IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 6TH OCTOBER 2010 / 14TH ASWINA 1932 WP(C).No. 29949 of 2010(P) ----------------------------------------- PETITIONER(S): ------------------------- 1. MESSRS.BASF POLYURETHANES INDIA LTD., REGISTERED OFFICE, 1ST FLOOR, VIBGYOR TOWERS, PLOT NO.C-62, `G' BLOCK, BANDRA KURLA COMPLEX, MUMBAI-400 051, REPRESENTED BY ITS AUTHORISED SIGNATORY. 2. RANJITH.K.K., PROPRIETOR, SPICE AGENCIES, MADURA BAZAR, B.C.ROAD, FEROKE, CALICUT-673 631. BY ADV. SRI.A.KUMAR RESPONDENT(S): --------------------------- 1. THE INTELLIGENCE INSPECTOR, SQUAD NO.IV, DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM - 16. 2. THE COMMERCIAL TAX OFFICER, KVAT, CIRCLE-III, CALICUT - 10. R1 & R2 BY GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.29949 of 2010 ------------------------------------------- Dated this the 6th day of October, 2010 J U D G M E N T ---------------------- Proceedings under Section 47(2) of the Kerala Value Added Tax Act, 2003 (KVAT Act), initiated pursuant to Ext.P10 notice, is under challenge in this writ petition. The second petitioner is the consignment sale agent of the first petitioner. The goods in question are stated to be chemicals imported from the Italy, at the Sea Port at Cochin. According to the petitioner, the goods were transported to the premises of the 2nd petitioner on the strength of valid documents as required under Section 46(3) of the KVAT Act, and the movement of the goods was on consignment basis to the agent of the first petitioner. 2. The reason for detention mentioned in Ext.P10 notice is that the transfer of the goods can only be treated as a sale made by the 1st petitioner who is not a registered dealer within the state. 3. Contention of the petitioner is that the aspect as to whether an enquiry can be conducted under Section 47 of the KVAT Act in order to decide as to whether the transaction was a local sale or interstate sale, is totally W.P.(C).29949/10- -2- beyond the powers contemplated under Section 47. Petitioner relies on a Division Bench decision of this court in S.T.Rev.No.119/2006 dt.27.8.2008 in support of this contention. It is held in that decision that, the enquiry officer himself has no power to act as though it is an assessing authority in order to look into the question whether the transaction is a consignment sale or interstate sale. While doing so, the enquiry officer will be acting without jurisdiction and without authority of law. The Sales Tax Officer alone is expected to look into the matter as to whether the transaction is mere consignment sale or interstate sale, is the dictum laid therein. 4. Learned Government Pleader on the other hand contended that the alleged importer of the goods is not a registered dealer within the state and the transaction in question was not an interstate movement which is having characteristics of a consignment transfer. Further, no conclusive proof was produced to the effect that the 2nd petitioner is a consignment agent. Under such circumstances the suspicion regarding sale within the state can only be reasonable and the matter can be decided only on finalisation of enquiry contemplated under Section 47, is the argument. It is also contended that, since the W.P.(C).29949/10- -3- 1st petitioner is not a registered dealer, payment of security deposit need be insisted. 5. Having considered the rival contentions, I am of the opinion that the matter need not be decided in this writ petition since an elaborate enquiry need be followed pursuant to Ext.P10. I am of the opinion that pending finalisation of the enquiry the goods can be released on proper security. 6. Under the above circumstances respondents are directed to release the goods along with vehicle detained under Ext.P10 notice, on either of the petitioners furnishing Bank Guarantee for 50% of the security deposit demanded under Ext.P10 and on both the petitioners together furnishing security bond in the form prescribed under the KVAT Rules, without sureties for the balance 50%. 7. The competent authority will finalise the enquiry at the earliest, at any rate within a period of two months from the date of release of the goods, after affording an opportunity of hearing to the petitioner. C.K.ABDUL REHIM, JUDGE. okb