TMI Blog1999 (4) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... ncessional rate of sales tax at 4 per cent by availing the benefit of section 5(7) of the Act, after filing declaration in form 18. The provisions contained in section 5(7) during the relevant time are as follows: (7) Notwithstanding anything contained in sub-section (1) or subsection (2), the tax payable by a dealer in respect of any sale of industrial raw materials or packing materials, which is liable to tax at a rate higher than four per cent, when sold to industrial units for use in the production of finished products inside the State for sale, or for packing of such finished products inside the State for sale, as the case may be, shall be at the rate of only four per cent on the taxable turnover relating to such industrial raw materials or packing materials, as the case may be: Provided that this sub-section shall not apply where the sale of such finished products is not liable to tax either under this Act or under the Central Sales Tax Act, 1956 (Central Act 74 of 1956) or when such finished products are exported out of the territory of India: Provided further that the provisions of this sub-section shall not apply to any sale unless the dealer selling the goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is made by this Act; such authority or officer may direct that such person shall pay, by way of penalty, an amount not exceeding twice the amount of sales tax or other amount evaded or sought to be evaded where it is practicable to quantify the evasion or an amount not exceeding ten thousand rupees in any other case. Explanation I.-The burden of proving that any person is not liable to the penalty under this section shall be on such person." 4. After hearing the petitioner, the assessing authority imposed twice the amount of sales tax leviable on the raw materials alleged to have evaded after holding that the imposition of maximum penalty is justified in the circumstances of the case. This was affirmed by the first revisional authority. The second revision petitions filed in respect of the assessment years involved were heard together and disposed of by exhibit P4 order by the Board of Revenue. The Board of Revenue while affirming the findings of the original authority and first revisional authority that imposition of maximum penalty is justified, correctly held that maximum penalty should be on the amount of tax sought to be evaded and not on the tax leviable on the raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds in seriatim. 6. It is not disputed that the petitioner has filed declaration in form 18 for obtaining the benefit of concessional sales tax. Only because of the declaration filed by the petitioner, the selling dealer had collected 4 per cent sales tax which resulted in non-collection of tax in full. In other words, but for the declaration, full sales tax would have been payable by the petitioner for the packing materials purchased and wrong declaration made by the petitioner resulted in loss of revenue. Under section 45A any person can be imposed with penalty. It need not be on the selling dealer alone or dealer who is liable to pay tax directly to the Government. In view of the wrong declaration only 4 per cent tax (concessional rate) was collected and paid and there is loss to the revenue. Whether the selling dealer is liable to pay penalty, etc., was considered by a Division Bench of this Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Bharat Refineries Limited [1978] 42 STC 225. Following the Supreme Court decision in Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax [1978] 41 STC 409 this Court held that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese raw materials during the period were transferred to outside the State by way of branch transfer without any liability to pay tax either under the Kerala General Sales Tax Act or under the Central Sales Tax Act. It is clearly mentioned in the declaration which was duly verified and certified as correct and complete to the best of the knowledge and belief of the authorised person of the petitioner-company that finished products are liable to tax under the Kerala General Sales Tax Act or under the Central Sales Tax Act. Since major part of the finished goods were transferred on the basis of branch transfer to other States, it was not liable to pay sales tax either under the Kerala General Sales Tax Act or under the Central Sales Tax Act, during the relevant period. 8.. The further contention of the petitioner is that even though they did not pay tax on the consignment sales, the finished goods as such are liable to tax under the Kerala General Sales Tax Act or the Central Sales Tax Act, as the case may be. Only because it was consignment transfer sales tax was not paid. In our view, this contention cannot be accepted. It is not a case where the finished goods are liable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer.......... 10.. The question to be considered is whether there is only a technical defect which resulted in loss of revenue without any mens rea on the part of the petitioner. Here, there is a definite false declaration under form 18 that finished goods will be liable to sales tax. But goods were removed on branch transfer/consignment basis making the goods not liable to pay sales tax under both the Acts. So unlike the case decided by the Supreme Court where there was no loss of revenue but only a technical breach, here there is evasion of tax and the solemn declaration filed was proved to be wrong. On the basis of the wrong declaration the selling dealer collected only 4 per cent sales tax. Petitioner-company is a public limited company with large turnover and factories and branches situated in various States in India with well-educated trained officers and emin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation I and penalty charged were also considered by the learned single Judge in the correct perspective. The learned single Judge after considering the findings had also confirmed the findings. We do not think that there is any reason to interfere with the findings of the three statutory authorities in imposing maximum penalty on the petitioner on the facts and circumstances of the case. Exhibit P4, second revisional order, correctly modified the order as the maximum amount of penalty is not on the entire tax payable on the raw materials, but only on the tax sought to be evaded. 12.. Exhibits P1 and P2 orders as modified by exhibit P4 order were correctly accepted and confirmed by the learned single Judge. In the impugned judgment learned single Judge held as follows: ...The petitioner evaded payment of tax by abusing or misusing form 18 declaration, and by transferring the manufactured goods to its branches in other States without making them subject to levy of sales tax under the Act. 12.. As regards section 45A, the interpretation given by the three departmental authorities is perfectly in accordance with the language of the section, and it should be remembered tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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