Rebuttable presumption in transit detention: alternate documents can defeat deemed sale treatment when the transit pass is unavailable.

Non-production of a transit pass in Form LL does not by itself justify treating goods in transit as deemed sales, because the statutory presumption under the Tamil Nadu VAT framework is rebuttable. Where the dealer produces reliable alternate records, such as a stock transfer memo, e-sugam and supporting declarations, showing movement of goods from another State without a local sale, detention on a sale assumption is not warranted. The composition fee mechanism is intended to address the procedural default, and the goods may be released on payment of that fee.

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Issues: Whether goods in transit could be detained and treated as deemed sold in Tamil Nadu merely because the transit pass in Form LL was not produced, and whether the petitioner was entitled to release of the goods on payment of composition fee on producing other reliable documents showing stock transfer.

Analysis: Section 70(1)(c) of the Tamil Nadu Value Added Tax Act, 2006 creates a deeming fiction of sale when the transit pass is not produced, but that presumption is rebuttable. Where the transporter/dealer produces legally valid and reliable documents such as stock transfer memo, e-sugam and related declarations to show movement of goods from one State to another without any sale within Tamil Nadu, the authority cannot insist on tax as if a sale had occurred. The departmental circular also recognises acceptance of alternate evidence in exceptional cases of non-submission of transit pass, and the composition fee mechanism is intended to deal with such default.

Conclusion: The detention was not sustainable merely for non-production of the transit pass, and the goods were directed to be released on payment of Rs. 2,000 as composition fee.

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