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2016 Supreme(Online)(KER) 33324
HIGH COURT OF KERALA
A.M.SHAFFIQUE, J
K MARI – Appellant
Versus
INTELLIGENCE OFFICER Advocate - GOVERNMENT PLEADER GOVERNMENT PLEADER – Respondent
WRIT PETITION (CIVIL) 22728/2014
The imposition of penalties requires substantial evidence, and discrepancies in documentation must not unjustly penalize parties if other evidence supports their claims.
Headnote:
Penalty - Vehicle Seizure - KVAT Act - Sections 6(9), 46, 47(6) - The court evaluated the imposition of a penalty for vehicle seizure focusing on the validity of an agreement and the burden of proof concerning tax evasion, ultimately reducing the penalty imposed.
Fact of the Case:
The petitioner challenged a penalty order regarding the seizure of an excavator he used in quarrying operations, arguing that the vehicle was hired legally, despite discrepancies in documentation.
Finding of the Court:
The court recognized defects in the Intelligence Officer's assessment, specifically the failure to consider evidentiary materials regarding the vehicle’s hire, warranting a reduction in the imposed penalty.
Issues: Whether the imposition of a penalty for alleged tax evasion was justified based on the available documentation and circumstances surrounding the vehicle's operation in Kerala.
Ratio Decidendi: The court established that the burden of proof rests on the owner to demonstrate the legitimacy of vehicle use, and discrepancies in documentation must be substantively evaluated rather than solely contributing to penalty imposition.
Final Decision: The court modified the penalty from Rs.7,08,470/- to Rs.1,00,000/- and ordered the vehicle's release upon payment.
J U D G M E N T
This writ petition is filed challenging Ext.P6, an order passed by the Intelligence Officer, by which penalty had been imposed on the petitioner calling upon him to remit an amount of Rs.7,08,470/-. Petitioner is also informed that if the amount is not deposited, the vehicle will be sold in public auction and the sale proceeds will be remitted to the State Exchequer.
2. The facts involved in the writ petition would disclose that the petitioner, purchased an excavator purchased in June 2013 by availing loan facility from the financier M/s.Bajaj Finserv. His monthly obligation was to pay an amount of Rs.56,096/- to the financier. According to the petitioner, the vehicle was brought to State of Kerala, on hire for the purpose of quarrying operation of one Sri.Kumar, who had a valid permit during the relevant time. The vehicle was seized by the officers of the Department when it was noticed that the vehicle was not declared in any of the check post in the State of Kerala and no documents were produced to show that the Excavator was taken on hire by the said Kumar.
The detention order was passed calling upon him to remit an amount of Rs.7,08,470/-. The petitioner could not remit the said amount and therefore the vehicle remained in the custody of the Department. The Intelligence Officer imposed a penalty of Rs.7,08470/- after conducting enquiry. The matter was carried in appeal which came to be confirmed and the Tribunal set aside the order and observed that the vehicle had to be returned back and no penalty can be imposed. The Tribunal apparently relied upon an agreement executed between the petitioner and the said Kumar by which permission was granted to operate the Excavator in the quarry of the said Kumar.
3. The State preferred O.T (Rev) No.25/2014 before this Court and this Court, having set aside the order passed by the Tribunal, remitted the matter back to the Intelligence Officer to consider the evidence adduced in the matter and to take a proper decision. Pursuant to the same, the Intelligence Officer again passed Ext.P6 order imposing penalty of Rs.7,08,470/-. The Intelligence Officer observed that though an agreement was produced, it was noticed that the stamp paper was purchased only on 03/07/2013, but the date of agreement was shown as
25/06/2013. It was observed that this arrangement was made to meet the allegations raised in Form No.17A.
4. Learned counsel for the petitioner would submit that there is no reason for the petitioner to bring a brand new vehicle to State of Kerala for re-sale. If the intention was to sell the excavator, any purchaser in State of Kerala could have actually purchased the same in the State of Kerala itself and there is no reason why such a sale should be effected and that too, when it was hypothecated to a financier. The aforesaid Kumar was having a valid quarrying permit during the relevant time which is produced as Ext.P2 and Mr.Kumar has agreed to the fact that the excavator was brought for use in his quarry during the relevant time. The agreement prepared in a stamp paper purchased on 03/07/2013 reflects the arrangement between the parties. It was only on account of a mistake that the date was shown as 25/06/2013, which, by itself, cannot be a reason for treating the agreement as sham. The agreement reflected the arrangement between the parties and should not have been rejected by the Intelligence Officer.
5. On the other hand, the learned Government Pleader, on the basis of the counter affidavit, submits that since there were no materials worthy or credence produced before the Intelligence Officer to arrive at a conclusion that the vehicle was hired by Mr.Kumar, there was no option for the Intelligence Officer other than to arrive at a finding that the vehicle was brought for re-sale within the State of Kerala and hence there was justification on the part of the authority to have imposed penalty, which is double the amount. That apart, it is contended that the petitioner, h
