IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM FRIDAY, THE 24TH SEPTEMBER 2010 / 2ND ASWINA 1932 WP(C).No. 29449 of 2010(E) ---------------------------------- PETITIONER(S): ------------------- M/S. IMPEX MARKETING ASSOCIATES, NEAR CAMPCO, VIDHYA NAGAR P.O., KASARAGOD DISTRICT 671 123. REPRESENTED BY PARTNER, SMT. RASHANA A. BY ADVS. SRI. K.U. VIJAYAN. SRI. K.N. SREEKUMAR RESPONDENT(S): -------------------- 1. THE INTELLIGENCE INSPECTOR, SQUAD NO.III, COMMERCIAL TAXES, KASARAGOD. 2. INTELLIGENCE OFFICER, SQUAD NO.III, COMMERCIAL TAXES, KASARAGOD. 3. STATE OF KERALA, REPRESENTED BY THE SECRETARY (TAXES), GOVT.SECRETARIAT, THIRUVANANTHAPURAM. R1 TO R3 BY GOVT.PLEADER SRI. C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: SVS/ C.K. ABDUL REHIM, J ------------------------------ WP(C) NO. 29449 OF 2010 ------------------------------------ Dated this the 24th day of September, 2010 JUDGMENT Petitioner-firm is a distributor in Glass basins and mirrors. According to the petitioner he is a registered dealer regularly paying tax. Grievance in this Writ Petition pertains to interception of a transport, wherein goods sold by them to various dealers and customers were detained. Ext.P4 is the notice issued under Section 47 (2) of the Kerala Value Added Tax Act (KVAT Act). It was revealed that the transport was accompanied by tax invoices wherein value and Tax collected with respect to each items are specifically shown. The reason for detention mentioned in Ext.P4 is that, on verification it was found that there is a vast difference between the total value disclosed under the invoices and the total value of MRP noted on the goods. The detaining authority had refixed the value of the goods, after allowing 25% discount from the MRP. Alleging suspicion that there was attempt in evasion of tax, security deposit was demanded for double the tax due on the differential amount. 2. Contention of the petitioner is that the value shown in the invoice is the actual value for which the transaction was effected. He had tabulated prices of the suppliers and the prices at which the 2 WP(C) No. 29449/2010 petitioner had sold the goods. A price list of the supplier was also produced as per Ext.P6, which will indicate different rates applicable to various commodities depending on the mode of payment and the period of payment. Contention of the petitioner is that, the allegation that the goods were sold on under valuation is not a ground for detaining the transport or for imposing penalty under Section 47 (2) of the Kerala Value Added Tax Act. 3. Heard learned Government Pleader on behalf of the respondents. It is argued that since there is a huge difference between the MRP and the value disclosed under the invoices, there is a reasonable suspension of evasion in payment of tax. Hence the proceedings initiated is legal and sustainable, is the contention. 4. Considering rival contentions, I am of the opinion that a finding on the disputed issues need not be arrived in this Writ Petition, because of the fact that an enquiry proceedings has to be completed under Section 47. However, the goods need not be detained till finalisation of such enquiry, if the petitioner provides security for the amounts demanded under Ext.P4. 5. The Writ Petition is therefore disposed of directing the first respondent to release the goods detained under Ext.P4, along with the vehicle, on the petitioner furnishing security bond as provided under KVAT Rules, without sureties. 3 WP(C) No. 29449/2010 6. The competent authority will finalise the enquiry after affording an opportunity of hearing to the petitioner as early as possible, at any rate within a period of two months from the date of release of the goods. C.K. ABDUL REHIM JUDGE dnc