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1996 Supreme(Ker) 145
Judges : V.V.KAMAT,G.SIVARAJAN
Sunitha Diesel Sales & Services - Appellant
Versus
State of Kerala - Respondent
Case No : TRC. Nos 145 & 149 of 1993
Decided On : 03/27/1996
Advocates Appeared :
K.K. Vijayaraghavan For Petitioner Government Pleader (C.K.A. Rahim) For Respondent
The main legal point established in the judgment is that the penalty under S.29A(4) of the Kerala General Sales Tax Act can only be imposed if there was an attempt to evade the tax due under the Act.
Headnote:
Kerala General Sales Tax Act - Assessment of penalty for evasion of tax - S.29A(4) - Summary of Acts and Sections: The court discussed S.29A(3) and (4) of the Kerala General Sales Tax Act, 1963, which require the party to satisfy the adjudicating authority that there is no attempt at evasion of tax by producing necessary documents. The court emphasized that the provisions of S.29A are not attracted if the transaction is an inter-State transaction or a sale in transit, and held that the penalty can only be imposed if there was an attempt to evade the tax due under the Act.
Fact of the Case:
The assessee, a distributor, was penalized for attempting to evade sales tax on the transport of goods from Pune to Pasuparai. The authorities imposed a penalty without considering the documents produced by the assessee to establish the nature of the transaction.
Finding of the Court:
The court found that the transaction was an inter-State transaction or a sale in transit, and therefore, the provisions of S.29A of the Act were not attracted. The court quashed the penalty order and directed the concerned authority to refund the penalty amount to the assessee.
Issues: The main issue was whether the penalty imposed on the assessee for attempting to evade sales tax was valid and justifiable.
Ratio Decidendi: The court held that the penalty can only be imposed if there was an attempt to evade the tax due under the Act. It emphasized that the provisions of S.29A are not attracted if the transaction is an inter-State transaction or a sale in transit.
Final Decision: The court allowed the tax revision cases, quashed the penalty order, and directed the concerned authority to refund the penalty amount to the assessee.
Sivaraj an, J.
T.R.C. No. 145 of 1993 relates to the assessment year 1989-90 in connection with the proceedings under S.29A(4) of the Kerala General Sales Tax Act, 1963. T.R.C. No. 149 of 1993 relates to the same assessment year and arises out of the assessment proceedings for the said year.
2. The assessee is the revision petitioner in both the tax revision cases. The assessee is a distributor for Kirlosker Cumine diesel engine manufactured and marketed by M/s Cumine Diesel Sales and Services (India) Ltd., Pune. The assessee received a purchase order for one engine from M/s. Highland Produce Company Ltd., Pasuparai Estate in Idukki district. The assessee in turn placed an order with M/s. Cumine Diesel Sales and Services (India) Ltd., with specific instruction to despatch the engine directly to costomers site at Pasuparai and to send the document of title to the assessee to enable them to sell the engine by transfer of document of title to the ultimate buyers. In terms of the purchase order, M/s. Cumine Diesel Sales and Service (India) Ltd., Pune, despatched the engine through Kerala Transport Company under cover of delivery note, and a certificate attached thereto showing the full value of consignment at Rs. 3.38.160.15/-
3. While the goods were moving to the designation, that is to Pasuparai in Idukki district, when the vehicle No. TCC 8986 carrying the said goods reached the sales tax checkpost, Perumannoor on April 24,1989, the Sales Tax Inspector attached to the said check post after verification of the records accompanying the transport detained the goods and issued a notice under S.29A(2) of the Kerala General Sales Tax Act, 1963, stating that the document delivery Note No. ES 04290 dt. April 19,1989-accompanying the transport is not the one as prescribed under the Act and the Rules and that the delivery note did not show the value of the goods consigned. As a condition for release of the goods, the Sales Tax Inspector demanded a sum of Rs. 1,01,700/- by way of cash security. It i s seen from the proceedings of the S ales Tax Officer (Enquiry) that the S ales Tax Inspector collected a security deposit of Rs. 67,800/-in the form of a bank guarantee from the assessee for the transport of one Kirlosker Cumine diesel engine valued at Rs. 3,390.000/- from Pune to Pasupari.
4. The Sales Tax Inspector, Sales Tax Check post, Perumannoor, subsequently forwarded the files to the Sales Tax Officer (Enquiry) attached to the office of the Deputy Commissioner, Agricultural Income Tax and Sales Tax, Ernakulam, for conducting necessary enquiries as provided under S.29A(3) of the Act. The Sales Tax Officer (Enquiry) thereafter issued notice as provided under S.29A(4) of the Act. The case was posted for hearing on July 26, 1990 and the proprietor of the assessee-firm appeared before the enquiry officer on July 26,1990 and explained the factual situation, as noted in paragraph 2 of this judgment. The proprietor also produced before the enquiry officer all the documents in support of the claim of the assessee that the transaction is a sale in transit. The enquiry officer rejected the claim of the assessee stating that the delivery note said to have been produced before the Sales Tax Inspector, Sales Tax Check Post, Perumannoor, is not the actual delivery note obtained from the department and it is printed and kept by the company itself. He further observed that it is not a valid record as contemplated under R.35(2)(a) of the Kerala General Sales Tax Rules, 1963 and that the assessee has violated the provisions of the Kerala General Sales Tax Act and Rules. The enquiry officer further stated that explanation for the non-production of invoice or sale bill at the time of interception is not convincing and mat the dealer had also foiled to prove beyond doubt mat there is no attempt to evade tax. He accordingly imposed penalty of Rs. 67,800/- under S.29A(4) of the Kerala General Sales Tax Act, 1963.
5. Aggrieved by the order-imposing pen
