2005 (9) TMI 602 - AT - VAT and Sales Tax

Summary

Issues: Challenge to detention of goods and penalty imposed by Assistant Commissioner of Commercial Taxes, Howrah Range.

Detailed Analysis:
1. Detention of Goods: The petitioner transported HDPE fabrics and multifilament yarn through West Bengal as a corridor from Bihar to Orissa. The vehicle was allowed to enter West Bengal without transit declaration at Dalkhola check-post, as the HDPE fabrics were exempt from sales tax. However, Assistant Commissioner of Commercial Taxes, Howrah Range, intercepted the vehicle at Malglahat and detained it, issuing a notice of demand for penalty. The respondent argued that HDPE fabric is taxable under the West Bengal Sales Tax Act, 1994. The petitioner contended that HDPE fabric was exempted from sales tax as per a circular of the Commissioner of Commercial Taxes. The Tribunal found that as HDPE fabric was not taxable, the penalty imposed was unjustified and set it aside.

2. Penalty Imposed: The respondent claimed that the multifilament yarn was subject to sales tax, and the petitioner was liable to pay a penalty for it. The petitioner admitted liability for penalty on the multifilament yarn. The Tribunal directed a reconsideration of the penalty on the multifilament yarn by the Assistant Commissioner of Commercial Taxes, Howrah Range, considering the exemption of HDPE fabric from tax. The Tribunal ordered the release of goods upon furnishing security, with the bank guarantee to be released immediately and the cash security to be adjusted against any penalty imposed by the Assistant Commissioner.

3. Conclusion: The Tribunal disposed of the case without costs, setting aside the penalty imposed on HDPE fabric due to its exemption from sales tax. The penalty on the multifilament yarn was remanded for reconsideration, taking into account the Tribunal's decision on the HDPE fabric. Goods were to be released upon adjusting the cash security against any penalty to be imposed. The decision was agreed upon by all members of the Tribunal, and the case was concluded accordingly.