IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 25389 of 2009(P)
1. MESSRS.ESCON ELEVATORS PRIVATE LTD.
... Petitioner
Vs
1. THE COMMERCIAL TAX INSPECTOR
... Respondent
For Petitioner :SRI.A.KUMAR
For Respondent : No Appearance
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :08/09/2009
O R D E R
C.K.ABDUL REHIM, J
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W.P.(C) No.25389 of 2009
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Dated this the 8th day of September, 2009
J U D G M E N T
1. The petitioner is engaged in manufacture and
installation of elevators having its factory at Maharashtra
and he is a registered dealer under the Local Sales Tax Act
and Central Sales Tax Act in Maharashtra state. The
petitioner was awarded with contract for replacement of
three numbers of lifts at the Naval Base, Kochi as evidenced
by Ext.P1 and P2. It is evident from Ext.P3 that the
authorities of the Naval Base had conducted inspection of
the Elevators to be installed at their site and issued Ext.P5
certificate in which it is stated that the petitioner will be
transporting the equipments from the factory at Mumbai to
the Naval Base at Kochi for execution of the above
mentioned work. The petitioner had transported three
numbers of elevators under two invoices as per Exts.P4 and
P4(a), drawn in the name of the Garison Engineer, Military
W.P.(C) No.25389 of 2009
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Engineering Services, Naval Base, Kochi. The goods were
transported under Ext.P6 and P6(a) way bills. But the
transport was inspected at the sales tax check post and
Exts.P7 and P7(a) notice were issued. The reason for
detention is that the petitioner was awarded with contract
for replacement of three numbers of lifts at Naval Base,
Kochi, but the consignor (petitioner) has not been
registered under the KVAT Act as a works contractor.
2. Learned counsel for the petitioner had pointed out
a decision of the Hon’ble Supreme Court in State of
Andrapradesh Vs.Kone Elevators (India) Ltd, 140
(2005) STC. 22. In the said decision the Hon’ble Supreme
Court held that in a contract for supply and installation of
lifts, even though the dealer is doing installation at the site,
it can only be considered as a sale and not as a works
contract. The learned Government Pleader submits that
correctness of the above said decision was doubted in a
subsequent case and the matter now stands referred for
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consideration of a larger bench. On the alternative, learned
counsel for the petitioner raised another contention that
even assuming that it is a works contract, the transfer of
property is goods takes place in the course of an inter state
sale and therefore it is not exigible to tax within the state.
In support of the above contention, the petitioner had
pointed out a decision of this court in Maestro Cooling
Towers Vs. State of Kerala 102 (1996) STC 617.
3. Having considered the rival contention, I am of
the opinion that the detention merely on the ground that the
consignor is not a registered dealer is not at all legally
tenable. But the question whether there is any attempt at
evasion of payment of tax need be decided after
adjudication as contemplated under section 47(2) of KVAT
Act. However, considering the proviso to section 47(2), I
feel that release of the goods can be ordered pending
finalisation of the adjudication, on the petitioner providing
adequate security.
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4. Under the above circumstances, the writ petition
is disposed of directing the respondent to release the goods
detained under Ext.P3 and P3(a) on the petitioner
furnishing security bond as provided under the KVAT Rules
for the amount mentioned in Ext.P7 and P7(a), without
sureties. It is further directed the competent authority
under section 47(2) of the Act will expedite the
adjudication and shall pass final orders after affording an
opportunity of hearing to the petitioner as early as possible,
at any rate within a period of one month from the date of
release of the goods.
C.K.ABDUL REHIM,
JUDGE.
app/-