The presumption under Section 28-AA(4) is rebuttable, and the appellant must be given an opportunity to rebut the presumption before levy of tax and penalty.

ORDER

1. This appeal is directed against the order dated 23-6-2005 passed by the High Court of Karnataka at Bangalore in Sales Tax Revision Petition No. 32 of 2005 filed by the appellant, whereby the High Court partly allowed the petition filed by the appellant.

2. Brief facts giving rise to the filing of the present appeal, by special leave are as follows:

The appellant is a transporter engaged in transporting goods from Mangalore (Karnataka) to various destinations in the country. He is the owner of vehicle (hereinafter referred to as “the appellant”) bearing Registration No. KA-19 A-3435. The companies, namely, M/s. PAS Petro Products & M/s. Vivek Petro Chemicals Pvt. Ltd., who are registered dealers under the provisions of the Karnataka Sales Tax Act, 1957 (for short “the Act”), having their head office at Pond cherry/Chennai and branch office at Mangalore, are the consignors of the goods in question.

3. During the months of May and June 2002, the appellant had transported superior kerosene oil and naptha from Mangalore Port (stock points at Mangalore) to Pondicherry/Chennai i.e. outside the State of Karnataka, consigned by the consignors i.e. M/s. PAS Petro Products and M/s. Vivek Petro Chemicals Pvt. Ltd. on stock transfer basis.

4. According to the appellant, the goods in question were imported by the consignors into the country from abroad and formed part of their stock at Mangalore after clearance from the Mangalore Port. To reach the consignors head office, the transport vehicle has to pass through the State of Karnataka. If the vehicle has to move from Mangalore, in the normal course, it has to pass through check post at Kannur, Mangalore, which is the entry or inward check post in Karnataka and the sales tax check post at Hosur Road, Attibele or N. Vaddarahalli Check Post, Mulabagal Taluk, Kolar District, which are the exit or outward check posts.

5. The driver in charge of the aforesaid vehicle, in order to obtain a transit pass, to pass through the State while carrying imported naptha and kerosene oil, as required under Section 28-AA of the Act, submitted an application in triplicate in Form 39-AA to the officer in charge of the check post at Kannur, Mangalore, which is the entry check post in Karnataka. The check post officer, after making necessary inquiries, issued a pass on the duplicate and triplicate copies of the application to the driver in charge of the vehicle and retained the original application with him. In the transit pass so issued, the check post officer had specifically directed the vehicle to cross the check post at Hosur Road (outward), Attibele, within the time and date specified. .

6. In the instant case, the driver in charge of the vehicle appeared to have created documents as if the duplicate transit pass was surrendered at N. Vaddarahalli Check Post, Mulabagal Taluk, Kolar District, and the duplicate copy of the transit pass was received by the officer, who had issued the transit pass in an envelope affixed with postal stamps used by the general public, instead of government service postage stamp. This caused suspicion regarding the genuineness of the movement of the goods vehicle out of the State of Karnataka by crossing at N. Vaddarahalli Check Post at Mulabagal Taluk. The officer in charge of the check post at Kannur, after making necessary inquiries and letter correspondence with his counterparts at Hosur and N. Vaddarahalli Check Post and being convinced that the goods vehicle, for which transit pass had been issued, had not crossed the State borders, initiated proceedings under Sections 28-AA(4) and (5) of the Act by issuing a show-cause notice to the appellant, to show cause as to why he be not assessed to tax as contemplated under Section 28-AA(4) of the Act and visited with penalty under Section 28-AA(5) of the Act for contravention of the provisions of Section 28-AA(2) of the Act.

7. The appellant filed his reply to the show-cause notice.

8. The check post officer, after affording a reas