2020 (5) TMI 499 - HC - VAT and Sales Tax

Court upholds authority to detain goods and issue orders under Tamil Nadu VAT Act, dismisses writ petitions

Sri Adinath Traders Versus The Commercial Tax Officer, The Assistant Commissioner (CT)

The court dismissed the writ petitions challenging the proceeding for compounding fees under the Tamil Nadu Value Added Tax Act, 2006. It held that the ... Levy of compounding/composition fees - release of detained goods - It is the case of the petitioner that the 1st respondent erred in passing the impugned order which are titled as “Notice” by calling upon the petitioner to pay the aforesaid amounts as compounding/composition fee in lieu of prosecution as the 1st respondent has no jurisdiction to pass such orders under section 72 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- As per Section 67(4) of the Act, if the tax is paid or the security is furnished, then the goods so detained shall be released forthwith. Thus, the officers at the check post/barriers are the proper officers empowered to call upon the driver or the person in charge of the vehicle/boat to pay tax or to furnish adequate security in such form and in such manner and to such authorities as may be prescribed, on behalf of the person liable to pay tax. It is only on payment of such tax, the detained goods can be released - In fact the petitioner or the purported owner who importer as the case may be ought to have paid the tax and got the goods released. There is no necessity to file a writ petition. Instead, the petitioner espoused the cause of the purported owner (importer) by filing a writ petition directly before this court. It was altogether unnecessary in the light of the fact that the authorities acting under the act are duty bound to release the goods on payment of tax as per section 67 (4) Of the Tamil Nadu Value Added Tax Act, 2006. There is no difficulty in concluding that the 1st respondent was competent to not only detained the goods under section 67 of the Tamil Nadu Value Added Tax Act, 2006 but also was competent to issue notice/order under section 72 of the aforesaid Act. There is no illegality - Petition dismissed. Issues:Challenge to impugned proceeding for compounding fees under Tamil Nadu Value Added Tax Act, 2006.Analysis:1. The petitioner challenged the proceeding by the 1st respondent to pay compounding fees for an alleged offence. The petitioner acted as a consignment agent for an importer of spices, and the goods were seized and released following a court order.2. The impugned order directed the petitioner to pay a specified amount pending final adjudication by the jurisdictional authority. The petitioner contested the jurisdiction of the 1st respondent to pass such orders under section 72 of the Tamil Nadu Value Added Tax Act, 2006.3. The petitioner cited various court orders and circulars to support their case. The 2nd respondent filed counters justifying the detention and the impugned order under the Act.4. The court examined the circumstances of the case, including the importer's actions and the petitioner's role. The court noted that the goods were detained based on tax liability after import and sale within Tamil Nadu.5. The court analyzed the provisions of section 72 of the Act, which allows the prescribed authority to offer an option for compounding of offences. The petitioner, a registered entity, was given the option to pay the compounding fee.6. The court considered the authority of the 1st respondent to initiate proceedings under section 72. It discussed the powers of officers at check posts and barriers to detain goods for tax purposes.7. The court found that the 1st respondent was competent to detain the goods and issue notices/orders under the Act. It concluded that there was no illegality in the actions of the respondents.8. Ultimately, the court dismissed the writ petitions, stating that they lacked merit. The connected miscellaneous petitions were closed without costs.This detailed analysis of the judgment highlights the legal arguments, factual background, and the court's reasoning in addressing the challenge to the impugned proceeding for compounding fees under the Tamil Nadu Value Added Tax Act, 2006.