M/s.Komal Industries, D-10, Novbad Industrial Area, Bidar, State of Karnataka v. The Commissioner of Commercial Taxes (CCT), Andhra

ORAL ORDER: (Per the Hon’ble Sri Justice J.Chelameswar) This writ petition is filed with the prayer as follows:

For the reasons stated in the accompanying affidavit, it is prayed the Hon’ble High Court be pleased to call for the records and issue Writ of Mandamus or any other appropriate writ or direction declaring the action of the 2nd Respondent, that is unloading and detaining the goods by receipt dt. 10/11/2006 as illegal, inoperative arbitrary accordingly set-a-side the order of the detention and seizure of goods and pass such other order or orders as the Hon’ble Court may deem fit and proper in the circumstances of the case.

The petitioner is a partnership firm and a registered dealer under the relevant laws of the State of Karnataka, having a small-scale industry engaged in the business of manufacturing iron and steel pipes (M.S.Wire) etcetera. The petitioner claims that for the purpose of its industry, it purchased certain raw material weighing about

15.250 MTs., from one M/s. Somya Trading Company, Bhilai, State of Chattisgadh. It is further asserted in the affidavit filed in support of the petition that the said raw material was dispatched by the abovementioned vendor through a truck bearing number CGO 4J 4940. While the said vehicle was passing through the territory of Andhra Pradesh, the 2nd respondent stopped the vehicle at Medchal and detained the goods on the ground that the driver of the vehicle could not produce the necessary documents (Transit Pass) contemplated under Section 47 of the A.P.V.A.T Act, 2005. The case of the petitioner is that the goods are destined to the petitioner’s factory located at Bidar, which is in the State of Karnataka. The transshipment of the goods is originated from the State of Chattisgadh. The transaction is an interstate sale transaction and is not amenable to any tax in the State of Andhra Pradesh. Therefore, detention of the goods is illegal.

Heard learned Government Pleader Commercial Tax. Section 47 of the Act, contemplates that any vehicle carrying goods through the State of Andhra Pradesh is required to obtain a transit pass from the officer in charge of the first check post encountered by the vehicle after the vehicle enters the territory of the State of Andhra Pradesh and surrender the said transit pass at the last check post, on the route of the vehicle located in the territory of the Andhra Pradesh. The provision, obviously, made with a view to ensure that goods are not illegally imported into the State without payment of the tax under the Act, under the guise of an interstate sale transaction. The learned Government Pleader for Commercial Tax submits that the State has come across a number of cases, where goods are brought into Andhra Pradesh accompanied by documents evidencing the fact that the goods are transshipped from a place outside the Andhra Pradesh and destined to reach another place outside the State of Andhra Pradesh and in order to reach the destination the goods are required to pass through the State of Andhra Pradesh, but as a matter of fact, the goods are eventually, unloaded and sold in the State of Andhra Pradesh avoiding the payment of tax under the A.P.V.A.T. Act or its predecessor enactments.

The provision under Section 47of the Act, is made not for the purpose of levying any tax on the interstate sale transactions, but to curb the abuse of documents issued under the C.S.T. Act. Section 47, in our view, prescribes only a mode of proof of a fact that the goods are, in fact, not sold in the State of Andhra Pradesh. Whether that is the only mode of proving the said fact or not is a different matter and we do not propose to deal with that question in the present writ petition. Failure to produce the transit pass, contemplated under Section 47 of the Act, leads to a presumption created under Section 47 “ that the goods carried thereby from the State have been sold within the State by the owner or person-in-charge of the vehicle …”, and on such a presumption, an assessment is required to be made for the tax payable on such goods under the Act. Eventually, for the assessment, the fact that the goods have been sold in the State of Andhra Pradesh, is to be established.