IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 17TH AUGUST 2011 / 26TH SRAVANA 1933 WA.No. 1164 of 2011() --------------------- AGAINST THE JUDGEMENT IN WPC.17428/2011 Dated 12/07/2011 .................... APPELLANT/PETITIONER. ----------------------------------- GALA ICE CREAMS PVT.LTD. , MAROOR, ELAMANNUR,PATHANAMTHITTA,REPRESENTED BY ITS DIRECTOR-FRANCIS JOHN. BY ADV. SRI.V.V.ASOKAN SRI.R.JAIKRISHNA RESPONDENTS: --------------- 1. COMMERCIAL TAX OFFICER-1, OFFICE OF THE COMMERCIAL TAX OFFICER, ADOOR-691 523. 2. DEPUTY COMMISSIONER, COMMERCIAL TAXES, PATHANAMTHITTA-689 645. BY G.P. SRI.MOHAMMED RAFEEQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 17/08/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... Writ Appeal No.1164 of 2011 .................................................................... Dated this the 17th day of August, 2011. JUDGMENT Ramachandran Nair, J. Writ Appeal is filed against judgment of the learned Single Judge declining to interfere with Ext.P2 notice issued by the first respondent against appellant's application for issuance of delivery note for transport of deep freezers. We have heard counsel appearing for the appellant and Government Pleader for respondent. 2. Appellant is a manufacturer of Ice creams marketing the product by engaging distributors. According to the appellant, deep freezers required for storage for the distributors are supplied by the appellant on collection of interest free security depending on the value of deep freezer. Appellant's case is that the deep freezers are not sold to the distributors and, therefore, there is no liability for tax. However, Government Pleader contended that the deep freezers are not supplied free of cost and on the other hand, interest free security itself is consideration for the same. Further, copy of the agreement produced 2 shows recovery of depreciation from security deposit at the time of refund of security on return of the used deep freezer by the distributor. Appellant has not stated wherefrom these deep freezers are sourced and what is the nature of transactions so far done such as the number of deep freezers supplied, amount collected towards security and refunds given against return of the equipment. However, what we feel is that since deep freezer is required for storage of Ice creams marketed by the appellant, appellant is entitled to supply free of cost the equipment to the distributor. So far as incidence of tax is concerned i.e. by way of recovery of depreciation, whether it be towards sale consideration or towards meeting cost of wear and tear in the form of depreciation on account of diminution in value, it is for the Assessing Officer to consider whether there is any tax effect under the KVAT Act and if so, to collect the same. We dispose of the Writ Appeal by modifying the judgment of the learned Single Judge with direction to the Assessing Officer to issue delivery note to the appellant after conducting enquiry and by imposing conditions including collection of tax, if liable for the supplies made. The appellant should be given opportunity to produce 3 documents and records about past transactions and before imposing any liability the appellant should be heard in the matter. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms