SHAJI C VARKEY Vs. ASSISTANT COMMISSIONER

JUDGEMENT

(1.) PETITIONER is a dealer in rubber. He is registered on the files of the first respondent ever since the business started in 1983. The second respondent is the Intelligence Inspector, Sales Tax Intelligence Office, Alleppey. On March 5, 1996 at about 23. 30 hours, the second respondent detained a lorry carrying 9,000 kgs. of raw rubber despatched by the petitioner from Kottayam to Calcutta. The transport was through M/s. Ajantha Transport Co. (P) Ltd. The goods were accompanied by the essential documents. But, the second respondent detained the goods and issued exhibit P7 notice under section 29a of the Kerala General Sales Tax Act (hereinafter referred to as "the Act" ). The grounds for detention are : (1) The date noted in the delivery note is March 1, 1996 and the reason for delay in despatch is not explained. (2) Though the goods were consigned from Kottayam to Calcutta, the vehicle was intercepted at Podiyedi on the way to Kayamkulam and the change of route was not explained. Hence evasion was suspected.

(2.) ON receipt of exhibit P7, petitioner got release of the goods on executing bank guarantee for an amount of Rs. 1,03,216. Subsequently, the petitioner filed objection to the notice. He was also heard by the third respondent. The petitioner thereafter received exhibit P20 - a communication from the Bank of Baroda, Kottayam (the bank guarantee was given on behalf of the petitioner though the Bank of Baroda ). In exhibit P20 it was stated that the beneficiaries of the bank guarantee have invoked the guarantee and claimed the guarantee amount as per the communication dated June 15, 1996. It was further stated that as per the terms of the guarantee they were settling the claim for Rs. 1,03,216. Exhibit P21 is the copy of the communication sent by the second respondent to the Manager, Bank of Baroda, wherein he had demanded for the encashment of the bank guarantee. Petitioner submits that the second respondent has not communicated any order imposing penalty and it was without communicating such an order, the bank guarantee has been enforced. Hence the original petition was filed challenging exhibit P7 as well as the encashment of the bank guarantee without communicating the order of penalty. The petitioner also contended that the imposition of penalty was itself without any basis as there was no evasion or attempt to evade tax.

(3.) UNDER the proviso to section 29a (2) of the Act the officer may allow the goods to be transported on the owner of the goods or his representative or the driver or other person in-charge of the vehicle or vessel executing a bond with or without sureties for securing the amount due as security. Thereafter, the officer detaining the goods has to enquire about the question whether there has been attempt to evade tax. UNDER sub-section (4) of section 29a, after enquiry and after hearing the owner of the goods, the officer shall, by order impose on the owner of the goods a penalty not exceeding twice the amount of tax attempted to be evaded. UNDER sub-section (6), if the owner of the goods is not paying the penalty imposed, the goods seized shall be liable to be sold for the realisation of the penalty. Rule 35a of the Kerala General Sales Tax Rules deals with the procedure for inspection of goods in transit through notified areas. Sub-rule (6) of rule 35a states as follows : " Where the penalty is not paid as provided in sub-rule (5) within the time specified in sub-section (6), (a) if cash security has been furnished or when the goods seized have been sold under sub-section (10) of section 29a and the amount deposited in Government treasury, the officer authorised under sub-section (3) of section 29a shall adjust the amount towards the penalty imposed and the expenses and incidental charges to be recovered and refund the excess if any; (b) if any other security or a bond has been furnished, the officer shall take steps to realise the amount of penalty imposed from the security or the surety and adjust the same towards the penalty and expenses and incidental charges. "