1993 (3) TMI 345 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Detention of goods by Indian Airlines.
2. Applicability of Section 29A of the Kerala General Sales Tax Act, 1963 (KGST Act).
3. Liability for demurrage charges.

Detailed Analysis:

1. Detention of Goods by Indian Airlines:
The petitioners, who are purchasers of call monitors and printers, faced non-delivery of their goods by Indian Airlines on the grounds that clearance from the Intelligence Officer, Sales Tax, Mattancherry, was required. Indian Airlines acted upon the instructions contained in the letter dated July 27, 1992 (Exhibit R1(a)) and the subsequent order dated September 1, 1992 (Exhibit R1(b)), both issued by the Intelligence Officer. These documents alleged that unregistered dealers were using air consignment facilities to evade tax, prompting the Intelligence Officer to request the detention of goods consigned to the company until written release orders were issued by him.

2. Applicability of Section 29A of the KGST Act:
The core issue was whether the actions taken under Section 29A of the KGST Act were justified. Section 29A prescribes procedures for the inspection of goods in transit, allowing for the detention of goods if there is suspicion of tax evasion. However, the petitioners contended that the sales were inter-State, on which no tax was payable within Kerala, and that the mere non-registration of the consignee under the KGST Act was insufficient to suspect tax evasion.

The court examined the provisions of Section 29A, noting that it primarily deals with the stoppage and inspection of vehicles in transit to verify the bona fides of the transport and ensure no tax evasion. The court found that the goods were consigned to the petitioners, and there was no case that the transport was not accompanied by proper and genuine documents. The court also highlighted that the non-registration of the consignee alone could not justify the detention of goods under Section 29A.

The court further noted that if any tax was payable, it would be by the company's branch office in Ernakulam, not the consignees. The court concluded that the Intelligence Officer's actions were not justified by the terms of Section 29A and that the prohibitory orders (Exhibits R1(a) and R1(b)) were unauthorized and liable to be quashed.

3. Liability for Demurrage Charges:
The petitioners also sought a declaration that they were not liable to pay demurrage to Indian Airlines for the delay in delivery. The court stated that the liability for demurrage depends on the terms and conditions of the carriage contract, which were not presented before the court. The court opined that such matters are best adjudicated in a properly framed civil suit rather than in a proceeding under Article 226 of the Constitution.

Conclusion:
The original petitions were allowed in part. The court quashed Exhibits R1(a) and R1(b), directing that Indian Airlines shall not detain the goods consigned to the petitioners or others based on these exhibits. The court did not make any order regarding the costs. The issue of demurrage charges was left to be resolved through appropriate civil proceedings.

Petition partly allowed.