Detention for suspected undervaluation upheld where prima facie evasion appears; separate valuation remedy does not bar transit detention.

Kerala HC held that check-post authorities may detain goods in transit under the Kerala General Sales Tax Act where, on a prima facie basis, undervaluation suggests an attempt to evade tax, so the detention notices under section 29-A(2) were valid. The Court further held that section 28-A, which addresses a different mechanism involving sales or purchases shown below prevailing market price, does not displace or exclude the detention power under section 29-A. The two provisions operate in separate fields, and section 28-A was not the exclusive remedy to challenge action taken for suspected undervaluation and tax evasion.

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Issues: (i) Whether the check-post authorities could detain goods under section 29-A(2) of the Kerala General Sales Tax Act, 1963, on the ground of undervaluation coupled with a suspected attempt to evade tax. (ii) Whether section 28-A of the Kerala General Sales Tax Act, 1963, was the only remedy available in such circumstances.

Issue (i): Whether the check-post authorities could detain goods under section 29-A(2) of the Kerala General Sales Tax Act, 1963, on the ground of undervaluation coupled with a suspected attempt to evade tax.

Analysis: The power under section 29-A(2) extends to detention of goods in transit where the check-post authority, on a prima facie basis, forms the view that undervaluation has been adopted with a view to evade tax. Detention is justified when undervaluation and a consequential attempt to evade tax coexist as the basis for action. The Court applied the settled position that the check-post officer is not confined to a mere document check, but may act where the material indicates possible evasion.

Conclusion: The detention notices under section 29-A(2) were valid and the challenge to them failed.

Issue (ii): Whether section 28-A of the Kerala General Sales Tax Act, 1963, was the only remedy available in such circumstances.

Analysis: Section 28-A deals with a different situation, namely cases where a dealer shows sales or purchases in accounts at prices lower than the prevailing market price and the empowered authority may purchase the goods at the statutorily prescribed higher price. That mechanism is not meant to control detention proceedings by check-post authorities under section 29-A. The Court held that the two provisions operate in different fields and section 28-A cannot displace the detention power under section 29-A.

Conclusion: Section 28-A was not the exclusive remedy and could not be invoked to negate action under section 29-A(2).

Final Conclusion: The writ appeal succeeded, the writ petition was dismissed, and the detention notices were restored with directions regarding security and further proceedings under section 29-A.

Ratio Decidendi: Where the check-post authority prima facie finds undervaluation suggesting tax evasion, detention of goods under section 29-A(2) is permissible, and section 28-A cannot be used to exclude or substitute that statutory power.

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