(2012) 236 KLR 978
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH
WEDNESDAY, THE 22ND DAY OF FEBRUARY 2012/3RD PHALGUNA 1933
WA.No. 260 of 2012 ()
AGAINST THE ORDER/JUDGMENT IN WPC.3476/2012 DATED 14-02-2012
M/S. PERIYAR CEMENTS PVT LTD., NIDA, KANJIKODE, PALAKKAD DISTRICT, REPRESENTED BY STAISAN M.D., MANAGING DIRECTOR.
BY ADVS. SRI.HARISANKAR V. MENON, SMT.MEERA V.MENON, SRI.MAHESH V.MENON.
1. COMMERCIAL TAX OFFICER, 2ND CIRCLE, PALAKKAD - 678 001.
2. COMMERCIAL TAX INSPECTOR, COMMERCIAL TAX CHECK POST, WALAYAR-678 624.
BY GOVT. PLEADER MR.BOBBY JOHN.
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 22-02-2012, ALONG WITH WPC. 4226 OF 2012 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs.
C.N. RAMACHANDRAN NAIR & BABU MATHEW P. JOSEPH, JJ.
W.A. No. 260 OF 2012 and W.P.C. Nos.4226, 4228, 4238 & 4239 of 2012
Dated this the 22nd day of February, 2012
Kerala Value Added Tax Act, 2003 - Section 47(4) - the Assessing Officers in the State should keep on updating the Check Post officials about the tax arrears of dealers so that as and when goods are transported by defaulters their goods under transport are detained and released only on clearance of arrears of tax, recovery of which is not stayed by any authority or Court or on such dealer making arrangements for timely payment of arrears of tax to the satisfaction of the Department.
J U D G M E N T
Ramachandran Nair, J
The appellant in the writ appeal and the petitioner in the writ petitions is one and the same party which is in arrears of tax of around Rs.60 lakhs due for the assessment years 2002-2003 till 2008-2009. Capital goods brought by the assessee for installation in their factory at Kanjikode are detained in the Check Post on allegation of attempted evasion of tax in respect of the goods. One more ground in support of the detention stated in the notice is that the appellant/petitioners are in arrears of tax for which goods can be detained as provided u/s 47(4) of KVAT Act. Single Judge directed adjudication before release of goods against which the writ appeal is filed. Petitioner has filed writ petitions for direction to the appellate authorities to dispose of the various statutory appeals pending against assessments under which arrears are due.
2. We have heard counsel appearing for the appellant/petitioner and senior Government Pleader appearing for respondents. The case in hand is one unusual but prudent step taken by the Check Post officials to recover the arrears of tax by detaining the goods transported by defaulter who owe substantial amount of tax to the department for the past few years.
3. Counsel for the appellant/petitioner submits that S.47(4) does not authorize recovery of arrears of tax by detaining goods under transport at the Check Post. On the other hand, according to him the Section authorizes detention of goods and release of the same on payment of tax, if any due, in respect of the goods transported. The Government Pleader has defended the action of the Check Post officials in detaining the goods on both the grounds. Since the controversy is on the scope of S.47, we extract the said provision hereunder for reference.
"S.47(4): If such officer has reason to believe that the tax exigible on the sale or purchase of goods under transport is not paid, or the dealer whose goods are transported is in default of payment of any tax or other amount due under this Act for any period, such officer may, notwithstanding anything to the contrary contained in this Act or the rules made thereunder allow the goods to be transported after realising the tax in respect of the goods transported. If the driver or the person in charge of the goods or the dealer whose goods are under transport refuses to pay such tax, the goods shall be detained by such officer and shall be dealt with in the manner provided in this section as if the transport of goods were an attempt to evade payment of tax due under this Act.
4. On going through the above provision, we notice that Check Post officials are free to detain goods if the dealer transporting the goods is in arrears of tax. Admittedly, the appellant/petitioner is in arrears of tax for an amount of around Rs.60 lakhs for the years stated above. So much so, detention of goods on this ground, u/s 47(4) is perfectly in order.
5. Further, as rightly pointed out by the counsel for the appellant/petitioner there is no provision in S.47(4) to detain the goods until full arrears are paid. However, Section 47(4) does not bar the department from exercising right of attachment and sale of the detained goods under transport under other provisions of the Act or under the Revenue Recovery Act for recovery of arrears if the dealer does not clear arrears or at least makes arrangement for payment of arrears as a condition for release of goods. We feel, in order to make S.47(4) more workable and effective, the Assessing Officers in the State should keep on updating the Check Post officials about the tax arrears of dealers so that as and when goods are transported by defaulters their goods under transport are detained and released only on clearance of arrears of tax, recovery of which is not stayed by any authority or Court or on such dealer making arrangements for timely payment of arrears of tax to the satisfaction of the Department. We direct the Commissioner to issue appropriate instructions in this regard to the Assessing Officers and also to the Check Post Authorities.
6. So far as the goods under transport in this case is concerned, prima facie, we feel the commodity brought is not for sale but is capital goods for installation in the factory which is a matter which the Assessing Officer/Check Post authorities or departmental officials can verify after release of goods. Considering the contentions raised by the appellants we allow the writ appeal by modifying the judgment of the learned Single Judge as follows.
7. The appellant will furnish a post dated Cheque drawn on a local Branch of a Nationalized Bank for Rs.10 lakhs in favour of their Assessing Officer towards arrears of tax. The balance will be paid in six equal monthly installments. On furnishing cheque and a simple Bond without surety for the security amount and undertaking to pay in installments the arrears as above by one of the Directors of the Company goods will be released to the Appellant.
8. The Assessing Officer will collect installments of arrears taking into account demand of tax as modified pursuant to the orders in appeals. As and when bond and post dated cheque is furnished the goods will be released and the file will be forwarded to the assessing officer for realising the cheque on due date and for recovering balance arrears. If the cheque is dishonoured for any reason, the assessing officer will take possession of the goods and sell the goods forthwith. The appellant will clear the arrears of tax in terms of the undertaking given in the Bond as above. The Assessing Officer will complete adjudication pursuant to detention of goods but released as above.
9. The writ petitions are disposed of directing the appellate or revisional authority to dispose of the appeals/revisions within three months from now.
10. The appellant will produce a copy of the judgment for compliance.
11. The Government Pleader will forward a copy of this judgment to the Commissioner of Commercial Tax for immediate compliance.
C.N. RAMACHANDRAN NAIR, JUDGE.
BABU MATHEW P. JOSEPH, JUDGE.