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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 ...
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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 petitioner's offer to provide the Bank Guarantee did not waive their right to challenge the tax levy and compounding fee. The court clarified that challenging the tax and fee was separate from submitting the Bank Guarantee. The writ petition was disposed of with no costs awarded, and the connected pending application was closed.
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.
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