Premature invocation of security barred until the statutory penalty payment period expires under the Kerala VAT scheme.

Security furnished for release of detained goods, including a bank guarantee, cannot be enforced before the expiry of the 30-day period prescribed for payment of penalty under section 47(8) of the Kerala Value Added Tax Act. Read with Rule 67(9), the statutory scheme permits adjustment or realisation from cash security, other security, or bond only after that period if the penalty remains unpaid. The provisions were construed harmoniously to apply the same time limit to released goods as to seized goods, protecting the assessee from premature invocation of the guarantee.

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Issues: Whether the security furnished by the assessee, including a bank guarantee, could be enforced before expiry of 30 days from the order imposing penalty under section 47(8) of the Kerala Value Added Tax Act, having regard to Rule 67(9) of the Kerala Value Added Tax Rules.

Analysis: Section 47 provides for detention of goods in transit and, where security is furnished, release of the goods on such security or bond. The provision further contemplates seizure only where security or bond is not furnished within the stipulated period. Rule 67(9) expressly applies where penalty is not paid within the time specified in section 47(8) and directs adjustment or realisation from cash security, other security, or bond only after that period. The provisions were read together and construed harmoniously to mean that the 30-day period is not confined to cases of seized goods alone, but governs enforcement of the security furnished for released goods as well.

Conclusion: The security and bank guarantee could not be enforced before expiry of the 30-day period specified in section 47(8); enforcement was permissible only if the penalty remained unpaid within that period, and the assessee succeeded on this issue.

Final Conclusion: The assessee was entitled to protection against premature invocation of the bank guarantee, and the order of the single judge was set aside.

Ratio Decidendi: Where the statute and rules prescribe a specific period for payment of penalty, security furnished for release of detained goods cannot be enforced until that statutory period expires.

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