IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 6TH SEPTEMBER 2010 / 15TH BHADRA 1932 WP(C).No. 27491 of 2010(J) -------------------------- PETITIONER(S): --------------- M/S.SIEMENS LIMITED, PLOT NO-2, SECTOR.2,KHARGHAR NODE, NAVI MUMBAI-PIN 410210.REPRESENTED BY DIPU.K.BOSE, GORUP LEADER - MARKETING BY ADV. SRI.JOSE JOSEPH RESPONDENT(S): --------------- 1. THE INTELLIGENCE INSPECTOR, SQUAD NO.II,COMMERCIAL TAXES, KASARAGOD 2. MODEL MEDI DIAGNOSTIC CENTRE(P)LTD PULIKKAL BUILDING,M.G.ROAD, ERNAKULAM, KOCHI-682016 BY G.P.SRI.V.K.SHAMSUDHEEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C. K. ABDUL REHIM, J. =~=~=~=~=~=~=~=~=~=~=~=~=~=~=~=~= W.P.(C) No. 27491 of 2010 =~=~=~=~=~=~=~=~=~=~=~=~=~=~=~=~= Dated this the 6th day of September, 2010 JUDGMENT Detention of transport of goods and issuance of notice under section 47(2) of the Kerala Value Added Tax Act (for short the KVAT Act) are under challenge in this writ petition. 2. The goods transported is a scanning machine and its accessories, branded as “Siemens Magnetom Espree- 1.5T MRI System”. According to the petitioner, the goods in question was imported from Germany and was manufactured by Siemens, Germany. The same was imported by the petitioner on the basis of Ext.P1 order placed by a customer at Kochi, the second respondent herein. It was imported at the Port of Mumbai and transported in 4 heavy vehicles. The goods and the vehicles were intercepted by 1st respondent, on issuing Ext.P3 notice. The reason for detention noted in Ext.P3 is that, in the documents, which accompanied the transport, the value W.P.(C) No. 27491/2010 2 is shown as including installation charges. Since the installation charges are included in the invoice, it is suspected that the transaction is in the nature of works contract, which is taxable under the Act. On the basis of value shown in the invoice, the petitioner was directed to pay a sum of Rs.1,08,57,500/- towards security deposit. 3. Learned counsel for the petitioner contended that the goods in question are imported goods and it is a sale effected in the course of import and it will not attract any liability of tax under the KVAT Act. It is the further contention that the goods in question, even assuming taxable, are liable to be levied with tax only at 4% going by Entry 59-A in the IIIrd Schedule of the Act. Therefore, the detention as well as demand for the huge amount of security is assailed. 4. Learned Government Pleader appearing for the 1st respondent, on instructions, submitted that the petitioner has not produced any convincing document to prove that the goods under transport was imported by them and that W.P.(C) No. 27491/2010 3 the sale is effected in the course of import. Since it is evident that the petitioner is installing this machinery at the premises of the 2nd respondent, it will attract liability of tax as works contract, is the contention. 5. Learned counsel for the petitioner then pointed out that Ext.P1 is the specific order placed by the 2nd respondent, which will clearly indicate that the order was placed for purchase of the equipment to be imported by the petitioner from Germany. There is a stipulation that any other equipment, which is not directly imported, will not be accepted. It is also contended that all documents pertaining to the import is available with the petitioner and that the petitioner is ready and willing to produce such documents at the time of enquiry. 6. It is further pointed out by the learned Government Pleader that the petitioner is not a registered dealer under the KVAT Act, but the petitioner is having a branch at Kochi which is a registered dealer. Under such circumstances, it is submitted that condition if any to be insisted by this W.P.(C) No. 27491/2010 4 Court for furnishing security, shall be complied with by the registered branch of the petitioner situated at Kochi. 7. Question whether there was any attempt of evasion of tax and as to whether the transport will attract any imposition of penalty are the matters to be finally decided by the Enquiry Officer on completion of adjudication. At present I am concerned only with release of the goods, pending finalization of the adjudication. Having considered the entire facts and circumstances, I am of the opinion that the goods can be ordered to be released on the petitioner furnishing security for the amount demanded under Ext.P3. 8. In the result, the writ petition is disposed of directing the 1st respondent to release the goods along with vehicles detained under Ext.P3 notice, on the petitioner furnishing a bank guarantee for the amount of 4% tax calculated on the value of Rs.4,30,00,000/- and also on furnishing Security Bond, without sureties as provided under the KVAT Rules for the entire balance amount demanded in Ext.P3.The security bond has to be furnished W.P.(C) No. 27491/2010 5 by the branch of the petitioner in Kochi ,which is a registered dealer under the KVAT Act. 9. The Enquiry Officer shall expedite the adjudication and finalize the same at the earliest, after affording an opportunity of hearing to the petitioner, at any rate within a period of two months from the date of release of the goods. C. K. ABDUL REHIM, JUDGE. mn.