioner paid tax and penalty. Subsequently, the authority issued a release order confirming the genuineness of the transaction. The petitioner cited a circular and court decisions to support their case.The Additional Government Pleader argued that the goods' movement from Vellore to Vijayawada constituted interstate movement requiring an e-Transit Pass. The petitioner should have approached the Revisional Authority under Section 55 of the Tamil Nadu Value Added Tax Act instead of filing a writ petition. Referring to a similar case, the Additional Government Pleader highlighted the requirement of a transit pass and penalties for non-compliance. The circular issued by the Commissioner of Commercial Taxes emphasized the need for valid documentary evidence in case of non-surrender of transit pass.The petitioner's counsel emphasized that this was the first instance of the petitioner's goods being detained and that the petitioner had no prior adverse history with the Department. The court held that the authority should have considered all documents to determine the transaction's genuineness. As the authority had confirmed the transaction's genuineness in the release order, the court concluded that the tax and penalty should not have been collected from the petitioner. The writ petition was allowed, the impugned orders were quashed, and the petitioner was directed to file a revision claim for a refund of the tax amount and penalty within three months. No interest was to be charged on the refund.