Kerala High Court
M/S.Hygiene Medical System vs The Intelligence Inspector on 18 May, 2010
Author: P.R.Ramachandra Menon
Bench: P.R.Ramachandra Menon
IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 14812 of 2010(B)
1. M/S.HYGIENE MEDICAL SYSTEM,
... Petitioner
Vs
1. THE INTELLIGENCE INSPECTOR,
... Respondent
For Petitioner :SRI.K.J.ABRAHAM
For Respondent : No Appearance
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :18/05/2010
O R D E R
P.R. RAMACHANDRA MENON, J.
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W.P.(C) No. 14812 OF 2010
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Dated this the 18th May , 2010
J U D G M E N T
The petitioner is challenging Ext.P4 notice issued under Section 47(2) of the KVAT Act , whereby the scanning machine transported in the vehicle was detained, suspecting evasion of tax and demanding security deposit to the extent as specified therein. The case of the petitioner is that the product was brought by the petitioner from elsewhere for the purpose of demonstration and hence that there is absolutely no rhyme or reason for having the same detained stating that there was no document accompanying the goods. The learned Counsel for the petitioner also placed reliance on the contents of Ext. P3 invoice, where the purpose is clearly given under the 'Note' stating that it is only for the purpose of demonstration and not for sale.
2. The learned Government Pleader appearing for the W.P.(C) No. 14812 OF 2010 2 respondent submits that the idea and understanding of the petitioner as projected in the Writ Petition is quite wrong and misconceived. If the petitioner was desirous of performing any demonstration, specific permission ought to have been obtained and he was liable to pay the security deposit, it is submitted. Reliance is placed on Section 16(13) of the KVAT Act and Rule 17(29) of the KVAT Rules, which are extracted below:
Section 16(13) "Any dealer conducting exhibitions, exchange melas or any prize schemes for sales promotion, shall obtain a written permission from the assessing authority with whom he is registered as a dealer on payment of a fee of five hundred rupees. The assessing authority may issue such permission in such form and subject to such conditions as may be prescribed,. The dealer to whom the permission is issued shall exhibit the same at a conspicuous place where the exhibition or exchange mela or prize scheme is conducted." W.P.(C) No. 14812 OF 2010 3 Rule 17(29):
"Any dealer seeking permission under sub-
section (13) of Section 16 shall make an application to the assessing authority in form No.1C. The application shall be accompanied by a chalan receipt from a Government Treasury for the fee specified in sub-section (13) of Section 16 and consent from the owner of the premises where the exhibition, mela or other schemes are conducted . The assessing authority shall, if he is satisfied that the application is genuine and that the required fee has been remitted, issue the permission in Form No.4C."
It is further submitted that there is no case for the petitioner that the petitioner has already approached the concerned department seeking for permission in the above regard and that the petitioner was simply transporting the item without any regard to the relevant provisions of law; under which circumstance, the detention is proper and well within the four walls of the law and is not assailable under any circumstances. W.P.(C) No. 14812 OF 2010 4
3. This Court finds that there is considerable force in the above submission. That apart, it is stated by the petitioner in the opening paragraph of the Writ Petition that the petitioner is a dealer in Medical/Surgical equipments and spares including Ultrasound Scanning Machine, ECG, Colour Doppler, various types of Scanning Machines, etc. Obviously the product that was brought by the petitioner forming the subject matter of detention, as per Ext. P4, is a Scanning Machine'. But Ext. P3 invoice produced before this Court clearly shows that against Column No. III, that the item mentioned in the said 'delivery note' was a 'Colour Doppler - Model M5'. This prima facie, is a different product than the one mentioned in Ext. P4; in view of the description of the different items given by the petitioner in the opening paragraph.
4. In the above circumstance, this Court finds that the detention made by the respondents demanding security deposit suspecting evasion of tax is not liable to be interfered at the hands of this Court and that the matter requires to be adjudicated in an appropriate manner. However, this Court finds W.P.(C) No. 14812 OF 2010 5 that the item need not be detained any further and can be released to the petitioner, on condition that the petitioner satisfies the demand either by way of cash or by furnishing 'Bank Guarantee' for the amount of security deposit shown in Ext. P4. On satisfying the said requirement, the detained goods shall be released to the petitioner forthwith. This will be without prejudice to the rights of the respondents to pursue the adjudication proceedings, which exercise shall be completed in accordance with law, as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a copy of the judgment. It is also made clear that the petitioner is at liberty to cause the goods to be examined by an expert to be suggested by the departmental authorities, so as to identify the 'class' before the same is released.
The Writ Petition is disposed of.
P.R. RAMACHANDRA MENON, JUDGE.
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