IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 27TH OCTOBER 2010 / 5TH KARTHIKA 1932 WP(C).No. 32631 of 2010(D) ----------------------------------------- PETITIONER(S): ------------------------ M/S.HAMSA TRADERS,NORTH OF VELLAKINAR, NEW BAZAR,ALAPPUZHA,REPRESENTED BY ITS PROPRIETOR H.SIYAD. BY ADV. SRI.K.J.ABRAHAM RESPONDENT(S): --------------------------- THE COMMERCIAL TAX INSPECTOR, COMMERCIAL TAXES CHECK POST, ARIYAMKAVU PO, KOLLAM,PIN 690 590. BY SR. GOVERNMENT PLEADER SRI. C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.32631 of 2010 ------------------------------------------- Dated this the 27th day of October, 2010 J U D G M E N T ---------------------- “Old machineries scrap” sold by the petitioner to a dealer at Chennai was intercepted on transport by the 1st respondent, on issuing Ext.P6 notice under Section 47(2) of the Kerala Value Added Tax Act, 2003 (KVAT Act). According to the petitioner, the scrap machinery was purchased by him from M/s.Poabs Battery Containers Pvt.Ltd., Thiruvalla, on the strength of Ext.P2 on payment of tax at 4% and it was sold to the dealer at Chennai on the strength of Ext.P3 tax invoice collecting tax at 4%. The transport was accompanied with Delivery Note, issued in Form No.15, which indicated the real quantity and value of transaction. 2. On a perusal of Ext.P6 it is noticed that the reason for detention mentioned is that on physical verification the authority found that the goods under W.P.(C).32631/10-D -2- transport was not old machinery scrap, but it is machinery in working condition, which is used in moulding of battery containers. It was not having characteristics of scrap and since it is found that the machine was filled with engine oil, it is suspected that the machine was transported for further use and not for re-processing. It is also found that the weighment slip, which accompanied the transport, was a manipulated one. Hence the 1st respondent estimated value of the goods at Rs.10 lakhs and security deposit was demanded on the basis of double the amount of tax due on such valuation. 3. According to learned counsel for the petitioner the transport was genuine and there was no attempt in evasion of payment of tax. He has produced for my perusal a certificate issued by M/s.Poabs Battery Containers Pvt.Ltd. confirming sale of the machinery scrap to the petitioner. According to the petitioner, the goods under transport was only scrap machinery and the same was not intended for any re-use. W.P.(C).32631/10-D -3- 4. Learned Government Pleader, on the other hand contended that, the weighment slip was found to be one manipulated and the actual quantity involved in the transport was found to be more than 22,000 Kgs. It was also found that the goods were not conforming with the description as mentioned in the Delivery Note. Therefore the suspicion raised regarding attempt in evasion of payment of tax seems to be genuine, is the contention. 5. I am not proposing to enter upon any findings regarding genuineness of the transport or the alleged attempt in evasion of payment of tax, because an enquiry as contemplated under Section 47 has to be completed. At any rate, I am of the opinion that the goods can be released pending finalisation of such enquiry, provided the petitioner furnishes proper security. 6. Under the above circumstances the writ petition is disposed of directing the 1st respondent to release the goods along with vehicle which is detained pursuant to Ext.P6 notice on the petitioner furnishing Bank Guarantee W.P.(C).32631/10-D -4- for 50% of the amount demanded thereunder and also furnishing Security Bond for the balance amount, in the form prescribed under the KVAT Rules, without sureties. 7. The competent authority will finalise the enquiry proceedings at the earliest possible, after affording an opportunity of hearing to the petitioner, at any rate within a period of 6 weeks from the date of release of the goods. 8. It is made clear that the goods shall be released forthwith, on the petitioner producing copy of this judgment along with the Bank Guarantee and Security Bond. It is also made clear that the respondent or the competent enquiry officer is at liberty to conduct physical verification of the goods and to prepare a Mahazar or report, if necessary with assistance of an expert, before release of the goods as stipulated above. C.K.ABDUL REHIM, JUDGE. okb