Non-surrender of transit passes does not automatically imply local sales; the presumption can be rebutted with sufficient evidence.

ORDER :

Anita Sumanth, J.

Prayer : Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorari, to call for the records on the files of the First Respondent herein in TIN/33200524703/2011-12, dated 28.03.2013, quashing the same or pass such further or other orders as may be deemed fit and proper in the circumstances of the case and render justice.

The petitioner is engaged in trading of PVC resin. The subject-matter of the present writ petition is a challenge to assessment order dated 28.03.2013 for the period 2012-13 passed under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (Act).

2. The petitioner had admittedly failed to surrender transit passes in respect of four consignments during the period 01.11.2011 and 31.1.12 at the Puzhal out check-post. The details of the transactions are as follows:-

3. The authority hence proposed to assess the value of the transactions at the rate of 5% along with penalty. To a proposal along the aforesaid lines, detailed objections were filed, wherein, petitioner confirmed that the transactions represented stock transfers to their depot in Andhra Pradesh.

4. Relevant Forms had been filed in support of the transfer. That apart, the goods covered by the aforesaid consignments had been sold in Andhra Pradesh and were subject to local tax there. While admitting to the non-surrender of transit pass, the petitioner had pointed out that contemporaneous evidences could also be furnished to establish the factum of depot transfer relying on various decisions in that regard.

5. The explanation of the assessee was overruled and the proposals for assessment were confirmed by the officer. Inter alia, the officer holds that the stock transfer is liable to be rejected as goods had been sold the very next day in Andhra Pradesh. This timing, he felt, militated against the argument of stock transfer as it indicates that the buyers had already been identified.

6. Hence he concludes that the alleged stock process were nothing but camouflaged, inter-state transactions, unsupported by C Forms. In fine, the assessing authority has brought to tax the turnover from the subject consignments as local sales adding gross profit and levying penalty.

7. Petitioner has relied on the judgment of the Supreme Court in the case of Sodhi Transport Co and Another v State of U.P [62 STC 38] and of the Tamil Nadu Taxation Special Tribunal in the case of Godrej – GE Appliances Ltd v Assistant Commercial Tax Officer and Others [114 STC 570] for the proposition that even if transit passes were not surrendered, the adverse presumption that arose could well be discharged by the assessee by producing other evidences in its possession in support of the transactions. It has also cited Circular bearing No.26/14 dated 16.06.2014, particularly clauses (d),(e) and (f) at paragraph 7 thereof.

8. Learned Government Advocate would stress the position that there has been an admitted violation of the requirement under Section 70 and it was incumbent upon the consigner to deliver the transit pass to the officer in-charge of the last check-post point. The very purpose of a transit pass was to prevent illegal movement of goods crossing the state border and leakage of revenue and hence