2017 (12) TMI 1483 - HC - VAT and Sales Tax

Detention of goods - in the course of lorry check on verification of the dealer s profile and monthly returns it revealed that they have purchased huge quantity of such machines but no proof of payment of tax was found out - whether the order of detention passed by the respondent is valid and proper and as to whether the transaction could be treated as a sale within the State of Tamil Nadu and tax could be levied under the provisions of the said Act? - Held that - the contract is between the State Bank of India Navi Mumbai and the petitioner at New Delhi with a specific condition that the goods are to be supplied to the State Bank of India Chennai to be routed through their agent and service provider M/s.Hitachi Payment Services Private Limited. Thus the impugned order is not sustainable more so when the State Bank of India themselves have given a certificate dated 11.4.2017 clearly explaining the nature of transaction - petition allowed.

Summary

Issues:
1. Detention of goods at Tamil Nadu border for alleged tax evasion.
2. Validity of detention order and tax levy under the Tamil Nadu Value Added Tax Act, 2006.
3. Interpretation of transaction nature between parties involved.

Analysis:

Issue 1: Detention of Goods
The petitioner was contracted by the State Bank of India to supply POS Terminals, with specific conditions for payment processing and delivery. However, the goods were detained at the Tamil Nadu border due to suspicions of tax evasion, leading to a compounding notice issued by the respondent.

Issue 2: Validity of Detention Order and Tax Levy
The petitioner submitted a representation to the Joint Commissioner, Enforcement, enclosing a certificate from the State Bank of India certifying the purchase details and delivery instructions. Despite the certificate not being immediately available to the respondent, the Court examined the transaction's nature and found that the purchase was made by the State Bank of India in Navi Mumbai from the petitioner in New Delhi, with goods to be delivered to M/s.Hitachi Payment Services Private Limited, the agent of the State Bank of India in Chennai. The Court concluded that the detention order was improper as there was no direct sale between M/s.Hitachi Payment Services Private Limited and the State Bank of India in Chennai.

Issue 3: Interpretation of Transaction Nature
Upon reviewing the agreement between Prizm Payment Services Private Limited and the State Bank of India, the Court determined that the transaction involved the State Bank of India in Navi Mumbai purchasing from the petitioner in New Delhi, with goods to be delivered to M/s.Hitachi Payment Services Private Limited for further processing and delivery to the State Bank of India in Chennai. The Court emphasized that the transaction nature was clear from the documents presented, and the detention of goods was unjustified.

The Court allowed the writ petition, set aside the impugned order, and directed the respondent to release the consignment immediately, noting that the State Bank of India's certificate clarified the transaction's nature. No costs were awarded, and the related Writ Miscellaneous Petitions were closed.