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2017 (1) TMI 1553 - HC - VAT and Sales TaxRelease of detained goods - mis-classification of the goods as packing material - Held that - Considering the fact that the petitioner is a registered dealer and that the petitioner has a prima facie case to refute the offence alleged, it is only proper that the petitioner be released with the goods on execution of a simple bond without solvent sureties - this Court had directed release of the goods unconditionally - petition allowed.
Issues: Mis-classification of goods leading to detention at check post, applicability of concessional tax rate, attempt to evade tax, release of goods pending adjudication
The judgment by the High Court of Kerala addressed the detention of the petitioner's goods at a check post due to mis-classification. The petitioner, a dealer in plastic carry bags, had declared the goods as 'packing material' under the Kerala Value Added Tax Act. The government argued that since the petitioner was not using the material as packing material but selling it, the concessional rate of 5% for packing materials did not apply, and the goods should be taxed at 20%. The government alleged an attempt to evade tax. The petitioner's counsel contended that the petitioner had been paying tax at 20% previously and the mis-classification was due to the absence of a specific schedule in the state from where the goods were purchased. The petitioner claimed the mis-classification was a genuine mistake and not an attempt to evade tax. The court acknowledged the need for a proper adjudication process to address the issues raised. However, considering the petitioner's registered dealer status, a prima facie case to refute the alleged offense, and the need for the release of goods, the court directed the release of goods on the execution of a simple bond without solvent sureties. The court emphasized that the release was only for the goods, and the adjudication proceedings should continue independently without influence from the release order. In conclusion, the writ petition was disposed of, highlighting the importance of addressing the mis-classification issue through adjudication while allowing the petitioner's goods to be released promptly under specified conditions.
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