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. 28725 of 2009(I) -------------------------- PETITIONER(S): --------------- SAI EXPORTS ENTERPRISES, NO.21, PRASANTHI NAGAR, MANGAD (P.O), KOLLAM-691015, REPRESENTED BY ITS PROPRIETRESS, K.R.USHASREE. BY ADV. SRI.P.SANJAY SMT.PARVATHI MENON. A. BIJU MEENATTOOR RAJAN KUDUMBATHIL GLEN ANTONY RESPONDENT(S): --------------- 1. STATE OF KERALA REPRESENTED BY SECRETARY, COMMERCIAL TAXES DEPARTMENT, THIRUVANANTHAPURAM. 2. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. 3. THE COMMERCIAL TAXES OFFICER, COMMERCIAL TAXES CHECK POST, AMARAVILA, NEYYATTINKARA, THIRUVANANTHAPURAM. 4. THE CASHEW EXPORTS PROMOTION COUNCIL, CHITTOOR ROAD, ERNAKULAM SOUTH, KOCHI-682016, REPRESENTED BY ITS SECRETARY. 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.28725 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 graded cashew kernels transported inter-state on branch transfer from Kannumamoodu in Tamilnadu to Mangad in Kollam. The transport was effected on the strength of Ext.P2 delivery note. It was intercepted enroute by issuing Ext.P3 notice under Section 47(2) of the Kerala Value Added Tax Act, 2003 alleging that the goods under transport eventhough described as graded cashew kernels, on physical verification was found to be cashew splits, waste and rejections. The value declared is Rs.230/- per Kg whereas the value of the goods under transport will be Rs.30/- per Kg only. The goods, according to the respondents, will not qualify the term cashew kernel. Therefore it is suspected that intention is to raise false claim that they had brought graded cashew kernels from outside the State and under the guise of such claim to effect sale of unaccounted cashew locally purchased, and thereby to suppress the turnover and to evade payment of tax. Eventhough the petitioner submitted Ext.P5 reply the 3rd respondent refused to release the goods on issuing W.P.(C).28725/09-I 2 Ext.P6 notice informing that the transport cannot be released unless the petitioner makes security deposit. The petitioner submitted Ext.P3 request to the 3rd respondent to arrange physical verification of the goods with the aid of an expert from any of the establishments like the Cashew Export Promotion Council of India or from any other independent agency having qualified surveyors in this regard. 2. Contention of the petitioner is that the allegations raised in Ext.P3 is totally unsustainable because even assuming that the petitioner effects sale of unaccounted purchase of cashew they could not claim credit of input tax and therefore the suppression of turnover will not fetch any benefit to them. On the other hand the assertion on the side of the petitioner is that the goods transported is actually graded cashew kernels and that is why they are insisting for physical inspection of the goods with the aid of some expert. 3. Having considered the rival contentions I am of the opinion that the question whether there was any attempt at evasion of payment of tax is a matter which can be decided only on finalisation of adjudication proceedings. Learned Government Pleader submits that pending finalisation of the adjudication proceedings the goods can be released only on petitioner depositing the security amount. But I am of the W.P.(C).28725/09-I 3 opinion that the continued detention till finalisation of the proceedings is not at all warranted. Therefore the goods can be released on the petitioner furnishing adequate security. So also I am of the opinion that the physical verification of the goods which is requested for, will be of much use in the finalisation of the adjudication proceedings. 4. Under the above circumstances the writ petition is disposed of directing the 3rd respondent to release the goods detained under Ext.P3 along with the vehicle on the petitioner making payment of 50% of the amount demanded under Ext.P3 towards advance tax, without prejudice to finalisation of the proceedings under Section 47 of the KVAT Act and without prejudice to imposition of penalty if any ultimately found liable. The petitioner will also furnish a security bond in the form provided under the KVAT Rules without sureties for the balance 50%. 5. The competent authority under Section 47 entrusted with adjudication process is directed to arrange a physical verification (inspection) to the goods before the same is released, with the aid of any expert either from the 4th respondent or from any other agency, at the expenses of the petitioner, and the adjudication shall be finalised after considering report of such inspection, and after affording an opportunity of hearing to the W.P.(C).28725/09-I 4 petitioner as early as possible, at any rate within a period of two months from the date of release of the goods. 6. The petitioner had a further prayer in the writ petition to compensate the petitioner for the loss sustained due to the detention. Since I had directed adjudication of the matter and finalisation of the liability, the said question is left open without decision in this writ petition. C.K.ABDUL REHIM, JUDGE. okb