Provisional release of detained goods allowed on security where tax evasion allegations remained tentative and facts awaited adjudication

Goods and the vehicle detained under the Kerala Value Added Tax Act were held fit for provisional release where detention rested only on a tentative suspicion of tax evasion and the disputed factual issues, including the alleged works contract element, still required adjudication. The Court balanced release against revenue protection by directing release on furnishing security for 50% of the demanded amount by cash, bank guarantee, or immovable property, together with a simple bond without sureties for the balance. The statutory adjudication was left open to be completed in accordance with law, without prejudice to the revenue's rights.

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Issues: Whether goods and the vehicle detained under Section 47(2) of the Kerala Value Added Tax Act, 2003 should be released pending adjudication, and if so, on what conditions.

Analysis: The detention was founded on a suspicion of evasion of tax and a possible works contract element arising from the supply order and payment terms. At the same time, the Court noted that the machine had been transported as goods, the consignee was not before the Court, and the disputed factual position had to be examined in adjudication. In these circumstances, continued detention was found unnecessary, but release was balanced against the revenue interest by requiring security for part of the amount demanded.

Conclusion: The goods and vehicle were directed to be released forthwith on furnishing 50% of the demanded security by cash, bank guarantee, or immovable property and on executing a simple bond without sureties for the balance, while leaving the adjudication proceedings open.

Final Conclusion: The petitioner obtained interim release of the detained goods subject to security, and the respondent retained liberty to complete the statutory adjudication in accordance with law.

Ratio Decidendi: Where detention is based only on a tentative suspicion of evasion and the disputed factual issues require adjudication, the goods may be provisionally released on appropriate security without prejudice to the statutory proceedings.

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