2015 (10) TMI 2600 - HC - VAT and Sales Tax

Detention of goods - the vehicles are brought only for the purpose of exhibition - no certification obtained from the assessing authority for the proposed exhibition or display under Sub-section (13)(i) of Section 16 of the Kerala Value Added Tax Act, 2003 - Held that - It will be far fetched to interpret that provision to hold that if any vehicle is being brought into the State for the purpose of conducting exhibition, exchange mela or any prize scheme for sales promotion, such certification or permission has to be obtained from the assessing authority to which the dealer is subject, even before the vehicle is brought in for the purpose of the exhibition or exchange mela, as the case may be. Therefore, a certification under Section 16(13)(i) of the KVAT Act cannot be insisted upon at the time of entry of goods into the State, more particularly when the credibility of the goods under transit can be traced to a registered owner because the vehicle is already registered under the MV Act - the goods detained as per Ext.P9 shall be released on the appellant furnishing simple bond without sureties for the amount demanded. Appeal allowed - matter on remand - goods released on furnishing of simple bond.

Summary

Issues involved:
Challenge to a decision of a learned single Judge refusing to interfere with a detention order issued by the Commercial Tax Inspector at Walayar Checkpost regarding the transportation of vehicles registered in another state under the Motor Vehicles Act, 1988, for exhibition and demonstration purposes without the required certification under the Kerala Value Added Tax Act, 2003.

Analysis:

The appellant, a partnership firm, contested the decision of the learned single Judge who declined to intervene in a detention order issued by the Commercial Tax Inspector at Walayar Checkpost. The appellant was transporting three vehicles registered in Maharashtra under the Motor Vehicles Act, 1988, in the name of specific companies for exhibition and demonstration. The appellant argued that the vehicles were not intended for sale in Kerala but for exhibition purposes only. The Commercial Tax Inspector demanded an amount equivalent to two times the tax assessable on the total value of the vehicles, totaling Rs. 5,40,00,000. The primary objection raised was the lack of certification from the assessing authority for the proposed exhibition or display, as required by Section 16(13)(i) of the Kerala Value Added Tax Act, 2003.

The Kerala Value Added Tax Act mandates that any dealer conducting exhibitions or sales promotion events must obtain written permission from the assessing authority and exhibit it prominently at the event location. However, the Act does not explicitly require this permission to be obtained before bringing goods into the state for exhibition purposes. The Court emphasized that the certification under Section 16(13)(i) cannot be insisted upon at the time of entry of goods into the State, especially when the goods under transit can be traced back to a registered owner due to prior registration under the Motor Vehicles Act. Consequently, the Court ordered the release of the detained goods upon the appellant furnishing a simple bond without sureties for the demanded amount, with the Commercial Tax Inspector instructed to conclude the proceedings within one month, allowing the appellant to provide evidence of the goods being returned to their registered owner.

In conclusion, the High Court of Kerala allowed the writ appeal, directing the release of the detained goods and providing a timeframe for the completion of proceedings by the Commercial Tax Inspector, considering the specific circumstances and legal requirements under the Kerala Value Added Tax Act in relation to conducting exhibitions and sales promotion events.