IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 7TH OCTOBER 2009 / 15TH ASWINA 1931 WP(C).No. 27952 of 2009(L) -------------------------- PETITIONER(S): --------------- V.SUBRAMANI, S/O.VENKATACHALAM, 1/108, KAMPULAYAMPATTI, PERUNDURAI, ERODE DISTRICT, TAMILNADU-638 056. BY ADV. SRI.C.K.SREEJITH RESPONDENT(S): --------------- 1. THE INTELLIGENCE INSPECTOR, INTELLIGENCE SQUAD NO.1, DEPARTMENT OF COMMERCIAL TAXES, GOVERNMENT OF KERALA, MALAPPURAM. 2. THE INTELLIGENCE OFFICER, INTELLIGENCE SQUAD NO.1, DEPARTMENT OF COMMERCIAL TAXES, GOVERNMENT OF KERALA, MALAPPURAM. 3. THE COMMERCIAL TAX OFFICER, COMMERCIAL TAX CHECK POST, WALAYAR. 4. THE INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAX CHECK POST, WALAYAR. 5. GOVERNMENT OF KERALA REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. 6. M/S.SOMA ENTERPRISE LIMITED, N.H.CONNECTIVITY-VALLARPADAM, WARD NO.2, GODOWN ROAD, CHERANALLUR, COCHIN-682 034. GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07/10/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.27952 OF 2009 ------------------------------ Dated this the 7th day of October, 2009 J U D G M E N T ---------------------- 1. The petitioner is aggrieved by detention of a “Tata Hitachi” Excavator transported by him, at the border Check post, Walayar. The petitioner is a resident of Erode in Tamilnadu and the 'Excavator' belongs to him which according to him was purchased from its previous owner, by virtue of Ext.P2 Sale Deed. The transport was effected pursuant to an agreement for hire of the machinery entered by the petitioner with the 6th respondent, as evidenced by Ext.P4. The 1st respondent had intercepted and detained the consignment on issuing Ext.P6 notice under Section 47(2) of the Kerala Value Added Tax Act, 2003 (KVAT Act). 2. It is noticed that the reason for detention mentioned in Ext.P6 is that, the goods were not accompanied by any document as prescribed under Section 46(3) of the KVAT Act. No evidence was there to show ownership of the petitioner at that time. The invoice with respect to purchase of the machinery, which was available is in the name of Sri.Kandaswamy. It is further noticed that the consignee is a W.P.(C).27952/09 2 registered dealer, a works contractor and hence a delivery note ought to have been used for transportation, since the item is of higher value. 2. According to the petitioner the transport was genuinely made for the purpose of fulfilling the contract of hire entered with the 6th respondent, and as per the terms of the contract the tax on the hire amount is deductible by the 6th respondent at the source of payment. Therefore there was absolutely no attempt at evasion of payment of tax, is the contention. 3. Learned Government Pleader submitted on behalf of the respondents that the alleged sale deed (Ext.P2) was produced only after the detention, and from Ext.P2 it is noticed that the same was executed at Thiruvananthapuram and hence the sale of the vehicle by the previous owner was effected within the State, and that the said transaction is exigible to tax. But there is no evidence to the effect that the transaction had suffered tax payment. It is further pointed out that the amount of hire due under the contract is liable to be taxed at 4%, and since the petitioner is not a registered dealer within the State, there is every possibility of evasion in payment of tax. 4. Having considered rival contentions and the reasons for detention, I am of the considered opinion that there is no W.P.(C).27952/09 3 convincing evidence forthcoming to allege that the transport was effected pursuant to any inter-state purchase. So also there is no evidence to raise any suspicion that the machinery was brought for sale within the State. However the question whether there was any attempt at evasion of tax is a matter to be decided on finalisation of the adjudication. From the facts it is revealed that the hire amount which the petitioner will be receiving pursuant to use of the machinery within the State is exigible to tax. Under such circumstances I am of the opinion that the goods can be released on the petitioner furnishing security deposit to the tune of tax due on the hire charges, and on furnishing security for the balance amount demanded under Ext.P6 notice. 5. In the result the writ petition is disposed of directing the 1st respondent to release the goods detained under Ext.P6 notice on the petitioner making payment of an amount of Rs.44,400/-, being tax amount due on the hire charges for a period of six months and on furnishing Security Bond in the form prescribed under the KVAT Rules, without sureties, for the balance amount demanded under Ext.P6 notice. The petitioner will also file an undertaking before the 1st respondent to the effect that he will not alienate ownership or possession of the machinery till finalisation of the adjudication proceedings. 5. The competent authority under Section 47 is directed W.P.(C).27952/09 4 to expedite the adjudication proceedings and to finalise the same, after affording an opportunity of hearing to the petitioner as well as to the 6th respondent, as early as possible, at any rate within a period of one month from the date of release of the goods. C.K.ABDUL REHIM, JUDGE. okb