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2007 (12) TMI 425 - KERALA HIGH COURTEvasion of tax - penalty levied - sale by brand name holder - Held that:- Since goods manufactured by the petitioner were for sale only to the brand name holder, inter-State movement of goods by the petitioner to Kerala is under contract of sale and therefore sale though subsequently made is actually an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956 taxable in Tamil Nadu. The petitioner escaped CST assessment in Tamil Nadu because Tamil Nadu sales tax authorities would not have seen the contract under which goods are manufactured and sold by the petitioner. However, this is clearly a scheme of evasion of tax practised by the petitioner and the brand name holder. This is a fit case for considering penalty on the petitioner as well as on the brand name holder for attempting evasion of tax. However, on account of the officer's diligence, evasion has not taken place because he made assessment by invoking section 19B. In the circumstances, probably, the assessing officer did not consciously invoke penalty provisions against the petitioner and the third respondent. In view of the above findings, the impugned order is upheld and the original petition is dismissed as devoid of any merit.
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