IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 11TH OCTOBER 2010 / 19TH ASWINA 1932 WP(C).No. 30993 of 2010(Y) --------------------------------------- PETITIONER: ------------------- JOVY.T.D., PROPRIETOR, ROYAL BIRIYANI SQUARE, IRRIGATION RING ROAD, KANDASSANKADAVU, THRISSUR. BY ADVS. SRI.VIJAYAN. K.U, SRI. K.N. SREEKUMAR. RESPONDENTS: ------------------------ 1. COMMERCIAL TAX INSPECTOR, CTCP, GOPALAPURAM, PALAKKAD – 686 023. 2. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN-695 001. R1 & R2 BY SR. GOVT. PLEADER SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11/10/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. C.K. ABDUL REHIM, J ------------------------------ WP(C) NO. 30993 OF 2010 ------------------------------------ Dated this the 11th day of October, 2010 JUDGMENT Ext.P4 notice issued under Section 47 (2) of the Kerala Value Added Tax Act (KVAT Act) is under challenge. Interstate transport of 'Mango Pulp' purchased by the petitioner on the strength of Ext.P3 invoice was detained, alleging that, on verification of the goods it was revealed that there is a gross undervaluation with respect to the value shown in the invoice when compared with the MRP printed on the containers. The first respondent computed value of the goods at 65% of the MRP and security deposit, being double the amount of tax due on the differential value, was demanded. 2. Contention of the petitioner is that the transaction in question will attract payment of Central Sales Tax (CST) only, and that the assumption of undervaluation is highly whimsical. It is further 2 WP(C) No. 30993/2010 contended that the first respondent is not entitled to detain the goods invoking Section 47 (2) on the basis of an allegation as mentioned, since such an allegation will not come within the purview of the reasons for detention enumerated under Section 47 (2). 3. Learned Government Pleader on the other hand contended that the gross undervaluation revealed from the invoice gives rise to a reasonable suspection that there occurred collusion between the consignor and the consignee in declaring a lower price, after passing consideration extraneously, with an intention to show corresponding lower rate of sale prices than the actual value for the subsequent sale of the goods at the hands of the petitioner, within the state. Hence an attempt in evasion of payment of tax was legitimately suspected, is the contention. 4. However, question as to whether there was any attempt in evasion of payment of tax, is a matter which need 3 WP(C) No. 30993/2010 be decided on finalising the enquiry. Pending finalisation of such enquiry, I am of the opinion that, the goods can be released to the petitioner on furnishing proper security. 5. Under the above circumstances, the Writ Petition is disposed of directing the first respondent to release the goods along with the vehicle, which is detained under Ext.P4 notice, on the petitioner furnishing Bank Guarantee for 50% of the amount of security deposit demanded therein. The petitioner shall also furnish security bond in the form provided under the Kerala Value Added Tax Rules, without sureties, for the balance amount. 6. The competent enquiry officer will finalise the enquiry at the earliest possible, after affording an opportunity of hearing to the petitioner, at any rate within a period of six weeks from the date of release of the goods. C.K. ABDUL REHIM JUDGE dnc