Rebuttable deemed intra-State sale requires verification of evidence showing goods moved outside the State despite missing transit passes.

A deemed intra-State sale under the Tamil Nadu Value Added Tax Act, 2006 for failure to obtain a transit pass is rebuttable if the owner or carrier proves that the goods moved outside Tamil Nadu. Material prima facie showing outward movement after release of the goods must be verified before tax and value-based penalty can be sustained on the deemed-sale basis. Failure to obtain a transit pass may still attract penalty as a separate offence, but it does not by itself justify tax and penalty based on a presumed intra-State sale once the statutory presumption is rebutted. The assessment requires fresh consideration after verification of the evidence.

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Issues: Whether tax and penalty based on the deemed intra-State sale of goods for failure to obtain a transit pass may be sustained when the carrier produces material showing that the goods were transported outside Tamil Nadu.

Analysis: Section 70(1)(c) of the Tamil Nadu Value Added Tax Act, 2006 creates a rebuttable presumption that goods were sold within the State where the transit-pass requirement is not complied with. Its proviso permits the owner or person in charge to rebut that presumption by proving that the goods moved outside the State. The material produced prima facie indicated such outward movement after release of the goods and required verification. Although penalty for the separate offence of not obtaining a transit pass may remain available, tax and penalty assessed on the value of the goods cannot be imposed solely on the deemed-sale basis once the legal fiction is rebutted.

Conclusion: The deemed-sale assessment requires fresh consideration after verification of the evidence of movement of goods outside the State, in favour of the assessee.

Ratio Decidendi: A statutory deeming fiction of intra-State sale based on non-compliance with transit-pass requirements is rebuttable where the carrier establishes that the goods were transported outside the State.

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