K. Rajendran vs The Deputy Commissioner

P.R. Ramachandra Menon, J.—The detention of the vehicle bearing No. TN 37BS 1814 belonging to the petitioner made him to approach this Court contending that, it is unauthorised and without any factual or legal basis. It is stated that, the vehicle bearing No. TN 37BS 1814 was purchased by the petitioner from the previous owner by name P. Muthurathinam and necessary change in ownership was entered in the RC book. Earlier, the vehicle was in the registered ownership of one Azhagan in the year 2011. It was transferred to one Mr. Nagarajan and thereafter to one Shanti, from whom it was purchased by Mr. P. Muthurathinam on 2.09.2013. The petitioner became the owner of the vehicle only on 28.4.2014.

When the petitioner was transporting some goods on the strength of valid documents, the said vehicle which was being driven by the petitioner himself was intercepted by the 2nd respondent issuing Ext. P4 notice stating that the vehicle and goods will be released after obtaining clearance certificate from the Deputy Commissioner, Palakkad. Because of the detention of the vehicle, much loss and hardships were caused to the petitioner. The consignor made alternative arrangements and the goods were released by the respondents, however detaining the vehicle. The petitioner was given to understand that the vehicle was detained, also with reference to Ext. P5 Circular bearing No. 5/2013 dated 15.4.2013, because of the arrears of tax to be cleared by some of the dealers who transported the goods earlier, making use of the vehicle, now belonging to the petitioner. A copy of the relevant proceedings dated 11.2.2013 issued by the Commercial Tax Officer, first Circle, Palakkad, to the Inspecting Assistant Commissioner, Commercial Tax Check Post, Walayar has been produced as Ext. P6, referring to the transactions. Since the attempt made by the petitioner to have the vehicle released turned to be futile, he is before this Court by way of this writ petition.

Heard Smt. G. Mini, the learned counsel appearing for the petitioner and the learned Government Pleader.

A statement has been filed by the second respondent; paragraphs 2 and 3 of which read as follows:

"2. It is respectfully submitted that M/s. Sri. Amman Traders was a registered dealer on the rolls of 1st Circle, Palakkad, with TIN 32090546935. The KVATIS revealed unaccounted transactions by the said dealer, enquiries were made, in which it was found that certain third parties misusing the name and address of the consignors as well as the consignee (the assessee) have made the above said unaccounted transactions. Since the consignors and consignee denied the transactions, efforts were taken to catch hold of the owner and drivers of the vehicles. Under Section 48(4) of the KVAT Act the transporter, owner, person in charge of vehicle are jointly and severally liable to pay tax on goods transported under false, bogus documents, by email dated 01.02.2013, the commercial Taxes Check posts were informed of the vehicles involved in this case for detaining the vehicles as and when they report at the check posts. The present vehicle TN-37 BS 1814 is involved in the bogus transactions. The details of bogus consignment transported reveal that this vehicle has been used for making 76 transports involving goods valued at Rs.61,29,413.00. True copy of the details of bogus consignment transported by vehicle No. TN-37 BS 1814 is produced herewith and marked as Annexure R2(a). The vehicle was detained to conduct detailed enquiry into the bogus transactions using the vehicle.

It is submitted that no assessment has been made against any of the lorry owners and drivers since the whereabouts were not available. It is further submitted the matter has been entrusted to Inspecting Assistant Commissioner (Investigation Branch), Palakkad and reports are awaited and once they are received, assessment will be completed immediately."

Learned Government Pleader points out that, in the course of further proceedings, another notice dated 11.11.2014 was served to the petitioner asking him to submit objections, if any; a copy of which has been produced as Annexure R2(b). It is stated that no objection has been filed by the petitioner so far and that investigation is going on in respect of ''ten vehicles'' involved in bogus transactions, since the consignor and the consignee denied the transactions.

The learned counsel for the petitioner points out that, the provisions sought to be relied on by the respondents do not enable them to detain the ''empty vehicle'' belonging to the petitioner.

Section 48(4) of the Kerala Value Added Act reads as follows:--

"Section 48(4):Where any person consigns any goods or transports any goods liable to tax under this Act from another State into the State without any records as provided for under Section 46 or where the particulars furnished in the documents accompanying the goods are false or the consignor or purchaser stated therein is found to be bogus or non-existent or is not traceable or where the transporter fails to prove the bona fides of the transport, it shall be presumed that such goods have been sold in the state by the consignor or the owner of the goods or the transporter or the owner or person in charge of the vehicle or the person in charge of the goods or all of them jointly and they shall be jointly and severally liable to pay tax on such sales which shall be assessed and recovered in the manner provided in sub-section (3)."

Rule 29 of the Kerala Value Added Tax Rules, 2005 reads as follows:

"Rule 29. Submission of records by owners of the vehicles and vessels etc:--Owners of vehicles or vessels shall submit to the assessing authority having jurisdiction over the area in which the goods are delivered, copies of bill of sale, invoice, delivery-note, or certificate of ownership as the case may be with a certificate written on the back of such copies of bill of sale, invoice, delivery note, or certificate of ownership, by the person to whom the goods were delivered, to the effect that the goods as per description given were actually delivered to him and taken delivery of by him and duly signed by the purchaser/consignee or his duly authorized agent as the case may be mentioned in such bill of sale, invoice, delivery note, or certificate of ownership. Such copies of bill of sale, invoice, delivery note, or certificate of ownership along with a return in Form No. 11 shall be submitted so as to reach the assessing authority on or before the 10th day of the month following that to which they relate."

The circumstances under which an owner of the vehicle could be proceeded against could also be with reference to Section 47(3) which is in the following terms.

"Section 47(3): Where the owner, driver or person in charge of the vehicle or vessel carrying the goods detained under sub-section (2) is found in collusion for such carrying of goods, the vehicle or vessel shall also be detained and seized by the officer empowered under sub-section (1) and such vehicle or vessel shall be released only on the owner, driver or person in charge of it furnishing the security provided in sub-section (2). In case of failure to furnish the security as above, the officer detaining and seizing the vehicle shall have the power to order the vehicle or vessel being taken to the nearest Police Station or to any check post or to the office of the Commercial Tax Department for safe custody of the goods or the vehicle or the vessel or both:

Provided that where the owner, driver or person in charge of a vehicle or vessel carrying goods is found guilty of the offence under this sub-section for a second for a subsequent time, such vehicle or vessel may be detained for a period not exceeding thirty days from the date of furnishing the security."

The case of the petitioner is that, he was never the owner of the vehicle at the relevant point of time, as discernible from Ext. P1 Certificate of Registration, wherein particulars of the owners of the vehicle in whose name the registration was transferred, till it came to the hands of the petitioner, are given. There is no case for the respondents that the detention is with reference to any adverse circumstance or instance after 28.4.2014, on which day alone did the petitioner come to be the registered owner of the vehicle.

This Court had occasion to consider the scope of detention of an ''empty vehicle'' with reference to the mandate of Section 47(3) of the KVAT Act, while considering the issue projected in W.P.(C) No. 3302 of 2012. Paragraph No. 4 and the concluding paragraph of the judgment dated 13.02.2012 rendered by this Court in the said case are relevant, which are as follows:--

"4. As far as this writ petition is concerned what is under challenge is Ext. P2, notice under Section 47(2)(3) of the KVAT Act. The contention raised by the petitioner is that the aforesaid provisions of the Act does not authorize detention of empty vehicle. A reading of these provisions show that these provisions do not authorize detention of empty vehicle. In so far as the proviso to Section 47(3) relied on by the Government Pleader is concerned that proviso become applicable only in the case of an offender who has already been found guilty is again found guilty. There is no case for the respondent that the petitioner has already been found guilty and hence this proviso has no application. In such circumstances detention cannot be upheld.

Therefore without prejudice to the right of the respondent to continue the proceedings including the proceedings under Section 67 of the Act this writ petition will stand disposed of directing that on the production of a copy of the judgment vehicle in question shall be released to the petitioner."

No provision is brought to the notice of this Court from the part of the respondents to detain the petitioner''s vehicle, but for mere reference to the pendency of an enquiry or investigation. In the said circumstance, this Court finds it fit and proper to cause release of the above mentioned vehicle to the petitioner; more so, in the light of the judgment in W.P.(C). No. 3302/2012. It shall be released immediately, on execution of a simple bond without sureties and also on giving an undertaking in the form of an affidavit before the second respondent to the effect that the petitioner will co-operate with the enquiry proposed to be pursued as per the statement filed before this Court and in relation to Ext. P4 and Annexure R2(b) and further to the effect that, the petitioner will not alienate the vehicle or cause any act so as to reduce its value, without getting necessary clearance from the second respondent.

It is open for the respondents to proceed with appropriate steps against the concerned parties, who have allegedly pursued the bogus transactions forming the subject matter of Exts. P6/P6(a) and P7, including such other proceedings to the extent the petitioner''s vehicle is involved, in accordance with law, which shall be finalised at the earliest, at any rate, within ''three months''.

The petitioner shall produce a copy of the judgment along with a copy of the writ petition before the second respondent for further steps. The writ petition is disposed of.