IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 1ST JUNE 2010 / 11TH JYAISTHA 1932 WP(C).No. 16500 of 2010(J) -------------------------- PETITIONER: --------------- HDFC BANK LTD., FORMERLY CENTURIAN BANK OF PUNJAB LTD.,THRISSUR BRANCH, SHORNUR ROAD, THRISSUR, REPRESENTED BY MR.SUMITH P. PRASAD, AREA LEGAL MANAGER. BY ADV. MR. JOSEPH JERARD SAMSON RODRIGUES MR.ROVIN RODRIGUES RESPONDENTS: --------------- 1. THE INTELLIGENCE OFFICER, SQUAD NO.II, DEPT. OF COMMERCIAL TAXES, THRISSUR. 2. THE DEPUTY COMMISSIONR (APPEALS), COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER MR. C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R. RAMACHANDRA MENON J. ~~~~~~~~~~~~~~~~~~~~~~~ W.P. (C) No. 16500 of 2010 ~~~~~~~~~~~~~~~~~~~~~~~ Dated, this the 1st day of June, 2010 JUDGMENT The petitioner is challenging the sustainability of the condition imposed by the appellate authority as per Ext.P4 order, whereby the petitioner has been directed to satisfy 50 % of the disputed liability and to furnish sufficient security bond for the balance amount, so as to avail the benefit of interim stay during the period of appeal. True, the time to satisfy the condition was extended subsequently, on an application preferred by the petitioner, as borne by Ext.P5 order dated 19.5.2010. 2. The case of the petitioner is that, sale of the vehicles concerned, which have been hypothicated with the Bank, in connection with the advance arranged in favour of the persons concerned, are liable to be sold in auction for realizing the amount due to the financier. Such an instance will not attract the tax liability; especially when such vehicles have already suffered tax at the first instance of sale and not taxable any further, submits the learned counsel for the petitioner. 3. Heard the learned Government Pleader as well, who submits that, the issue is squarely covered by the decision rendered by this Court in Federal Bank Limited and Others Vs. State of Kerala [ (2003) 11 KTR 327 (Ker) ] Special emphasis is also given to the observation made in paragraph 7 of the judgment, wherein it is stated W.P. (C) No. 16500 of 2010 : 2 : as follows: “The crucial question that arise for consideration in this case is as to whether the activity of auction sale of gold ornaments or other valuables pledged by the customers as security for the loans taken by them from the banks for realization of the loan amount with interest can be said to attract the provisions of the Act making the bank liable to pay tax under the Act on such transactions”. 4. The learned counsel for the petitioner submits that, the above decision is not at all attracted to the case in hand as there is no instances of 'pledge' at all but for 'hypothecation' of the vehicle. It is also contended that, the factum of 'hypothecation' is entirely different from the instance of 'pledge'. Reliance is also sought to be placed in the definition of the term 'dealer' under Section 2 (xv) (f) and the meaning of the term 'hypothecation' as given in dictionary; the same having not been defined in KVAT Act. 5. The learned Government Pleader made a reference to the definition of the term 'business' in 2 (ix) (a) (b), which is extracted below: (ix) “business” includes -- (a) any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce of manufacture, whether or not such trade, commerce, manufacture, adventure or concerns is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and (b) any transaction in connection with or incidental or W.P. (C) No. 16500 of 2010 : 3 : ancillary to such trade, commerce, manufacture, adventure or concern; It is pointed out that, by virtue of the above definition any transactions incidental, commercial or manufacture will come within the purview of the taxable event and as such, the impugned order does not call for any interference. 6. Considering the facts and circumstances, this Court finds that, the basic issue is rather a 'question of law', which has to be resolved by considering the merits of the Revision Petition. Accordingly, the second respondent is directed to consider Ext.P2 Revision Petition and pass final orders in accordance with law, also with reference to the relevant judicial precedents, of course after giving an opportunity of hearing to both the sides. This shall be done as expeditiously as possible, at any rate, within two months from the date of receipt of a copy of the judgment. It is made clear that till such final orders are passed on the revision petition, no coercive steps shall be pursued against the petitioner for realization of the 'penalty', on condition that petitioner furnishes 'bank guarantee' for the amount involved. The Writ Petition is disposed of. P. R. RAMACHANDRA MENON, JUDGE kmd