IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 27491 of 2010(J)
1. M/S.SIEMENS LIMITED,
... Petitioner
Vs
1. THE INTELLIGENCE INSPECTOR,
... Respondent
2. MODEL MEDI DIAGNOSTIC CENTRE(P)LTD
For Petitioner :SRI.JOSE JOSEPH
For Respondent : No Appearance
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :06/09/2010
O R D E R
C. K. ABDUL REHIM, J.
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W.P.(C) No. 27491 of 2010
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Dated this the 6th day of September, 2010
JUDGMENT
Detention of transport of goods and issuance of notice
under section 47(2) of the Kerala Value Added Tax Act (for
short the KVAT Act) are under challenge in this writ
petition.
2. The goods transported is a scanning machine and
its accessories, branded as “Siemens Magnetom Espree-
1.5T MRI System”. According to the petitioner, the goods
in question was imported from Germany and was
manufactured by Siemens, Germany. The same was
imported by the petitioner on the basis of Ext.P1 order
placed by a customer at Kochi, the second respondent
herein. It was imported at the Port of Mumbai and
transported in 4 heavy vehicles. The goods and the vehicles
were intercepted by 1st respondent, on issuing Ext.P3
notice. The reason for detention noted in Ext.P3 is that, in
the documents, which accompanied the transport, the value
W.P.(C) No. 27491/2010 2
is shown as including installation charges. Since the
installation charges are included in the invoice, it is
suspected that the transaction is in the nature of works
contract, which is taxable under the Act. On the basis of
value shown in the invoice, the petitioner was directed to
pay a sum of Rs.1,08,57,500/- towards security deposit.
3. Learned counsel for the petitioner contended that
the goods in question are imported goods and it is a sale
effected in the course of import and it will not attract any
liability of tax under the KVAT Act. It is the further
contention that the goods in question, even assuming
taxable, are liable to be levied with tax only at 4% going by
Entry 59-A in the IIIrd Schedule of the Act. Therefore, the
detention as well as demand for the huge amount of
security is assailed.
4. Learned Government Pleader appearing for the 1st
respondent, on instructions, submitted that the petitioner
has not produced any convincing document to prove that
the goods under transport was imported by them and that
W.P.(C) No. 27491/2010 3
the sale is effected in the course of import. Since it is
evident that the petitioner is installing this machinery at the
premises of the 2nd respondent, it will attract liability of tax
as works contract, is the contention.
5. Learned counsel for the petitioner then pointed out
that Ext.P1 is the specific order placed by the 2nd
respondent, which will clearly indicate that the order was
placed for purchase of the equipment to be imported by the
petitioner from Germany. There is a stipulation that any
other equipment, which is not directly imported, will not be
accepted. It is also contended that all documents
pertaining to the import is available with the petitioner and
that the petitioner is ready and willing to produce such
documents at the time of enquiry.
6. It is further pointed out by the learned Government
Pleader that the petitioner is not a registered dealer under
the KVAT Act, but the petitioner is having a branch at Kochi
which is a registered dealer. Under such circumstances, it
is submitted that condition if any to be insisted by this
W.P.(C) No. 27491/2010 4
Court for furnishing security, shall be complied with by the
registered branch of the petitioner situated at Kochi.
7. Question whether there was any attempt of evasion
of tax and as to whether the transport will attract any
imposition of penalty are the matters to be finally decided
by the Enquiry Officer on completion of adjudication. At
present I am concerned only with release of the goods,
pending finalization of the adjudication. Having considered
the entire facts and circumstances, I am of the opinion that
the goods can be ordered to be released on the petitioner
furnishing security for the amount demanded under Ext.P3.
8. In the result, the writ petition is disposed of
directing the 1st respondent to release the goods along with
vehicles detained under Ext.P3 notice, on the petitioner
furnishing a bank guarantee for the amount of 4% tax
calculated on the value of Rs.4,30,00,000/- and also on
furnishing Security Bond, without sureties as provided
under the KVAT Rules for the entire balance amount
demanded in Ext.P3.The security bond has to be furnished
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by the branch of the petitioner in Kochi ,which is a
registered dealer under the KVAT Act.
9. The Enquiry Officer shall expedite the adjudication
and finalize the same at the earliest, after affording an
opportunity of hearing to the petitioner, at any rate within a
period of two months from the date of release of the goods.
C. K. ABDUL REHIM,
JUDGE.
mn.