1997 (4) TMI 552 - HC - GST

Free movement of goods prevails where documentary proof shows bona fide inter state carriage, so detention is unlawful absent reasonable doubt.

Detention powers at state check-posts under sales tax rules are limited by the constitutional guarantee of free movement of goods; they apply only where ... Inter-State trade and free movement of goods - reasonable doubt standard for detention to prevent tax evasionInter-State trade and free movement of goods - reasonable doubt standard for detention to prevent tax evasion - Lawfulness of detention of a goods vehicle under the A.P. Sales Tax provisions where documents indicate carriage from outside the State to outside the State - HELD THAT: - The Court held that statutory provisions requiring carriage of documents and obtainment of transit passes are measures to prevent clandestine intra-State sale and tax evasion, but they cannot be exercised so as to obstruct guaranteed inter-State movement of goods when there is no reasonable doubt about the nature of the transit. A detention is justified only where a reasonable doubt relatable to concrete facts exists that the transport is a camouflaged sale; absent such doubt, and where documents produced (including consignor/consignee declarations, transport challans and a way bill issued by the originating State authority) sufficiently demonstrate carriage from outside the State to outside the State, the Officer had no authority to detain the vehicle. The Court found the available documents collectively dispelled any reasonable doubt and therefore the detention exceeded statutory power. [Paras 4, 5]Detention was without authority; goods must be released and transit pass issued for continuation of inter-State carriage.Final Conclusion: The detention of the vehicle was quashed because the documents on record established bona fide transit from outside the State to outside the State and no reasonable doubt of clandestine sale existed; the officer was directed to release the goods and issue the transit pass. Issues: Whether the detention of a goods vehicle at a State check-post under Section 27, Section 29-B of the A.P.G.S.T. Act and Rule 46-A(1) of the A.P.G.S.T. Rules was lawful where documents produced showed carriage from outside the State to outside the State.Analysis: The statutory scheme requires carriers to carry prescribed documents and obtain transit passes to safeguard against evasion of sales tax. That supervisory power, however, is constrained by the constitutional guarantee of free movement of goods between States and applies only so long as there is a real and reasonable doubt that the transport is a camouflage to effect local sale. The materials produced included a road challan on the consignor's letterhead, way bill issued under the Orissa Sales Tax Act, consignment note, lorry challans showing consignor and consignee and prior checks at an earlier check gate. The form and annexures do not mandate a specific format of delivery note disclosing the party who handed the goods to the carrier. In the absence of concrete facts giving rise to a reasonable doubt that the movement was sham, the detention power could not be exercised.Conclusion: The detention of the vehicle was without authority and unlawful; the goods must be released and a transit pass issued. This conclusion is in favour of the assessee.Ratio Decidendi: Where documentary evidence establishes bona fide inter-state carriage to a destination outside the State, a checking officer lacks jurisdiction to detain the vehicle; detention is permissible only upon a reasonable doubt grounded in concrete facts that the transport is a camouflaged sale to evade tax.