2015 (10) TMI 2599 - HC - VAT and Sales Tax

Security deposit to release the goods - the petitioner had produced a delivery note together with an 8F declaration, which showed that the goods were being transported for exhibition purposes, but there was no document that was produced to show that the consignor/petitioner had a permission for exhibition/display purposes - whether demand of deposit valid? - Held that - there was no compliance with the procedure required to be followed as per Section 16 (13) of the KVAT Act - this is a case where the necessary documents that had to accompany the transportation were not there, and therefore direction to furnish a bank guarantee for the security deposit is sustainable - the adjudicating authority shall adjudicate the matter and pass orders - petition allowed by way of remand.

Summary

Issues:
Detention of consignment of Motor Cars by the respondent due to lack of proper documentation and demand for security deposit by the petitioner for release of goods and vehicle.

Analysis:
The petitioner, a registered dealer under the Kerala Value Added Tax Act, challenged the Ext.P9 notice detaining a consignment of Motor Cars being transported at the petitioner's instance. The respondent insisted on a security deposit as a condition for releasing the goods and vehicle. The court noted that the objection was primarily about the lack of valid documents accompanying the transportation, specifically the absence of permission for exhibition/display purposes as required by Section 16(13) of the KVAT Act. Despite the petitioner's claim that the goods were for demonstration purposes with an undertaking for return, the court emphasized the necessity of proper documentation. Thus, the court directed the 1st respondent to release the goods and vehicle upon the petitioner furnishing a bank guarantee for the security deposit amount demanded in the notice.

The court further ordered that the 1st respondent should transmit the files to the adjudicating authority for further proceedings within two months from the date of the judgment. Additionally, the petitioner was instructed to provide a copy of the judgment and the writ petition to the 1st respondent for compliance. The judgment highlighted the importance of adhering to statutory requirements and the need for proper documentation in the transportation of goods to avoid detention and ensure legal compliance under the KVAT Act.