2016 (5) TMI 1432 - HC - VAT and Sales Tax

Detention of goods with vehicle - Section 47(2) of the KVAT Act - Held that - In Interfield Laboratories v. State of Kerala 2015 (9) TMI 1538 - KERALA HIGH COURT this Court held that the officer in charge of the notified area or the empowered officer can invoke the provisions under sub-section (2) of Section 47 of the KVAT Act, if he has reason to suspect that goods under transport are not covered by proper and genuine documents or that any person transporting the goods is attempting to evade payment of tax due under the said Act - the finding in Ext.P4 notice is that the consignment was not accompanied by any documents. In such circumstances, the 1st respondent cannot be found fault with in intercepting the goods and issuing Ext.P4 notice under Section 47 (2) of the Act. If the petitioner is aggrieved by Ext.P4 notice, it is for him to file an appropriate objection before the 1st respondent, along with supporting materials - Pending adjudication, the goods detained pursuant to Ext.P4 notice shall be released to the petitioner, on the petitioner depositing 50% of the total amount demanded in Ext.P4 and furnishing adequate security to the satisfaction of the 1st respondent for the balance sum in the form of a simple bond, with sureties.

Summary

Issues Involved:
Petitioner challenging notice under Section 47(2) of KVAT Act for detention of goods during transportation.

Analysis:
The petitioner, constructing a residential building, purchased wood from a registered dealer under KVAT Act and CST Act. The goods were intercepted during transportation, leading to the issuance of a notice demanding a security deposit and penalty. The petitioner approached the High Court seeking relief from the notice.

The High Court considered the reasons stated in the notice for invoking Section 47(2) of the KVAT Act, which allows interception if there are suspicions about the goods or tax evasion. Referring to a previous judgment, the Court held that the officer can detain goods if proper documents are not produced. Consequently, the interception and the demand for security deposit were deemed valid.

The petitioner argued that the goods were transported with a purchase bill, while the notice claimed lack of accompanying documents. The Court held that in the absence of proper documentation, the interception and notice were justified. The Court directed the petitioner to file objections with supporting materials for adjudication by the competent authority within two months.

Pending adjudication, the Court ordered the release of the detained goods upon the petitioner depositing 50% of the demanded amount and providing security to the satisfaction of the authorities. The Writ Petition was disposed of with these directions, ensuring due process in the resolution of the dispute.