1. The same petitioner has filed both the petitions, and in W.P. No. 4160 of 1979 he had sought for setting aside the order of the first respondent dated 5th August, 1979, in and by which a sum of Rs. 4,145 representing tax and fee payable by the petitioner is imposed, and the order states that till the amount is paid, the goods would be detained. In W.P. No. 6143 of 1979, the relief is one for a declaration that sections 42 and 43 of the Tamil Nadu General Sales Tax Act, 1959, and rule 35 framed therein, are null and void, in so far as they relate to inter-State sales of the petitioner.
2. The petitioner claims that it is a registered dealer in the State of Karnataka and is assessed to tax by the Commercial Tax Officer, XVI Circle, Bangalore. It also carries Central sales tax registration number in the State of Karnataka. The petitioner is the distributor for the paper manufactured by M/s. Kamrup Paper Mills, situate in Assam, and the petitioner effects sales in different parts of the country. The petitioner does not have any office or any other place of business within the State of Tamil Nadu. The procedure adopted by it is to secure orders from registered dealers within the State of Tamil Nadu as well as other States for the purpose of purchasing paper, and it places orders with the manufacturer which despatches the goods in their names to destinations all over India on raising invoices of sale and drawing documents for presentation through banks. The lorry receipts/railway receipts are taken 'self' by the manufacturer. The petitioner pays the proceeds through bank and obtains documents of title against invoices of sale against it by Kamrup Paper Mills Limited, and thereafter in turn the petitioner renegotiates the documents of title along with the invoices of sale to other buyers during transit, and it is the ultimate buyers who accept the documents and pay the proceeds against the invoices of the petitioner. The petitioner also issues declarations in form C as obtained from the State of Karnataka and also secure E-I certificate. The ultimate buyers issue form C to the petitioner, whereupon the petitioner treats the sales as effected by transfer of documents during transit of the goods, and thereby secures the exemption provided under section 6(2) of the Central Sales Tax Act. When the sale effected by the petitioner bears the character of inter-State sales under section 3(b) of Act 74 of 1956, the State of Karnataka is the appropriate State to tax the inter-State sales. In this context, it also refers to section 9(1) of the said Act. It is further claimed that the petitioner does not effect any sales within the State of Tamil Nadu, since it is not an importer effecting the first sale in terms of section 9 of the Tamil Nadu General Sales Tax Act, 1959.
3. It is on this basis the petitioners claims that the action taken by the first respondent to detain the goods at the check post at Tirumangalam, has resulted in considerable loss, and that the action taken is contrary to the provisions of Act 74 of 1956. The detention of the goods vehicle bearing registration number TNG 1881 of Sri Lakshmi Transports by the sales tax authorities at Tirumangalam, and treating the driver of the vehicles as if he is the dealer and calling upon the petitioner to pay the amount demanded as tax even before an order of assessment is made, is a high-handed action not contemplated under the provisions of the Act or the Tamil Nadu General Sales Tax Act, hereinafter referred to as the Sales Tax Act.
4. The respondents claim that the goods were intercepted on 5th August, 1979, at 16.22 hours and the lorry driver informed that the goods were removed from Bangalore to Sivakasi and it carried only bills, gate passes, delivery chalans and lorry way-bills, but the names of the consignees and their compete address at Sivakasi were not furnished in any of the records produced at the time of check. The goods having been removed from Bangalore to Sivakasi, without bills drawn by the petitioner, it had necessarily resulted in contravention of the provisions of the Sales Tax Act, and there being no material to hold that it was an inter-State sale covered by the Act, the impugned proceedings were passed levying a sum of Rs. 1,000 as compounding fee and also advance tax of Rs. 3,145 to be paid before the goods could be released. The transport contractors furnished security bond for the amount voluntarily, and thereafter the lorry was allowed to pass on 5th August, 1979, itself. When the petitioner had admitted that the goods were transported as a result of transit sale under section 6(2) of the Act, it should have produced the necessary records, to show that the transaction falls within the scope of section 6(2) of the Act. If really it was an inter-State sale, the petitioner should have drawn a bill in the name of the ultimate buyers at Sivakasi. In the absence of relative invoice of the petitioner, the movement of the goods cannot be said to be one coming under section 6(2) of the Act. Further no E-I form accompanied the goods and not even the serial number of E-I form is noted in any of the records furnished. The driver of the vehicle had stated that the goods were moved from Bangalore and not from Gauhati, and the petitioner is not a registered dealer in the State of Tamil Nadu, and the goods having been consigned to 'self', namely, paper mills, and not to the petitioner, a sale bill as provided under sub-rules (11) and (12) of rule 26 of the Tamil Nadu General Sales Tax Rules, should have been issued. As the petitioner has resorted to avoid payment of single point tax due under section 3(2) of the Sales Tax Act, the action taken is quite valid. Even if it is to be taken as a sale coming under Act 74 of 1956, it would fall only within the scope of section 4 and not section 6(2). What has been done being only a provisional demand, instead of filing these writ petitions, the petitioner ought to have availed of the statutory remedies.
5. The main point taken in these petitions is that the detention of gods in a check post and the demand made for payment of advance tax and compounding fee being paid as a precondition for release of the goods is a high-handed action quite uncalled for, and inhibits moving of goods from one part of the country to another part, particularly when the transaction partakes the character of an inter-State sale. The petitioner is not a registered dealer in this State. He claims that the paper manufactured in Assam was being transhipped to various parts of the country and the petitioner acts as a distributor. It is the admitted case of the petitioner that it has no place of business or office in the State of Tamil Nadu, but it secures orders from registered dealers from the State of Tamil Nadu as well as other States, and then goods are removed by the manufacturer against lorry/railway receipts taken 'self' by the manufacturer. When goods are being moved from one State to another during the course of trade, there can be several sales effected by transfer of documents, before-ever the goods reach the destination. Such transit sales are not unknown to the respondents. The reason for the detention of the goods at the check post and for making a demand on the driver was under the erroneous impression that the transaction was not an inter-State sale. It is stated in the counter-affidavit that the driver of the vehicle informed the check post authorities that it was the petitioner, who had despatched the goods from Bangalore to Sivakasi. Having thus known the name of the consignor and the consignee, there was no need for detention of the vehicle any longer.
6. The invoice clearly states that the goods were despatched to Sivakasi through Highways Transport Corporation by the manufacturer in Assam. E-I form sale is also mentioned therein. While despatching the goods, the manufacturer may not know who is the ultimate purchaser of the products, and in fact need not even know that. As distributor when the petitioner had moved the goods from Assam to Sivakasi, during the course of transit of the goods, under Act 74 of 1956, it can enter into several transactions. In turn, its buyers can also sell to somebody else. When such is the nature of inter-State sales, and when these goods were despatched, the manufacturer would not have known as to who all would be the actual purchasers at Sivakasi or elsewhere.
7. The petitioners may even stock the goods at Sivakasi, if it so chooses; or may allow the goods to be retained by the transport company paying demurages, till it finds a purchaser at Sivakasi or even outside the State. When there is no need to indicate the ultimate purchaser in the invoice issued by the manufacturer, it cannot be said that the vehicle did not carry the necessary documents.
8. At the check post, undoubtedly the authorities have the right to scrutinise the documents and taken note of the particulars, and if necessary, take custody of the documents for initiating proceedings by properly comprehending the nature of the transaction. In the instant case, in spite of relevant particulars being available, an illegal detention had taken place.
9. The learned counsel for the petitioner then contends that till an assessment is made there can be no question of payment of advance tax. He relies upon the decision reported in Murugan Soap Works v. Assistant Commercial Tax Officer  30 STC 468, wherein this Court had held held that 'in the absence of definite proof or cogent material that a sale or purchase of goods has taken place at or about the time when an officer levies tax on the goods in the possession of another, it ceases to be a sales tax. Therefore, a demand for advance tax by the check post officer as a condition precedent for release of the goods detained by him in transit due to the absence of documents required under section 44 prima facie one which is not authorised by law or justified under the Act'.
10. There can be no levy of tax on assumptions, expectency or surmises. If on scrutiny of the documents, which have been taken custody of, the authorities are to demand tax nothing precludes them from making an assessment on the petitioner, and ultimately recover the tax payable by it. The petitioner is not a registered dealer in this State, but it does not preclude the respondents from initiating proceedings and to assess the petitioner to pay tax under Tamil Nadu Act 1 of 1959, if the petitioner fails to establish that it is an inter-State sale covered by Act 74 of 1956. When such is the proper course available, and the documents accompanying goods per se disclosed inter-State sales, to demand payment of advance tax at check post, as has been done in this case, has necessarily to be avoided, and hence the impugned order has to be set aside. This conclusion does not preclude the respondents to call for other documents and take a decision on the merits of the matter, as to whether there was an inter-State sale under Act 74 of 1956 or sale under Act 1 of 1959.
11. The Government Advocate appearing for the respondents has not placed before the court any section or Rules framed under the Act, except those which are referred to in the counter-affidavit. Hence the contention of the counsel for the petitioner that the detention of the goods at the check post under such circumstances as disclosed so far, could not have been carried out, and the only course that was open to the respondents was to take custody of the documents and thereafter call upon the party to pay tax, if any, payable under Act 1 of 1959.
12. The counsel for the petitioner quite rightly contends that liability to pay tax can come into play only when there is a completed transaction of sale or purchase, and not in anticipation of sale or purchase. When a concluded sale has not been established, the demand for compounding fee at this stage does not occur, unless and until the assessment to pay tax is concluded.
13. The contention of the petitioner is that the consignment could not be detained as the liability to pay tax as per rules 24(3) and 14 of Tamil Nadu Rules, arises only after the sale and not earlier. The respondents rely upon section 42(8) to contend that if the particulars of the owner of the goods are not made out, there is power in the authorities at the check post to inspect and detain the goods. Section 41-A authorises the authorities to intercept the goods delivered through a carrier or the vehicle. In the instant case, undoubtedly the authorities have the power to inspect the goods and the documents, and thy can detain the goods, if the transaction partakes the character of sale under Act 1 of 1959, and only if the driver of the vehicle does not disclose the name of the owner of the goods or consignor or consignee of the goods. In the instant case, the respondents admit that the name of the petitioner had been disclosed. The invoice itself carried the name of the petitioner in no unmistakable terms. In spite of such disclosures, if the goods are to be detained, such an action is illegal. The notice issued nowhere stated that the authorities were not satisfied with the name of the owner of the goods as disclosed by the drier. Hence the detention of the goods, under the circumstances of this case as hitherto disclosed, being illegal, the impugned order is set aside.
14. If after securing the representations of the petitioner and after scrutiny of all the relevant documents, it be found that the goods have resulted in a sale which would fall within the purview of Act 1 of 1959, the disposal of this writ petition would not stand in the way of the respondents proceedings to assess the petitioner under the Tamil Nadu General Sales Tax Act. Hence W.P. No. 4160 of 1979 is allowed. No costs.
15. In W.P. No. 6143 of 1979, the petitioner having sought for a declaration as above referred to, in the light of the orders passed in W.P. No. 4160 of 1979, this writ petition is dismissed. No costs.