W.P.Nos.28470 of 2013 IN HIGH COURT OF JUDICATURE AT MADRAS Reserved on: 13.02.2020 Pronounced on : 19.05.2020 CORAM: HONOURABLE MR.JUSTICE C.SARAVANAN W.P.Nos.28470 of 2013 and M.P. No.2 of 2013 Vestas Wind Technology India Private Limited having its registered office at No.298, Old Mahabalipuram Road, Sholinganallur, Chennai 600 119, represented by its Senior Executive ..Petitioner Versus 1.The Commercial Tax Officer, Enforcement, Roving Squad, Chengalpet, Enforcement South, Greams Road, Chennai 600 006. 2.The Deputy Commissioner of Commercial Taxes, Enforcement (Chennai South) Greams Road, Chennai 600 006. 3.The Joint Commissioner of Commercial Taxes, Enforcement Taxes, Enforcement II, Greams Road, Chennai 600 006. 1/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 4.The Commissioner of Commercial Taxes, Commercial Taxes, Ezhilagam, Chepauk 600 005. ..Respondents Prayer: Writ Petition filed under Article 226 of Constitution of India praying to issue Writ of Certiorarified mandamus, to call for records pertaining to issue of compounding order in proceedings bearing GD No.41/2013-14 O.R.No.11798/13-14 dated 05.09.2013 vide Form No.46 duly issued by Commercial Tax Officer, Roving Squad, Chengalpet, Enforcement South Chennai, 1st respondent herein and quash same and direct respondents to refund compounding fee at Rs.2,74,048/- to petitioner company that had been collected illegally. For Petitioner : Mr.D.Ashok KUmar For Respondents : Mr. R.Swarnavel, G.A. ORDER petitioner has prayed for quashing of impugned Compounding Notice dated 5.9.2013 bearing reference GD No. 41/2013-14 OR No. 11798/13-14 issued by 1st respondent Commercial Tax Officer, Roving Squad, Chengalpet, Enforcement South Chennai and for 2/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 consequential direction for refund of ? 2, 74, 048/-paid by petitioner as compounding amount/fee for release of goods detained vide Goods Detention Notice No 41/2013-14 in Form No. 41 dated 2.9.2013. 2. petitioner had purchased wind energy gearbox from M/s.Siemens Limited from their factory at Sriperumbadur Taluk, Tamil Nadu and had directly consigned to site office from where wind energy gearbox was to be installed for customer of theirs along with goods equipments. While consignment was in transit it was intercepted and detained at Paranoor Check Post, near Chengalpet District on ground that on verification of document produced at time of detention, it was found that goods were to be delivered at unregistered place and enquiry through phone, dealer was not clear regarding registration of place of unloading. Hence, goods along with vehicle were detained at Commercial Tax Office premises at Greams Road Chennai 6 for verification of particulars of transaction. 3.It appears from facts that were narrated during course of 3/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 hearing petitioner is engaged in development of wind energy parks in Tirunelveli District wherein it installs wind energy generators for its customers and for aforesaid purpose it had procured aforesaid gearbox. 4.The contention of respondent is that since petitioner did not have registration for site office, transportation was improper and without payment of duty. 5.It is contention of petitioner that power to levy compounding fee under section 72 of Tamil Nadu Value Added Tax Act 2006 by Check Post officer at Check Post was without authority of law and therefore compounding fee paid by petitioner was without authority of law and therefore prayed for refund. 6.In this connection learned counsel for petitioner has placed reliance on following decisions of courts:- i.Rajasthan investment Corporation versus Deputy Commercial Tax Officer T Nagar (1968) 21 STC 500; 4/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 ii. Sundaresan versus Board of Revenue (CT) Madras (1972) 29 STC 691; iii.K.J. Lingan versus Joint Commercial Tax Officer (1967) 19 STC 349; iv.Supreme Industries Ltd Versus Deputy commercial tax Officer And Others 7.Heard learned counsel for petitioner and respondent. Though present writ petition is of year 2013, respondents have not filed any counter. 8.However, learned counsel for respondent on instructions have submitted that all rules and regulations, notifications clarifications orders made or issued under any of provisions of TNGST Act, 1959 will continue to be in force insofar as long as they are not inconsistent with provisions of Tamil Nadu Value Added Tax Act, 2006. 9.It is thereforesubmitted that under Rule 53 of TNGST Rules, 1959, Assistant Commercial Tax Officer, Deputy Commercial Tax Officer and Asst Commercial Tax Officer may exercise power 5/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 specified in Section 46 of TNGST Act, 1959 subject to control and direction of Deputy Commissioner of Commercial Taxes and Commissioner of Commercial Taxes. 10.It is submitted that there is no error in assumption of jurisdiction by 1st respondent Commercial Tax Officer, Enforcement Roving Squad while detaining and levying tax and in asking petitiioner to pay compounding fee. 11.I have considered submissions of learned counsel for petitioner and respondent. I have also perused caselaw cited by learned cause for petitioner. 12.Short point that arises for consideration in present writ petition is whether 1st respondent was justified in detaining goods at Check Post and whether demand for payment of Value Added Tax and compounding fee for release of goods was justified or not in fact and circumstances of present case. 6/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 13.The goods in question were directly dispatched by manufacturer to Petitioner s site in Tirunelveli for being installed along with other wind energy equipment at later point time. 14.The petitioner had not affected any sale of goods when goods was detained by 1st respondent at Paranoor Check Post near Chengalpet. It is at later stage, sale would have taken place by petitioner to its customer. 15.I am therefore of view that detention of goods on assumption that petitioner had already effected sale and that no tax was paid when goods were in transit was is purely based on assumption, presumption and conjecture. As and when petitioner effects sale, petitioner would be liable to pay tax. 16.In era where there was scope for availing of input tax credit on incidence of tax, it can hardly be assumed that petitioner would not be paying tax as and when sale takes place. 17.The manufacturer s invoice filed along with typeset indicates 7/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 that supplier-manufacturer had charged sum of ? 1,3,024.05.This amount is available as input tax credit for being set off as input tax credit. Further, when petitioner sells same, there will be markup and value addition. Therefore, petitioner would be paying tax on value addition and partly discharge tax liability from input tax credit earned. 18.It is however noticed that same amount was again demanded as tax from petitioner on assumption that detained goods had not suffered tax. petitioner was given option to release detained goods on payment of compounding fee of ? 2,74,048/- (being twice amount of tax ) in impugned proceeding. 19.In my view, there was error in assumption of jurisdiction by 1st respondent Commercial Tax Officer namely Check Post officer on ground that goods had not suffered tax as manufacturer had indeed charged tax in invoice raised on petitioner. 1st respondent not only erred in demanding tax at Check Post from 8/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 petitioner after wrongly detaining goods but also erred in asking petitioner to opt for compounding of alleged offence under section 72(1)(a) of Tamil Nadu Value Added Tax Act, 2006 by asking petitioner to pay aforesaid amount of Rs.2,74,048/-. Indeed, no casewas made for detaining goods in transit on assumption that no tax was paid. 20.At same time, petitioner was as at fault. Though petitioner appears to have obtained VAT registration for its head office, it had not obtained separate registration for site office as additional place of business under Rule 5 (1) (a) of Tamil Nadu Value Added Rules, 2007 read with Section 38 of Tamil Nadu Value Added Tax Act,2006. 21.Failure to obtain separate registration for site office attracts penal provision Section71(1)(b). As per aforesaid provision any person who is obliged to register himself as dealer under Act and does not get himself registered shall on conviction by Magistrate, be liable to fine which may extend to Rs.500 /- as petitioner could have been proceeded 9/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 only for aforesaid violation. 22.Therefore, while upholding invocation of Section 72(1) of Tamil Nadu Value Added Tax Act, 2006, I am of view that composition fee ought to have been restricted to amount not exceeding Rs.2000/-under Section 72(1)(b) of aforesaid Act. 23.In light of above discussion, I modify impugned proceeding by restricting compounding fee Rs.2000/-under Section 72(1)(b) of theTamil Nadu Value Added Tax Act, 2006. Respondents are therefore directed to refund excess amount paid by petitioner to towards compounding/composition amount. As far as amount which was collected towards tax is concerned, same can be djusted towards tax liability of petitioner. 24.The writ petition stands partly allowed. Accordingly, miscellaneous petition is closed. No cost. 19.05.2020 10/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 arb/Arul Index :Yes/No Internet: Yes/No To 1.The Commercial Tax Officer, Enforcement, Roving Squad, Chengalpet, Enforcement South, Greams Road, Chennai 600 006. 2.The Deputy Commissioner of Commercial Taxes, Enforcement (Chennai South) Greams Road, Chennai 600 006. 3.The Joint Commissioner of Commercial Taxes, Enforcement Taxes, Enforcement II, Greams Road, Chennai 600 006. 4.The Commissioner of Commercial Taxes, Commercial Taxes, Ezhilagam, Chepauk 600 005. 11/12 http://www.judis.nic.in W.P.Nos.28470 of 2013 C.SARAVANAN.J. Arul W.P.No.28470 of 2013 19.05.2020 12/12 http://www.judis.nic.in Vestas Wind Technology India Private Limited v. Commercial Tax Officer, Chennai / Deputy Commissioner of Commercial Taxes, Chennai / Joint Commissioner of Commercial Taxes, Chennai / Commissioner of Commercial Taxes, Chepauk