IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 28694 of 2009(F)
1. KOTTARAM TRADING COMPANY
... Petitioner
Vs
1. INTELLIGENCE INSPECTOR AND ANOTHER
... Respondent
For Petitioner :SRI.VIJAYAN. K.U.
For Respondent : No Appearance
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :12/10/2009
O R D E R
C.K.ABDUL REHIM, J.
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W.P.(C).No.28694 OF 2009
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Dated this the 12th day of October, 2009
J U D G M E N T
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1. Petitioner is aggrieved by detention of a transport
effected from Delhi on inter-state purchase, by the 1st respondent
on issuing Ext.P3 notice under Section 47(2) of the Kerala Value
Added Tax Act, 2003. The petitioner is a wholesale dealer and
distributor of kitchenware, glassware, electronic goods, etc. and
according to him he is a heavy tax payer. It is submitted by the
petitioner that the output tax due on the sales effected by the
petitioner for the financial year 2008-09 is about Rs.3.57 crores
and the monthly tax payment comes to about Rs.40 lakhs or
more. Petitioner had produced Ext.P1 and P1(a) documents in
support of the above claims.
2. One truck load of goods covered under Ext.P2 invoice
containing 21 specific items were consigned by the dealer at
Delhi to the petitioner. The goods were cleared from the border
Checkpost at Walayar without noticing any defect in the
documents accompanying the transport. But the 1st respondent
intercepted the transport enroute and issued Ext.P3 notice, for
the reason that it is noticed that MRP value of one of the items
covered under Ext.P2 is noticed as Rs.390/- per piece, whereas
W.P.(C).28694/09-F 2
the value shown in the invoice is Rs.80/- per piece only.
According to the 1st respondent the value shown in the invoice
will come only 20.51% of the MRP and on enquiry it is revealed
that the prevailing market value of the commodity is about
Rs.200/-. Therefore suspecting evasion of tax the 1st respondent
required the petitioner to furnish security deposit for double the
amount of tax due on the differential value calculated at 35% of
the MRP value.
3. According to the petitioner he is only a wholesale
distributor and the ultimate sale to the consumer will be effected
after passing through various stages of distribution network and
the retail rate at which the ultimate consumer is getting the
product will be always less than the MRP noted therein. It is
submitted that only when the sale is effected the authority can
find out as to whether there was any undervaluation. The notice
now issued presuming that the petitioner is getting goods at 35%
of the MRP, is highly presumptive and unrealistic, is the
contention.
4. The learned Government Pleader on the other hand
contended that the 1st respondent is entitled to detain the goods
on the basis of a suspicion that there is evasion in payment of tax
by quoting price than the actual price for which the goods was
purchased and therefore the matter need investigation in the
process of adjudication.
5. Having considered the rival contentions I am of the
W.P.(C).28694/09-F 3
opinion that the question whether there was any attempt at
evasion of payment of tax is a matter to be decided on
finalisation of the adjudication. At the same there need not be
continued detention till such time, especially considering the fact
that the transport in question covers so many other items also.
Therefore the goods detained can be released on the petitioner
furnishing adequate security. Considering the fact that the
petitioner is a heavy tax payer and considering the fact that
there is no allegation of any non-availability of records or any
incriminating defects in the records, I am of the opinion that the
detention can be released on the petitioner furnishing security
bond.
6. Accordingly the writ petition is disposed of directing
the 1st respondent to release the goods detained under Ext.P3
along with the vehicle, on condition the petitioner furnishing
security bond in the form provided under the KVAT Rules,
without sureties, for the amount demanded under Ext.P3.
7. The competent authority under Section 47 is directed
to expedite the adjudication proceedings and to finalise the same
at the earliest, at any rate within a period of two months from
the date of release of the goods.
C.K.ABDUL REHIM, JUDGE.
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