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2013 (4) TMI 150 - HC - VAT and Sales TaxDetention of consignment of hand made soaps on grounds of undervaluation - KVAT Act - assessee contested that whenever goods are detained on allegation of undervaluation the goods should be purchased as mandated in Section 45 and the circular No.47/06 - Held that - The provision under Section 45 and the circular only show that it is only an enabling power of the respondents and there is no mandatory obligation for them to purchase the goods in each and every case, when their statutory powers are exercised. Therefore no direction as sought for in that behalf granted. Adjudication be conducted and in the meanwhile, the goods be released subject to the petitioner therein furnishing bank guarantee for the security demanded.
Issues: Detention of consignment under Section 47(2) of the KVAT Act on grounds of undervaluation, applicability of Section 45 of the KVAT Act and Circular No.47/06 in cases of detention on undervaluation allegations.
In this case, the petitioner challenged the notice issued under Section 47(2) of the KVAT Act detaining a consignment of hand-made soaps due to undervaluation. The petitioner argued that in cases of detention on undervaluation allegations, the authorities must invoke their powers under Section 45 of the KVAT Act, as clarified by Circular No.47/06. The petitioner contended that the goods should be purchased as mandated in Section 45 and the circular whenever a consignment is detained for undervaluation. The Government Pleader opposed this, stating that Section 45 is not applicable in cases of consignment detention due to undervaluation. The court noted a previous judgment where a similar situation was dealt with and directed adjudication while releasing the goods upon furnishing a bank guarantee. Despite the petitioner's argument regarding the mandatory nature of Section 45 and the circular, the court held that these provisions only provide enabling powers to the authorities, not a mandatory obligation to purchase goods in every case of detention under statutory powers. The court declined to issue a direction as sought by the petitioner, emphasizing the discretionary nature of the authorities' actions in such cases. Therefore, the writ petition was disposed of with a direction similar to a previous judgment, rejecting the petitioner's argument regarding the mandatory purchase of goods under Section 45 and Circular No.47/06 in cases of consignment detention due to undervaluation under the KVAT Act.
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