M.S. Ismail, M.S. Traders, Vettillappara, Malappuram District v. Inspecting Assistant Commissioner (Intelligence), Commercial Taxes, Kozhikode; Deputy Commissioner, Commercial Taxes, Kozhikode; Commissioner of Commercial Taxes, Thiruvananthapuram; State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE ANTONY DOMINIC** ## **MONDAY, THE 14TH DAY OF JANUARY 2013/24TH POUSHA 1934** **WP(C).No. 20312 of 2009 (H) ---------------------------** **PETITIONER(S):** **-----------------------** **M.S.ISMAIL, M.S.TRADERS, VETTILAPPARA, MALAPPURAM DISTRICT.** **BY ADVS.SRI.N.MURALEEDHARAN NAIR SMT.K.HYMAVATHY** **RESPONDENT(S):** **--------------------------** **1. INSPECTING ASSISTANT COMMISSIONER (INTELLIGENCE),COMMERCIAL TAXES,KOZHIKODE.** **2. DEPUTY COMMISSIONER,COMMERCIAL TAXES, KOZHIKODE.** **3. COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM.** **4. THE STATE OF KERALA,REPRESENTED BY CHIEF SECRETARY,VIKAS BHAVAN,THIRUVANANTHAPURAM.** **R1 TO R4 BY SR.GOVERNMENT PLEADER SRI.MANOJ KUNJACHAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14-01-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Kss** ## **WPC.NO.20312/2009 H** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1: COPY OF THE PENALTY ORDER PASSED BY THE 1ST RESPONDENT DTD. 13/07/2004.** - **P2: COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT DTD.7/06/2008.** - **P3: COPY OF THE REVISION PETITION FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT DTD. 4/07/2008.** - **P4: COPY OF THE ORDER PASSED BY THE 3RD RESPONDENT DTD.23/01/2009.** **RESPONDENT'S EXHIBITS: N I L** **/TRUE COPY/** **P.A.TO JUDGE** **Kss** ## **ANTONY DOMINIC,J -------------------------------W.P.(C)No.20312 of 2009** ## **------------------------------------Dated this the 14[th] day of January, 2013** ## **JUDGMENT** Petitioner is a dealer in Rubber. According to the petitioner, in December, 2003, he sold a consignment of 10 tons of Rubber to another dealer. It is stated that as per the agreement, the petitioner was to deliver the Rubber at the Government Warehouse at Muthalamada in Palakkad District. It is stated that en-route, the intelligence Officer detained the vehicle at the 4[th] Mile. Thereafter, notice was issued under Section 30E of the KGST Act. At that stage, the petitioner filed writ petition No.38678 of 2003. On the basis of the interim order obtained in that writ petition, the petitioner furnished a bank guarantee for Rs.1,26,960/- and bond for Rs.1,94,440/-. Accordingly, the vehicle and the goods were released. Finally, by Ext.P1 order, penalty under Section 30E was levied on the petitioner and the owner of W.P.(C).No. 20312 of 2009 : 2 : the goods. That was confirmed by respondents 2 and 3 by dismissing the revisions as per Exts.P2 and P4 orders. It is thereupon that this writ petition is filed. 2. The first prayer in the writ petition is to declare Section 30E of the KGST Act, as unconstitutional. This contention is raised relying on the Apex Court judgment in the **Check Post Officer, Coimbatore v. K.P.Abdulla and Brothers[(1971) 27 STC I]** where, according to the petitioner, it has been held that the power to seize and confiscate and to levy penalty in respect of goods, which are carried in a vehicle is not incidental or ancillary to the power to levy sales tax. I am unable to accept this contention for the simple reason that after referring to the aforesaid judgment, the Apex Court in its judgment in _**Commercial Tax Officer v. Swastik Roadways [(2004)**_ **135 STC 1]** held thus: “ _The power to levy a tax includes all incidental powers to prevent the evasion_ W.P.(C).No. 20312 of 2009 : 3 : _of such tax. The powers such as the power to seize and confiscate goods in the event of evasion of tax and the power to levy penalty are meant to check tax evasion and are intended to operate as a deterrent against tax evaders and are therefore ancillary or incidental to the power to levy tax on the sale of goods and thus fall within the ambit and scope of entry 54 of List II to the Seventh Schedule to the Constitution of India.”_ From the above, it is clear that the challenge against the Section has no substance. 3. It was then contended by the petitioner that the provision has application only if the goods are smuggled into or from out of the State. According to the petitioner, he sold the goods to a dealer in the State and the goods were detained en-route. Therefore, it was argued that this was not a case of smuggling attracting Section 30E of the KGST Act. I am unable to accept this contention also. W.P.(C).No. 20312 of 2009 : 4 : 4. As already stated, according to the petitioner, the goods were to be delivered at the Muthalamada Government Warehouse. However, reading of the impugned orders show that the goods were seized near to the Tamil Nadu border. There is absolutely no explanation why the goods were taken to the border if the goods were to be delivered at Muthalamada. The fact that the goods were consigned to be taken outside the State was admitted by the driver in his statement. Although, this is sought to be explained by the petitioner as a case of mistake, the petitioner has not taken any effort to examine the driver in the penalty proceedings. That apart, the goods were transported in lorry bearing registration No. TN A1 C 5454. As per the provisions of Rule 90(7) of the Central Motor Vehicle Rules, a lorry with a national permit can transport the goods only for transportation outside the State except in the case of W.P.(C).No. 20312 of 2009 : 5 : delivery within the home State. Admittedly, the lorry in question is a national permit one and that too a Tamil Nadu registration vehicle. 5. Having regard to all these facts and in view of the concurrent findings arrived at by the original authority as also the revisional authorities, I am unable to accept the case of the petitioner that this was not a case of smuggling. 6. If that be so, the orders impugned do not call for any interference. However, the impugned orders show that penalty of Rs.1,26,960/- has been levied on the owner of the vehicle. Reading of the proviso to sub section 30E(6) shows that the maximum amount of penalty that can be levied on the owner of the vehicle in lieu of confiscation, is Rs.1,00,000/-. Therefore, the penalty levied on the owner should be limited Rs.1,00,000/-. Accordingly, I modify Exts.P1, P2 and P4 W.P.(C).No. 20312 of 2009 : 6 : limiting the penalty levied on the owner of the vehicle to Rs.1,00,000/-. Subject to the above, the writ petition stands dismissed. Sd/- **ANTONY DOMINIC, JUDGE** ln