Anti-evasion vehicle detention powers upheld as a reasonable taxation safeguard, not an unconstitutional restraint on trade.

Section 29A of the Kerala General Sales Tax Act, 1963 was upheld as a valid anti-evasion measure within the incidental and ancillary powers of taxation. The Court held that interception of vehicles, detention of goods, demand of security, and seizure on default were aimed at preventing sales tax evasion and ensuring compliance with transport documentation requirements, not at authorising confiscation simpliciter. Because the section required recorded reasons, notice, hearing, and enquiry before penalty, the restriction on movement of goods was treated as a reasonable public-interest safeguard and not an arbitrary restraint. It was also held not to violate Articles 301, 304(b), 19(1)(f), or 19(1)(g).

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Issues: Whether section 29A of the Kerala General Sales Tax Act, 1963, empowering interception of vehicles, detention of goods, demand of security, seizure on default, and levy and recovery of penalty for attempted evasion of sales tax, is constitutionally valid and within legislative competence.

Analysis: The provision was examined as a measure to prevent evasion of sales tax and to enforce compliance with the document requirements accompanying transport of goods. The power to tax was treated as including incidental and ancillary powers necessary to make the levy effective, including powers to check evasion. The section was distinguished from the earlier invalidated provisions because it was not based on any assumption that all goods in transit had already been sold within the State, and it did not authorise confiscation simpliciter. Instead, it required recorded reasons, notice, opportunity of hearing, enquiry before penalty, and only then permitted seizure if security was not furnished. The restriction on movement of goods was held to have a direct nexus with prevention of tax evasion and to operate as a reasonable safeguard in the public interest, not as an excessive or arbitrary restraint. The possibility of abuse by subordinate officers was held insufficient to invalidate the provision itself.

Conclusion: Section 29A was held to be constitutionally valid and within the incidental and ancillary powers of taxation. It was also held not to violate Articles 301, 304(b), 19(1)(f), or 19(1)(g) of the Constitution of India.

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