TMI Blog2005 (11) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... have been issued from the Canteen Stores Department, in short, CSD . Further the assessees also apprised the assessing authority that before making sales at concessional rate they had ascertained the procedures from the CSD and they were informed that CSD would be raising sales invoices in its name though registering the vehicles in the name of the defence personnel and that there is no provision in the sale letter to include the name of the canteen. Explanation given by the assessees was not satisfactory to the authorities. Hence the assessing authority issued notice under section 45A of the Kerala General Sales Tax Act, 1963 to show cause why penalty be not imposed for filing untrue and incorrect return so as to evade payment of tax. The assessees filed reply to the show cause notice which was not acceptable to the assessing authority. Later order dated June 24, 2004 was passed by the first respondent imposing a penalty of Rs. 3,54,385 under section 45A of the Kerala General Sales Tax Act. Similar order was also passed for the year 2003-04 demanding an amount of Rs. 11,16,810 being the amount of tax sought to be evaded. Aggrieved by those proceedings the assessee has approached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the counsel, are not directly kept by the canteen in its premises but all the same necessary arrangements are being made by the CSD for the sale of those items to defence personnel. Certificates issued by the CSD would show, according to the assessee, that the vehicles were sold to the defence personnel on their recommendation. Counsel submitted in effect sales were effected to CSD and therefore the assessees are entitled to get the benefit of SRO No. 1091/99. Counsel submitted that but for the certificates issued by the CSD the assessee would have collected the entire tax from the Defence personnel. Therefore, there is no question of violating the provision or filing incorrect returns and that the assessees were on the bona fide belief that they were entitled to the benefit of the abovementioned S.R.O. Referring to sections 19 and 20 of the Sale of Goods Act, 1930 counsel submitted that in effect the transfer was in favour of CSD though the certificate of sale, etc., under the Motor Vehicles Act and Rules, stood in the name of individual purchasers. Counsel placed reliance on the decision of the apex court in Agricultural Market Committee v. Shalimar Chemical Works Ltd. AIR 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de payment of tax on the due date which is an offence punishable under section 45A of the Kerala General Sales Tax Act, 1963 and therefore learned single judge is not justified in interfering with the order imposing penalty. Before we examine the rival contentions, we may refer to the relevant provisions of Notification S.R.O. No. 1091/99. State Government have issued S.R.O. No. 1091/99 in exercise of the powers conferred under section 10(1) of the Kerala General Sales Tax Act, 1963, and hence it is a statutory notification. It is trite that exemption notification has to be interpreted strictly. Relevant entry of Schedule III reads as follows: Schedule III Persons or organisations, the rate of tax on the sale of goods to whom is reduced under sub-clause (3) of clause 1. Sl. No. Description of person/organization Description of goods Reduced rate of tax (per cent) 6. Military, Naval, Air force NCC canteens and Canteen Stores Department Any goods Half of the rate of the tax applicable to such goods. Column 2 of Schedule III specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of tax as per SRO No. 1091/99. We may also refer to the relevant provisions of the Motor Vehicles Act and Rules. As per rule 47(a) and (d) of the Motor Vehicles Rules, application for registration of a motor vehicle shall be accompanied with the sale certificate in form 21 which gives details of real purchase of the vehicles. Sale certificates would show that the sales have been effected not to CSD but in the name of individuals. No delivery of vehicle has been effected to CSD. Registration Certificates reveal that no sale has been effected in favour of CSD. In view of the above mentioned circumstances, we are in agreement with the Revenue that unless and until it is shown that the assessees have sold vehicles to CSD and certificate to that effect is produced they are not entitled to get the benefit of SRO No. 1091/99. Certificate produced from the Canteen Stores Department would not show that they have purchased any vehicle from the assessee. The argument that in fact vehicles were purchased by the Canteen Stores Department on behalf of the individuals is also far-fetched and if that be so it should be reflected in the records. Documents produced would not show that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally and on a consideration of all the relevant circumstances. The court also held as follows (page 214): Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the 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. The apex court in Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax [1980] 45 STC 197; AIR 1980 SC 346 held that where the assessee does not include a particular item in the taxable turnover under a bona fide belief that he is not liable so to include it, it will not be right to condemn the return as a false return inviting imposition of penalty. Reference may also be made to the decision of the apex court in E.I.D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes [2000] 117 STC 457; [2000] 2 SCC 321 wherein the court interfered with the facts and imposition of penalty on the ground that the assessee had not acted in defiance of law or that the assessee was dishonest or that it had failed to adher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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