2013 (4) TMI 200 - HC - VAT and Sales Tax

Detention of goods - Demand of security deposit - Department doubted evasion of tax as petitioner purchased purchased various household articles/fittings and such other installations from Bangalore for renovation of its establishment. - Held that - Court finds that the observation made by the detaining authority that there were no supporting documents to prove that the taxable materials were transported for own use , may not be true, as the presence of Invoice and form 16 was also available. For that matter, the goods need not be detained any further and that the same can be released to the petitioner on executing a simple bond . It is ordered accordingly. The petitioner shall produce a copy of the judgment along with a copy of the writ petition before the second respondent for further steps. The writ petition is disposed of.

Summary

Issues: Detention of goods for suspected tax evasion during transportation; Validity of supporting documents for transportation under KVAT Act/Rules

In this case, the petitioner, who runs a hotel, closed down the establishment for renovation and purchased household articles from Bangalore for re-construction activities. The goods were being transported to the site in Kerala when they were intercepted by the second respondent under Section 47(2) of the KVAT Act, suspecting tax evasion. The petitioner challenged the detention of goods in a writ petition. The petitioner argued that all necessary documents, including the Certificate of Ownership in Form 16, were provided, and there was no reason for detention. On the other hand, the respondents claimed that there were doubts regarding the purpose of transportation due to the lack of supporting documents proving the goods were for 'own use.'

After considering the arguments, the Court found that the detaining authority's claim of lack of supporting documents was incorrect. The presence of the Invoice No. 233/06.03.2013, recorded against 'Column No.9' in Ext.P5, along with the Certificate of Ownership in Form 16, satisfied the requirements under the law for accompanying the goods during transportation. The Court clarified that additional documents such as an approved plan from municipal authorities were not necessary to prove the genuineness of transportation under the KVAT Act/Rules. The Court ordered the release of the goods to the petitioner upon execution of a simple bond, without prejudice to the respondents' rights to pursue adjudication proceedings. The Court directed the adjudication proceedings to be completed within three months from the date of the judgment. The petitioner was instructed to provide a copy of the judgment and the writ petition to the second respondent for further action.

In conclusion, the writ petition challenging the detention of goods for suspected tax evasion during transportation was disposed of in favor of the petitioner, emphasizing the sufficiency of the provided documents and allowing the release of goods upon execution of a bond, while preserving the respondents' right to conduct adjudication proceedings within a specified timeframe.