IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 2ND MARCH 2010 / 11TH PHALGUNA 1931 WP(C).No. 4639 of 2010(D) ------------------------- PETITIONER: -------------- PSN CONSTRUCTION EQUIPMENT PRIVATE LIMITED, 34/126A N.H. 47,EDAPPALLY BYE PASS, EDAPPALLY P.O.,COCHIN 682024. REPRESENTED BY ITS AUTHORISED SIGNATORY. BY ADV. SRI.A.KUMAR RESPONDENT: --------------- THE INTELLIGENCE INSPECTOR, COMMERCIAL TAXES, SQUAD NO.1, KOLLAM 691021. BY GOVERNMENT PLEADER, SRI.C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02/03/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R.Ramachandra Menon, J. ------------------------------------------ W.P.(C) No.4639 of 2010 ------------------------------------------ Dated this the 2nd day of March, 2010 JUDGMENT The goods transported by the petitioner (a Tata- Hitachi ZAXIS 210, LC Hydraulic Excavator) in the vehicle bearing registration No.KA19/AA 8889 covered by Ext.P4 lorry receipt, was intercepted by the respondent issuing Ext.P6 notice under Section 47(2) of the Kerala Value Added Tax Act, 2003 doubting evasion of tax and thus demanding security deposit to the extent specified therein, which compelled the petitioner to approach this Court by filing this writ petition. 2. When the matter came up for consideration before this Court on 11.2.2010, an interim order was passed whereby the consignment was permitted to be off-loaded at the premises of the consignee, subject to the condition that the petitioner executed a bond undertaking that the goods in question will not W.P.(C) No.4639 of 2010 - 2 - be taken out from the premises of the consignee and that it shall be subject to further orders to be passed in the matter. 3. The respondent has filed a statement seeking to sustain Ext.P6 issued by the said authority, demanding security. 4. Going by the pleadings, the case put forward by the petitioner is as follows:- a) The authority only has to see whether the goods are accompanied by documents as prescribed. When all the required documents accompany the transport, the authority cannot detain the goods. b) The documents produced are not in dispute nor are they subject of any suspicion. c) There is no power or jurisdiction to detain goods which are the subject of a sale in transit under Section 47(2) of the KVAT Act. The said proposition is settled in Sunitha Diesel and Service v. State of Kerala, 102 STC 448 (Ker.) d) That the detaining authority cannot assume the role of an assessing authority, as settled vide the W.P.(C) No.4639 of 2010 - 3 - judgment in Keltron Component Complex Ltd. v. The State of Kerala. 5. The case projected by the petitioner has been sought to be controverted from the part of the respondent, referring to the glaring inconsistencies and discrepancies and also with specific reference to the 'Goods Vehicle Record' produced as Annexure R1(a). The crucial aspects pointed out from the part of the respondent are as follows: “1) As per the Way Bill and Goods Vehicle Record available with the transporter, the goods consigned from the Dharwad party to the petitioner at Cochin and the sale by the outside dealer to Kerala dealer has been concluded. 2) As per the value of the goods mentioned in the Way Bill (for transport from Telcon Construction, Dharwad to the petitioner) is Rs.47,05,452/- whereas the value of the goods as per the local invoice in Form 8 raised by the petitioner in favour of the Thiruvananthapuram dealer is Rs.50,50,000/-. Difference Rs.3,44,548/- is the gross profit excluding W.P.(C) No.4639 of 2010 - 4 - hire charges paid by the petitioner. 3) The invoice mentioned in the Way Bill for transport from Dharwad to Cochin is 16500946 as per the entry in the Way Bill; whereas the number of the invoice raised by the Ernakulam dealer is C-006 dated 06.06.2010.” 6. The learned counsel for the petitioner submits that in view of the settled position of law, the action pursued by the respondent is not liable to be justified under any circumstance. It is also contended that no reliance can be placed on Annexure R1(a) 'Goods Vehicle Record' which was written by the concerned transporter or driver of the lorry showing the destination as 'Cochin' and the petitioner cannot be found fault with the same. The crux of the contentions raised by the petitioner is that, it is a 'transit sale' and that there is no point in doubting the veracity of the statement and the documents furnished by the petitioner, particularly when there is no case for the respondent that the transportation was without any W.P.(C) No.4639 of 2010 - 5 - documents as contemplated under the relevant provisions of law. 7. Referring to the incriminating circumstances, the respondent has contended that the goods were originally transported from the consignor at Dharwad to Cochin and that the petitioner has already taken delivery of the same at Cochin, who thereafter issued a subsequent bill effecting sale to the consignee at Thiruvananthapuram; when there is sufficient material to doubt the transaction as a 'local sale' and hence Ext.P6 notice is not vitiated under any circumstance. 8. Taking note of the rival contentions, the essential dispute to be solved is whether the transaction pursued by the petitioner is a 'transit sale' or a 'local sale'. This is a matter which has to be decided on the basis of 'fact adjudication'. In the said circumstances, this Court finds it fit and proper to have the matter adjudicated by the concerned authority taking Exts.P6, P8 and P10 proceedings to logical conclusion, of course after giving an opportunity of hearing to the petitioner as W.P.(C) No.4639 of 2010 - 6 - expeditiously as possible, at any rate, within one month from the date of receipt of a copy of this judgment. 9. During the course of argument, the learned counsel for the petitioner brought to the notice of this Court as to the specific observation made by the respondent in Ext.P10 wherein it is stipulated as given below: “Even though the Cochin dealer has not taken delivery of the goods, but endorsed the lorry receipt in favour of the Thiruvananthapuram dealer, he has raised a sale bill with profit charged in the bill. Thus there happened a constructive delivery of the goods to the Cochin dealer.” 10. The specific case as put forward by the respondent in the statement is that the petitioner has actually taken delivery of the material in Cochin; whereas the observation in Ext.P10 clearly concedes that the Cochin dealer has not taken delivery of the goods, but endorsed the lorry receipt in favour of the Thiruvananthapuram dealer by which W.P.(C) No.4639 of 2010 - 7 - they raised a sale bill, with profit charged in the bill. This being the position, this Court finds that the goods now kept in the premises of the consignee can be released, on condition that the petitioner executes a fresh bond to the satisfaction of the authority and on satisfying the requirement as above, the petitioner will stand entitled to take absolute delivery of the same; subject to the liability, if any, to be fixed during the course of adjudication. Writ petition is disposed of accordingly. P.R.Ramachandra Menon, Judge vns