2017 (2) TMI 606 - HC - VAT and Sales Tax

Petitioner Ordered to Pay Tax and Compounding Fee Under VAT Act, 2006

Gini & Jony Limited Versus The Deputy Commercial Tax Officer

The court directed the petitioner to pay tax and a compounding fee under the Tamil Nadu Value Added Tax Act, 2006, for allegedly failing to produce ... Release of detained goods - payment of tax alongwith compounding fee - Held that: - the writ petition is disposed of with a direction that if, the petitioner were to deposit the tax, of ₹ 1,03,697/-, the detained goods would be released, immediately, thereafter - the petitioner having the liberty to assail the imposition of tax and compounding fee, on merits, in accordance with remedy available under the 2006 Act - petition allowed - decided partly in favor of petitioner. Issues:1. Challenge against the order directing payment of tax and compounding fee under the Tamil Nadu Value Added Tax Act, 2006.2. Interpretation of Sections 67-A, 72(1)(a), and 72(1)(b) of the 2006 Act.3. Dispute regarding the alleged failure to produce requisite documents during the transportation of goods.4. Resolution of the matter through depositing the tax amount to seek release of detained goods.Analysis:The writ petition challenged an order dated 08.01.2017 directing the petitioner to pay tax amounting to Rs. 1,03,697/- along with a compounding fee set at twice the tax rate, totaling Rs. 2,07,394/-. The impugned order was based on the petitioner's alleged failure to carry necessary documents while transporting goods from Nani Daman to Chennai, invoking Section 67-A of the Tamil Nadu Value Added Tax Act, 2006. The petitioner contended that the goods were transferred between branches and not an evasion of tax, suggesting that Section 72(1)(a) should not have been applied, and the compounding fee should have been limited to Rs. 2,000 under Section 72(1)(b).The petitioner, without prejudice to its rights, agreed to pay the tax amount to secure the release of the detained goods. The challenge against the compounding fee and tax imposition was reserved for further legal action under the 2006 Act. The respondent, upon payment of the tax as per the impugned order, assured the immediate release of the goods. Consequently, the writ petition was disposed of with a directive to deposit Rs. 1,03,697/- for the release of goods, allowing the petitioner to contest the tax and compounding fee imposition through the available legal remedies under the 2006 Act.The judgment emphasized the resolution of the dispute through payment of the tax amount while preserving the petitioner's right to challenge the imposition of tax and compounding fee on substantive grounds. No costs were awarded in the disposition of the writ petition, maintaining a neutral stance on the matter.