2017 (3) TMI 152 - HC - VAT and Sales Tax

Court orders release of Air Compressor upon Bank Guarantee, petitioner retains right to challenge tax levy

The court directed the release of the detained Air Compressor upon the petitioner furnishing a Bank Guarantee equivalent to the imposed tax amount. The ... Detention of goods - Aircompressor transported from Pondicherry to Tiruchengode - detention on the ground that consignees TIN. No. not mentioned in the invoice. Further the consignor Tvl. ATLAS COPCO (India) Pondicherry has not raised any sale invoice - Held that: - perusal of the tax invoice would show that the requisite Central Sales Tax has been paid - the transaction in issue is an Inter-State sale transaction and hence, is not amenable to local tax - goods ordered to be released on furnishing of Bank guarantee - petition allowed - decided in favor of petitioner. Issues:Detention of subject goods challenged based on goods detention notice and compounding notice.Analysis:The petitioner contested the detention of subject goods, an Air Compressor, based on a goods detention notice and a compounding notice. The compounding notice imposed a tax rate of 14.5% amounting to Rs. 5,46,059 and a compounding fee of Rs. 16,38,177 on the petitioner. The petitioner claimed to have raised a Purchase Order on Chicago Pneumatic Construction Equipment to sell the goods to PR.Rajenthiran, supported by documents such as the Purchase Order and tax invoice. However, the detention notice highlighted discrepancies, including the absence of consignee TIN in the invoice and the lack of a sales invoice from the consignor, Atlas Copco India Limited. The petitioner argued that the transaction was an Inter-State sale not subject to local tax, even though the sales invoice from Chicago Pneumatic Construction Equipment was not with the transporter.The petitioner offered to provide a Bank Guarantee equivalent to the imposed tax amount to expedite the release of the detained goods. The respondents agreed to release the Air Compressor upon receiving the Bank Guarantee. The petitioner clarified that this offer did not affect their right to challenge the tax levy and compounding fee. The court, after hearing both parties and examining the records, directed the release of the detained goods upon the petitioner furnishing a Bank Guarantee from a Nationalized Bank or Scheduled Bank equivalent to Rs. 5,46,059. The Bank Guarantee was to remain valid until further orders. Additionally, the court specified that challenging the tax and compounding fee was separate from submitting the Bank Guarantee. The writ petition was disposed of accordingly, with no costs awarded, and the connected pending application was closed.