IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 1ST JULY 2009 / 10TH ASHADHA 1931 OT.Rev.No. 1 of 2009() ---------------------- TA(VAT).288/2008 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM .................... PETITIONER/APPELLANT/ ASSESSEE ---------------------------- SIDDHARTH MERCHANTILE (P) LTD., V/1007, 1008, ANNAPURAM PLAZA, PARA ROAD, KANJIKODE - 678 623, A PRIVATE LIMITED COMPANY, REPRESENTED BY ITS GENERAL MANAGER, SRI. JITENDRA KUMAR BHUPAL. BY ADV. SRI.E.P.GOVINDAN RESPONDENT/RESPONDENT/ REVENUE ---------------------- THE STATE OF KERALA, REPRESENTED BY SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM. BY G.P. SRI.MOHAMMED RAFIQ THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 01/07/2009, ALONG WITH WPC NO.6048 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. .................................................................... O.T. Rev. No.1 of 2009 & W.P.(C) No.6048 of 2009 .................................................................... Dated this the 1st day of July, 2009. JUDGMENT Ramachandran Nair, J. Connected revision case and the W.P.(C) pertain to the same transaction which is confiscation of a consignment of steel sent by the petitioner to a purchaser in Cochin who disowned the transaction and informed the department that the goods were not meant for them. The department, therefore, took it as a case of transport of goods in the name of bogus or unidentified person or under cover of bogus documents falling under Section 47 (16) of the Kerala Value Added Tax Act and the officer concerned confiscated the goods. Since the goods were lying with the department during the pendency of adjudication and appeal proceedings, this court ordered sale of the same in public auction as continued detention would lead to further erosion and loss in value of goods. Goods are accordingly sold and the price released is stated to be deposited in the Treasury. Even 2 though petitioner challenged the adjudication proceedings in appeal, the statutory appellate authorities including the Tribunal dismissed the appeals and against the Tribunal's order the revision case is filed. Besides challenging the order on merits, petitioner challenges constitutional validity of Section 47(16) of the KVAT Act and the W.P. (C) is filed for this purpose. 2. After hearing counsel for the petitioner and the Government Pleader, we find that there is no material to hold that the transport is in bogus name or based on bogus documents. In the first place, petitioner is a registered dealer and goods are consigned under cover of delivery note issued by the department. Further, name of the consignee as shown in the original document (before correction) is also a registered dealer whose TIN number is mentioned in the transport document. However, when goods were consigned, there is a partial correction in the name of the consignee which led to the whole problem for the petitioner because there is no such party in the name as corrected in the transport document and in the delivery note. The name of the 3 consignee as shown in the original delivery note before correction is a registered dealer, but they disowned the transaction and informed the department based on which goods were seized. We do not find anything wrong with the department seizing the goods because the consignee as shown in the delivery note is non-existent and the TIN number shown in the delivery note is that of another party in the same area, who disowned the transaction. Even though we are of the view that the bogus or unidentified person referred to in Section 47(16) is the consignee and not the consignor, we still feel this cannot be treated as a case of transport in the name of bogus person because but for the minor correction in the name, the consignee is a registered dealer whose TIN number was mentioned in the delivery note accompanying the goods. We do not know whether this is a case of consignee deliberately disowning the transaction after placing purchase order with the petitioner. In any case since the consignment is accompanied by delivery note issued by the petitioner which is a registered dealer under the KVAT Act and the consignee, though disowned transaction, is also 4 a registered dealer, we set aside the impugned order confirmed by orders in two level appeals including that of the Tribunal and remand the matter to the officer concerned for readjudication for the purpose of considering penalty under Section 47(2) of the KVAT Act after issuing notice and after giving opportunity to the assessee. If any penalty is levied, the same will be recovered along with the cost incurred by the department for storage and sale of the goods and balance should be released within a period of three months from date of production of copy of this judgment. If no penalty is levied, the entire recovered amount after deducting cost for storage and actual expenses if any incurred for sale, will be released to the petitioner without any delay. 3. In view of our above finding, the adjudication order is not treated as an order under Section 47(16) and therefore, the petitioner has no justification to challenge the validity of Section 47(16) which in substance is the very same provision contained in Section 29A(14) of the KGST Act. We, therefore, dismiss the W.P.(C). Similarly, petitioner's challenge against the proceedings for want of procedural 5 formalities prescribed under the Act or Rules also does not call for interference because we have already held that the proceedings under Section 47(16) is not tenable at all. It is for the Government Pleader to take note of this argument and request the Government to take steps to make up for the deficiency in the Act and Rules. C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms