IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 1ST OCTOBER 2009 / 9TH ASWINA 1931 WP(C).No. 27606 of 2009(U) -------------------------- PETITIONER(S): --------------- 1. SREE NARAYANA CONSTRUCTIONS PVT.LTD., SREE NIVAS, OPP.KSRTC BUS STATION, JETTY ROAD, KOLLAM-691 001, REPRESENTED BY ITS PROJECT ENGINEER, V.R.KRISHNAKUMAR. 2. N.ANGAMUTHU, KOVAI BULDOZER SERVICE, NO.12, RAMAKUTTY LAY OUT, 5TH STREET, HOUSING UNIT, KOVUANDAM PALAYAM, COIMBATORE. BY ADV. SRI.N.MURALEEDHARAN NAIR SRI.T.G.ABHILASH RESPONDENT(S): --------------- INTELLIGENCE INSPECTOR, SQUAD NO.1, COMMERCIAL TAXES, TRIVANDRUM. GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/10/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.27606 OF 2009 ------------------------------ Dated this the 1st day of October, 2009 J U D G M E N T ---------------------- 1. Challenge is against action of the respondent in detaining the transport of an 'Excavator' machinery. According to the petitioner the 1st petitioner is a works contractor having registration under the provisions of the Kerala Value Added Tax Act, 2003 and they have undertaken works of earth filling, temporary road works, etc. at Techno Park, Thiruvananthapuram. Submission of the petitioners is that the 'Excavator' machinery which belonged to the 2nd petitioner, who had purchased it by virtue of Ext.P5 invoice, was brought to Kerala on the basis of agreement of hire entered between the petitioners 1 and 2, in order to utilise it in execution of the above said work. The transport was effected from Tamilnadu through the border check post at 'Velanthavalam' and Ext.P2 and P3 documents which accompanied the transport bear seal of the border check post. The transport was intercepted by respondent at Kazhakkoottam near Thiruvananthapuram on issuing Ext.P4 notice. The reason for detention mentioned in Ext.P4 is that the agreement between the petitioners was not accompanied the W.P.(C).27606/09 2 transport. It was further noticed that the TIN registration number furnished by the 1st petitioner was found to be not correct on verification. The detention is on the basis of suspicion that the machinery was actually brought by the 1st petitioner for re-sale within the State. 2. It is evident from the records produced that the machinery belongs to the 2nd petitioner. Ext.P3 letter which was accompanying the transport revealed that there is an understanding between the petitioners with respect to hiring of the machinery. It is also revealed that the 1st petitioner is a registered dealer as evidenced by Ext.P1 Certificate of Registration. The invoice pertaining to purchase of the machinery in the name of the 2nd petitioner is also produced, as Ext.P5. 3. Heard learned counsel for the petitioner and Government Pleader appearing for the respondent. Learned Government Pleader submitted that even assuming the transport is effected pursuant to hire of the machinery, it will fall within the purview of deemed sale as defined in the provision of the KVAT, which will attract tax liability, and that the 1st petitioner will be liable to make payment of the tax due on the amount of hire calculated for the entire period. Therefore the contention is that, huge amount of tax liability is involved by using the W.P.(C).27606/09 3 machinery within the State. 4. It is noticed that the machinery belongs to the 2nd petitioner was brought in pursuance of an agreement for hire. Eventhough no written agreement was produced the terms of such hire is evident from Ext.P3 letter. The detention is on assigning the reason that the machinery might have been purchased by the 2nd petitioner and it may be intended for further sale within the State. The basic question as to whether there was any attempt at evasion of payment of tax, need adjudication as contemplated under Section 47. I am not entering into the merits of the rival contentions. But the continued detention of the machinery till finalisation of such adjudication was not at all warranted in view of the proviso to Section 47(2). 5. In the result the writ petition is disposed of directing the respondent to release the 'Excavator' machinery detained under Ext.P4 notice on condition of both the petitioners furnishing 'Security Bond' in the form prescribed under the KVAT Rules, without sureties for the amount demanded under Ext.P4, and also declaring an undertaking to the effect that the machinery in question will not be taken outside the State before completion of the adjudication and the ownership or possession of the same will not be transferred to anybody till then. W.P.(C).27606/09 4 6. The competent authority under Section 47 shall expedite adjudication of the matter and pass final orders after affording an opportunity of hearing to the petitioners, 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