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. 28765 of 2009(M) -------------------------- PETITIONER(S): --------------- 1. M/S. M.ABDUL RAHMAN KUNJU, REPRESENTED BY ITS MANAGING PARTNER M.ABDUL RAHMAN KUNJU, CASHEW EXPORTERS AND IMPORTERS, CHANDANATHOPPE P.O., KOLLAM. 2. SIRJUDEEN, PROPRIETOR, CHOICE INDUSTRIES, CASHEW EXPORTERS AND IMPORTERS, CHANDANATHOPPE P.O., KOLLAM. BY ADV. SRI.B.MOHANLAL RESPONDENT(S): --------------- 1. THE DEPUTY COMMISSIONER, INTELLIGENCE, COMMERCIAL TAXES, THIRUVANANTHAPURAM. 2. THE COMMERCIAL TAX OFFICER, COMMERCIAL TAX CHECKPOSGT, AMARAVILA, THIRUVANANTHAPURAM. 3. THE ASSISTANT COMMISSIIONER, 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.28765 OF 2009 ------------------------------ Dated this the 12th day of October, 2009 J U D G M E N T ---------------------- 1. Petitioners are aggrieved by detention of inter-state transport of cashew kernels effected from their branches at Tamilnadu to their business places at Kollam, on branch transfer. The transport was accompanied by delivery notes and item-wise dispatch list evidenced by Ext.P1 and P1(a). The goods were intercepted on issuing Ext.P2 and P2(a) notices under Section 47 (2) of the Kerala Value Added Tax Act, 2003 (KVAT Act) alleging that the goods on verification was found to be cashew splits, wastes and rejections, against the description declared as graded cashew kernels. The value shown in the accompanying documents is Rs.240/- and Rs.250/- per Kgs; whereas the actual value of the goods under transport will be only about Rs.30/- per Kg. Suspicion of the authority is that the petitioners are bringing these goods under the guise of graded cashew from outside the State with an intention to conduct sale of unaccounted cashew locally purchased and thereby the attempt is to suppress such turnover with an intention of evasion of payment of tax. W.P.(C).28765/09-M 2 2. According to the petitioner there was absolutely no attempt at evasion of payment of tax. It is contended that even assuming that the allegation is true, the petitioner will not be benefited at all, because they will not get credit of input tax unless they account purchases. On the other hand the petitioners strongly contend that the goods transported is only graded cashew kernels. Therefore the petitioner is requesting to arrange a physical verification of the goods with the aid of some experts either from the Cashew Export Promotion Council of India, or from the Kerala State Cashew Development Corporation. In this regard the petitioners have submitted Ext.P4 and P4(a) before the 2nd respondent. But the requests were declined through Ext.P5 and P5(a) and payment of security deposit is insisted for release of goods. 3. Learned Government Pleader appearing for the respondent contended that even the petitioners have admitted in their representations Ext.P4 and P4(a), that the goods under transport include various categories of cashew splits, wastes, rejections etc. So the contention now raised that it is graded cashew kernels, is not sustainable. He further opposed release of the goods without insisting for payment of proper security deposit. 4. Having considered rival contentions, I am of the W.P.(C).28765/09-M 3 opinion that the question whether there was any attempt at evasion of payment of tax is a matter which can be finalised only on completing the adjudication as contemplated under Section 47 of the KVAT Act. At the same time continued detention pending such finalisation is not at all warranted. Hence I am of the opinion that the goods can be released on the petitioner furnishing adequate security. Also I am of the opinion that the inspection which is requested for will facilitate proper adjudication of the matter. 5. Under the above circumstances the writ petition is disposed of directing the 2nd respondent to release the goods detained under Ext.P2 and P2(a) notices along with the vehicles on the petitioners making payment of 50% of the security deposit demanded under each of the notices, towards the advance tax, without prejudice to finalisation of the adjudication proceedings under Section 47 and without prejudice to imposition of penalty if ultimately found liable. The petitioners will also furnish security bond in the form provided under the KVAT Rules without sureties for the balance 50%. 5. The competent authority under Section 47 is directed to arrange a physical verification (inspection) of the goods with the help of an expert from any of the agencies mentioned above at the expenses of the petitioner and will finalise the adjudication W.P.(C).28765/09-M 4 after taking into consideration of the report of the inspection and 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 receipt of a copy of this judgment. C.K.ABDUL REHIM, JUDGE. okb