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2015 (11) TMI 215 - KERALA HIGH COURTConstituional validity of section 49 of the KVAT Act, 2003 - power to confiscate / detain vehicles transporting goods - irrespective of whether they were covered by a transaction of sale or purchase - preventive measures - Ultra Vires of legislative competence of the State Legislature and ultra vires articles 14, 19 and 21 of the Constitution of India - Held that:- Provisions of section 49 of the KVAT Act, which are essentially for the purposes of ensuring that there is no activity of smuggling, and thereby an attempted evasion of tax that is due under the KVAT Act, in respect of notified goods, is in the nature of a machinery provision under a legislation that is intended to levy a tax on the sale or purchase of goods. The said provision is intended to ensure that the charge is effective and that no amount, that is due under the Act, escapes an assessment to tax under the Act. Being in the nature of a machinery provision that is intended to further the objects of main enactment, the provision itself has to be seen as one that is incidental or ancillary to the power of the State Legislature to enact a legislation for levy of tax on sale or purchase of goods. The challenge against the validity of the said provision on this ground must necessarily fail. Provisions of section 49 of the KVAT Act, cannot be struck down as unreasonable, arbitrary or violative of article 301 of the Constitution of India. The provision provides ample safeguards for ensuring compliance with the rules of natural justice and also ensures that the person proceeded against is given ample opportunity to show cause against the proposed detention and subsequent confiscation. The defects that had been pointed out in the erstwhile provisions of section 30C of the KGST Act were removed by the Legislature while enacting the new provision under section 49 of the KVAT Act. The prescription with regard to the value of the goods, for the purposes of attracting the definition of smuggling, has also been provided under rule 66 of the KVAT Rules. In that view of the matter, when the scheme envisaged in section 49 of the KVAT Act is considered in its entirety, it cannot be said that it falls foul of the Constitutional provisions for holding it to be invalid and unconstitutional. The challenge against the constitutional validity of the said provision, therefore, fails and is repelled. - Decided against assessee.
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