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. 28698 of 2009(F) -------------------------- PETITIONER(S): --------------- M/S.TASTY NUT INDUSTRIES, K.P.ROAD, KILIKOLLOOR, KOLLAM, REPRESENTED BY ITS MANAGING PARTNER, MOHAMMED NOWFAL. BY ADV. SRI.S.SANTHOSH KUMAR RESPONDENT(S): --------------- 1. THE COMMERCIAL TAX INSPECTOR, COMMERICIAL TAX CHECKPOST, AMARAVILA. 2. THE ASSISTANT COMMISSIONER (ASSESSMENT), COMMERCIAL TAXES, SPECIAL CIRCLE, KOLLAM. 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.28698 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 transport of cashew kernels effected from their factory at Melpuram at Tamilnadu, to their head office at Kilikolloor in Kollam. According to the petitioner the consignment was graded cashew kernels of 4,739 Kgs worth Rs.9,47,800/- and it was brought by way of branch transfer effected on the strength of Ext.P1 delivery note and Ext.P2 kernel dispatch statement. The transport is intercepted by the 1st respondent on issuing Ext.P3 notice under Section 47(2) of the Kerala Value Added Tax Act, 2003, for the reason that on physical verification it is found that the goods under transport are only cashew splits, wastes and rejections, whereas the item declared is graded cashew kernels worth Rs.200/- per Kg. According to the 1st respondent the item transported is having a value only about Rs.30/- per Kg. Therefore the 1st respondent suspected that the intention of the petitioner is to make false claim with respect to sale of unaccounted cashew locally purchased. Accordingly evasion of payment of tax is suspected and hence security deposit is demanded. 2. Contention of the petitioner is that under the W.P.(C).28698/09-F 2 provisions of the KVAT Act the petitioner could not claim credit of input tax if any purchase turnover is suppressed. Hence even assuming that the suspicion expressed by the 1st respondent that unaccounted purchase of cashew kernels effected locally will be sold as if it is graded cashew brought from outside, it will not fetch any benefit for suspecting tax evasion. On the other hand the petitioner strongly contends that the goods which are detained are graded cashew kernels and he seeks direction for a physical verification of the goods involved in the transport by any expert from an agency like the Cashew Export Promotion Council Lab, or through any qualified surveyor approved by Kerala State Cashew Development Corporation. The petitioner also prays for a direction to release the goods forthwith. However learned Government Pleader for the respondents opposes release of the goods without providing adequate security deposit. 3. Having considered facts and circumstances of the case and contentions on both side, I am of the opinion that the question whether there was any attempt at evasion of payment of tax is a matter which need adjudication. At the same time continued detention of goods till finalisation of such adjudication is not at all warranted. Having considered the prayer for physical verification of the goods with the aid of an expert, I am W.P.(C).28698/09-F 3 of the opinion that such verification will be useful in the process of finalising the adjudication. 4. In the result the writ petition is disposed of directing the petitioner to make deposit of 50% of the amount claimed under Ext.P3 towards advance tax, without prejudice to finalisation of the adjudication proceedings and without prejudice to levy of penalty if any ultimately found liable. The petitioner will also furnish security bond in the form provided under the KVAT Rules with respect to the balance 50%. 5. The competent authority under Section 47 vested with powers of finalising the adjudication, will arrange an inspection (physical verification) of the goods with the aid of an expert either from the Cashew Export Promotion Council Lab or from the Kerala State Cashew Development Corporation, before release of the goods, at the expense of the petitioner and will get a report of such inspection which has to be considered at the time of finalising the adjudication. The adjudication in this regard may be finalised 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. okb