2018 (11) TMI 718 - HC - VAT and Sales Tax

Detention of Consignments - inter-state sale - sales tax already paid - scope of KVAT Act - Jurisdiction - Held that - It is not a question of the second respondent s inherently lacking the jurisdiction-the subject matter jurisdiction - The authority may have decided erroneously, if at all. Then the petitioner s remedy lies under Section 57 of the Act. Petition disposed off holding that the petitioner is free to invoke Section 57, or any other statutory provision, to seek redressal against the Ext.P9 to P20 orders.

Summary

Issues: Jurisdiction of taxing authority under Kerala Value Added Tax Act; Detention of consignments; Adjustment of security deposits towards penalty; Alternative remedy available to petitioner; Estoppel from questioning jurisdiction; Encashment of bank guarantee.

The judgment by the Kerala High Court involved a case where the petitioner, engaged in elevator business, faced detention of consignments by authorities under the Kerala Value Added Tax Act. The petitioner contended that the transactions were inter-state sales and had already paid sales tax. The Commissioner of Commercial Taxes had issued a direction to release the consignments after multiple detentions. The petitioner had provided bank guarantees on all seventeen occasions of detention and was later issued orders to adjust security deposits towards penalties, leading to the writ petition.

The Senior Counsel argued that the transactions were beyond the scope of the KVAT Act as inter-state sales, and the orders for adjusting security deposits were questionable. The Government Pleader countered, stating that the petitioner, having submitted to the jurisdiction earlier, could not challenge it now due to estoppel. The Court acknowledged the jurisdictional issue but emphasized that errors, if any, could be addressed through statutory remedies like Section 57 of the Act. The Court allowed the petitioner to seek redressal under Section 57 against the orders but noted the potential prejudice from bank guarantee encashment before approaching the revision authority.

In the judgment, the Court disposed of the writ petition, granting the petitioner time to approach the revision authority without immediate encashment of the bank guarantee. The Court balanced the interests of justice by providing a two-month breathing period to the petitioner before any enforcement action, recognizing the petitioner's bona fide approach to seek redressal. The judgment highlighted the importance of statutory remedies and the need for due process in challenging tax-related orders while ensuring fairness and procedural safeguards for the parties involved.