1995 (10) TMI 221 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge against the interlocutory order directing release of detained goods pending decision of the original petition.
2. Detention of 10 rolls of coaxial cables transported through South Eastern Roadways.
3. Justification for issuing notice demanding security for release of goods.
4. Interpretation of the applicable tax rate for the transported goods.

Analysis:
The appeal before the Kerala High Court stemmed from an interlocutory order issued by a learned single Judge in response to a complaint regarding the release of goods detained under exhibit P3. The appeal was filed by the Intelligence Inspector, Intelligence Squad No. IV, Agricultural Income-tax and Sales Tax, Palakkad, against the detention of 10 rolls of coaxial cables transported through South Eastern Roadways in Lorry No. KRH 7263. The challenge in the original petition sought to quash exhibit P3 notice issued under the provisions of the Kerala General Sales Tax Act, 1963. The petitioner filed for an interim relief seeking the unconditional release of the goods pending the decision of the original petition.

Upon interception of the lorry carrying the goods, suspicions arose regarding the legitimacy of the transport. Various documents accompanying the goods, such as delivery challan, lorry receipt, and a letter from the petitioner-company, raised concerns about the nature of the transaction. The appellant demanded security for the release of goods, citing potential tax evasion. The respondent contended that the goods were being transported for their own use and did not involve a sale. The Court acknowledged the justification for issuing the notice but emphasized the need for a proper inquiry by the statutory authority to make a final decision.

The Court considered the applicable tax rate for the transported goods, highlighting the difference in rates based on the classification under the Kerala General Sales Tax Act. The Revenue argued for a higher tax rate under item No. 120, while the respondent disputed the classification. The Court directed the appellant to release the goods to the respondent upon executing a bank guarantee for 50% of the security amount specified in exhibit P3, pending a decision by the statutory authority. The Court allowed the appeal, setting aside the earlier order granting interim relief without security, to safeguard the interest of Revenue.

In conclusion, the High Court's judgment addressed the issues surrounding the detention and release of goods, the justification for demanding security, and the interpretation of the applicable tax rate for the transported goods. The decision balanced the interests of the parties involved while emphasizing the need for a thorough inquiry by the statutory authority to determine the final outcome.