IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 30993 of 2010(Y)
1. JOVY.T.D., PROPRIETOR,
... Petitioner
Vs
1. COMMERCIAL TAX INSPECTOR,
... Respondent
2. STATE OF KERALA,
For Petitioner :SRI.VIJAYAN. K.U.
For Respondent : No Appearance
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :11/10/2010
O R D E R
C.K. ABDUL REHIM, J
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WP(C) NO. 30993 OF 2010
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Dated this the 11th day of October, 2010
JUDGMENT
Ext.P4 notice issued under Section 47 (2) of the
Kerala Value Added Tax Act (KVAT Act) is under
challenge. Interstate transport of ‘Mango Pulp’
purchased by the petitioner on the strength of Ext.P3
invoice was detained, alleging that, on verification of the
goods it was revealed that there is a gross undervaluation
with respect to the value shown in the invoice when
compared with the MRP printed on the containers. The
first respondent computed value of the goods at 65% of
the MRP and security deposit, being double the amount of
tax due on the differential value, was demanded.
2. Contention of the petitioner is that the
transaction in question will attract payment of Central
Sales Tax (CST) only, and that the assumption of
undervaluation is highly whimsical. It is further
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contended that the first respondent is not entitled to detain
the goods invoking Section 47 (2) on the basis of an
allegation as mentioned, since such an allegation will not
come within the purview of the reasons for detention
enumerated under Section 47 (2).
3. Learned Government Pleader on the other hand
contended that the gross undervaluation revealed from the
invoice gives rise to a reasonable suspection that there
occurred collusion between the consignor and the
consignee in declaring a lower price, after passing
consideration extraneously, with an intention to show
corresponding lower rate of sale prices than the actual
value for the subsequent sale of the goods at the hands of
the petitioner, within the state. Hence an attempt in
evasion of payment of tax was legitimately suspected, is the
contention.
4. However, question as to whether there was any
attempt in evasion of payment of tax, is a matter which need
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be decided on finalising the enquiry. Pending finalisation of
such enquiry, I am of the opinion that, the goods can be
released to the petitioner on furnishing proper security.
5. Under the above circumstances, the Writ Petition
is disposed of directing the first respondent to release the
goods along with the vehicle, which is detained under
Ext.P4 notice, on the petitioner furnishing Bank Guarantee
for 50% of the amount of security deposit demanded
therein. The petitioner shall also furnish security bond in
the form provided under the Kerala Value Added Tax Rules,
without sureties, for the balance amount.
6. The competent enquiry officer 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
dnc