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Judgment
Justice P.R. Ramachandra Menon
The petitioner company, who is a registered dealer under the KVAT Act, on the rolls of the second respondent wants to set up a new branch of ''Automobile works shop'' at the concerned place in Trivandrum. It was in connection with the said requirement, that Ext. P2 supply order was placed to procure some fittings and devices to be installed at the premises/building, which was being constructed on the strength of Ext. P1 permit issued by the local authority. It is stated that, the goods were supplied by the consignor situated outside the State and it was being transported on the strength of Ext. P3 invoice and Ext. P4 certificate of ownership as well. It was in the course of transit as above, the goods being transported by the petitioner were intercepted by the respondent, issuing Ext. P5 notice u/s 47(2) of the Act, doubting evasion of tax and demanding security to the extent as specified therein. Heard the learned Government Pleader as well.
The circumstances which led to doubting of evasion of tax, as given Ext. P5 notice, are as given below :
1) The certificate of own use in Form 16 clarify the own use of the consignee cannot be accepted as it is not support with valid documents. Further the consignee claims for ownership of the goods before obtaining the bills of the goods as 50 % of the payment in on delivery as per the purchase order.
2) Verification of the purchase order accompanied with the transport received that the consignor is entrusted with supply and installation of the goods under question. But the consignor being a work contractor, not taking registration under KVAT Act 2003, despite liability u/s 5 (IX) of the said Act. Hence it is suspected that the consignor is commence with the consignee attempt to evade payment of the on transfer of goods in the course of works contract.
3) The consignee being a private limited company, effected interstate purchase of the goods in the course of business without taking registration under KVAT Act. Without prejudice, it is also suspect that the consignee has wilfully not disclosed the TIN number with a view to evade payment of tax.
Apparently, Ext. P2 work order was placed with reference to some other ''quotation'' specifying the requirements and conditions of supply, though the terms of payment alone are reflected in Ext. P2. After considering the pleadings/materials on record and hearing the submissions made either side, this Court finds that, the matter requires to be adjudicated by way of appropriate proceedings to see whether there was any actual intent to evade tax. But, for that reason, the goods need not be detained any further and the same shall be released to the petitioner, on condition that, the petitioner satisfies 50 % of security demanded vide Ext. P5 notice, either by way of ''cash'' or by of ''bank guarantee'' and executes a ''simple bond'' without sureties for the balance amount. This will be without prejudice to the rights and liberties of the competent authority to pursue the adjudication proceedings, which shall be finalized in accordance with law, as expeditiously as possible.
The Writ Petition is disposed of.