IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM FRIDAY, THE 1ST OCTOBER 2010 / 9TH ASWINA 1932 WP(C).No. 30178 of 2010(V) -------------------------- PETITIONER(S): --------------- VIJI THANKACHAN, PROPRIETRESS, FASHION EYE STYLES, NO.40/4241, JEWS STREET, ERNAKULAM. BY ADV. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMARAN RESPONDENT(S): --------------- 1. COMMERCIAL TAX INSPECTOR, COMMERCIAL TAX CHECK POST, WALAYAR, PALAKKAD-678001. 2. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001. R1 AND R2 BY GOVT. PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.30178 of 2010 ------------------------------------------- Dated this the 1st day of October, 2010 J U D G M E N T ---------------------- Petitioner is aggrieved by detention of goods purchased interstate on payment of CST at the rate of 2%. According to the petitioner, the goods were purchased from a dealer in Mumbai by virtue of Ext.P2 invoice, under C- Form, on payment of concessional rate of tax. The consignment was detained at the Commercial Tax Check Post at Walayar by the 1st respondent on issuing Ext.P3 notice under Section 47(2) of the Kerala Value Added Tax Act, 2003 (KVAT Act). The reason for detention mentioned therein is that only a photocopy of the invoice was accompanying the transport and no other valid documents were available. Suspecting attempt in evasion of payment of tax the petitioner was directed to furnish security. 2. According to learned counsel for the petitioner, the transaction in question is purely an interstate purchase, which will not attract levy of tax under the provisions of the W.P.(C).30178/10-V -2- KVAT Act. Relying on the decision in Baheej Agencies Vs. STO (6 KTR 150 (Ker.)) it is contended that the documents prescribed under the KVAT Act and the Rules need not accompany with respect to a transport by way of interstate movement and the documents prescribed under law of the consignor's state will be sufficient. Further contention is that, eventhough the KVAT Act and the Rules thereunder insist for a transporter copy of the invoice to be accompanied with the consignment, there is no identical provision contained in the local law with respect to the state of the consignor. He further contends that the defect noted is only technical in nature, and insistence for payment of cash deposit is highly unreasonable and unjustifiable. Therefore the petitioner seeks direction for release of the goods pending finalisation of the enquiry. 3. Learned Government Pleader, per contra, contended that the movement of the goods within the barriers of the state, if not accompanied by documents prescribed under the KVAT Act and the Rules thereunder, need be treated as an illegal transport and penalty is liable to be imposed. It is argued that the authority is well justified in detaining the goods because the suspicion raised with respect to evasion in payment of tax is W.P.(C).30178/10-V -3- reasonable. Since photocopy of the invoice alone was accompanying the goods, there is every reason to suspect that the petitioner might have clandestinely transported the goods on the strength of the original of the invoice, bypassing the check post. Therefore it is contended that the petitioner need be compelled to furnish adequate security, is the contention. 4. I am not intending to consider the rival contentions or to enter any findings on the issue raised. The detention need to be followed by an enquiry to be conducted by the competent authority. At this stage, while considering the question with respect to release of goods, I am of the opinion that pending finalisation of the enquiry the goods in question can be released on the petitioner furnishing proper security. Taking note of the fact that the petitioner is a registered dealer and also that the transaction is an interstate purchase, I am inclined to allow the goods to be released on the petitioner furnishing security bond, without sureties. 5. The 1st respondent is therefore directed to release the goods detained under Ext.P3 on the petitioner furnishing security bond in the form prescribed under the KVAT Rules, without sureties, for the value demanded in Ext.P3. W.P.(C).30178/10-V -4- 6. The competent authority will finalise the enquiry at the earliest possible, after affording an opportunity of hearing to the petitioner, at any rate within a period of six weeks from the date of release of the goods. C.K.ABDUL REHIM, JUDGE. okb