2016 (11) TMI 1188 - HC - VAT and Sales Tax

Court rules in favor of transporter challenging Goods Detention Notice on tax liability.

International Cargo Agents Versus The Commercial Tax Officer

International Cargo Agents Versus The Commercial Tax Officer - TMI Issues:Detention of goods based on tax liability in inter-state sale.Analysis:The judgment deals with a writ petition challenging a Goods Detention Notice issued to a transporter regarding the tax liability on goods imported from West Bengal to Bangalore via Chennai. The petitioner, a transporter, was not the purchaser or seller but detained due to discrepancies in documents showing the movement of goods. The respondent contended that tax should be levied by Tamil Nadu as the goods' import ended in that state. However, the goods were imported by a registered dealer in West Bengal, sold to a registered dealer in Bangalore, and taxes were paid accordingly. The court considered whether the transaction, terminating in Tamil Nadu, constituted a sale in that state for tax purposes. The petitioner was advised to challenge the compounding notice through revision before the Joint Commissioner to balance revenue interests with the petitioner's rights. The respondent acknowledged the goods' movement from Tamil Nadu to Karnataka, indicating an inter-state sale subject to 2% tax under the Central Sales Tax Act. The respondent argued for a 14.5% tax rate, amounting to Rs. 1,86,675.The court noted that the goods' movement originated in Tamil Nadu, allowing the petitioner to seek release by remitting Rs. 50,000 towards the pending liability. The petitioner was granted two weeks to file a revision challenging the compounding notice before the Joint Commissioner. The release of goods was subject to the revisional authority's decision. The judgment disposed of the writ petition, allowing the petitioner to address all issues before the Joint Commissioner, ensuring a fair balance between revenue interests and the petitioner's rights.