IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 12TH OCTOBER 2009 / 20TH ASWINA 1931 WP(C).No. 28694 of 2009(F) -------------------------- PETITIONER(S): --------------- KOTTARAM TRADING COMPANY, 40/5015 A TO D., KOTTARAM TOWER, PAYYAPPILLY ROAD, KOCHI-35. (REPRESENTED BY PARTNER ANTONY THOMAS) BY ADV. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMAR RESPONDENT(S): --------------- 1. INTELLIGENCE INSPECTOR, SQUAD NO.V, COMMERICIAL TAXES, MALAPPURAM. 2. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12/10/2009 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.28694 OF 2009 ------------------------------ Dated this the 12th day of October, 2009 J U D G M E N T ---------------------- 1. Petitioner is aggrieved by detention of a transport effected from Delhi on inter-state purchase, by the 1st respondent on issuing Ext.P3 notice under Section 47(2) of the Kerala Value Added Tax Act, 2003. The petitioner is a wholesale dealer and distributor of kitchenware, glassware, electronic goods, etc. and according to him he is a heavy tax payer. It is submitted by the petitioner that the output tax due on the sales effected by the petitioner for the financial year 2008-09 is about Rs.3.57 crores and the monthly tax payment comes to about Rs.40 lakhs or more. Petitioner had produced Ext.P1 and P1(a) documents in support of the above claims. 2. One truck load of goods covered under Ext.P2 invoice containing 21 specific items were consigned by the dealer at Delhi to the petitioner. The goods were cleared from the border Checkpost at Walayar without noticing any defect in the documents accompanying the transport. But the 1st respondent intercepted the transport enroute and issued Ext.P3 notice, for the reason that it is noticed that MRP value of one of the items covered under Ext.P2 is noticed as Rs.390/- per piece, whereas W.P.(C).28694/09-F 2 the value shown in the invoice is Rs.80/- per piece only. According to the 1st respondent the value shown in the invoice will come only 20.51% of the MRP and on enquiry it is revealed that the prevailing market value of the commodity is about Rs.200/-. Therefore suspecting evasion of tax the 1st respondent required the petitioner to furnish security deposit for double the amount of tax due on the differential value calculated at 35% of the MRP value. 3. According to the petitioner he is only a wholesale distributor and the ultimate sale to the consumer will be effected after passing through various stages of distribution network and the retail rate at which the ultimate consumer is getting the product will be always less than the MRP noted therein. It is submitted that only when the sale is effected the authority can find out as to whether there was any undervaluation. The notice now issued presuming that the petitioner is getting goods at 35% of the MRP, is highly presumptive and unrealistic, is the contention. 4. The learned Government Pleader on the other hand contended that the 1st respondent is entitled to detain the goods on the basis of a suspicion that there is evasion in payment of tax by quoting price than the actual price for which the goods was purchased and therefore the matter need investigation in the process of adjudication. 5. Having considered the rival contentions I am of the W.P.(C).28694/09-F 3 opinion that the question whether there was any attempt at evasion of payment of tax is a matter to be decided on finalisation of the adjudication. At the same there need not be continued detention till such time, especially considering the fact that the transport in question covers so many other items also. Therefore the goods detained can be released on the petitioner furnishing adequate security. Considering the fact that the petitioner is a heavy tax payer and considering the fact that there is no allegation of any non-availability of records or any incriminating defects in the records, I am of the opinion that the detention can be released on the petitioner furnishing security bond. 6. Accordingly the writ petition is disposed of directing the 1st respondent to release the goods detained under Ext.P3 along with the vehicle, on condition the petitioner furnishing security bond in the form provided under the KVAT Rules, without sureties, for the amount demanded under Ext.P3. 7. The competent authority under Section 47 is directed to expedite the adjudication proceedings and to finalise the same at the earliest, at any rate within a period of two months from the date of release of the goods. C.K.ABDUL REHIM, JUDGE. okb W.P.(C).28694/09-F 4