TMI Blog2008 (9) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... sake of brevity referred to as, the Act, 1963 ), and confirmed by the Sales Tax Appellate Tribunal is called in question by the petitioner which is a partnership firm doing business in iron and steel at Coimbatore, State of Tamil Nadu. The questions of law raised for our consideration and decision is as under: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in confirming the penalty imposed considering the fact that the transaction in question is not a sale transaction and that there is no element of mens rea to attract penalty? 2.. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has erred in law in sustaining the penalty imposed under section 29A of the KGST Act upon the petitioner considering the fact that the tax liability is only on the seller and not on the purchaser even if it is presumed that the transaction in question is sale? 3.. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has erred in law in upholding the penalty imposed under section 29A of the KGST Act considering the fact that the transaction in question is inter-State trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the goods in question, customs duty, bond interest, tax both under CST and KGST Act was also paid. The Check-post Officer, after rejecting the explanation offered had estimated the value of goods and had demanded security deposit as provided under section 29A(3) of the Act. The total security deposit that was demanded was Rs. 2,17,973 and the same was paid by the assessee. As required under section 29A(4) of the Act, the Sales Tax Officer (Enquiry) issued notice giving an opportunity to both the consignee and the consignor to produce relevant documents to establish that the goods transported is in accordance with law, failing which it would be presumed that the goods are transported without valid documents with a view to evade tax and hence would pass orders and confirm penalty and that the amount paid towards security deposit would be adjusted towards penalty imposed and collected by the Check-post Officer. In response to the notices, the CSL informed that they had imported 4781.245 MT of steel from Hyundai Corporation, Korea and out of this quantity 42.027 MT of steel plates were rejected due to defects and as such, a portion of the consignment had to be returned to H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CSL. (c) That the transport was duly declared at the check-post. (d) That even assuming that the transaction is liable to be taxed, it should be levied on Hyundai Corporation. In view of the above submissions the authorised representative requested the Sales Tax Officer (Enquiry) to drop the proceedings and further to direct the Check-post Officer to refund the penalty collected in all the six cases. The Sales Tax Officer (Enquiry), after examining the submissions, has passed six separate orders corresponding to six different notices and, thereby, has confirmed the proposals made in the notice and has ordered to adjust the security deposit towards penalty imposed by him on the ground that the documents produced at the check-post were only a photostat copy of the material pass; that there was no record to show that the seller was a registered dealer under KGST/CST Acts within the State so as to prove the liability for payment of tax. Hence, the documents produced were not bona fide and hence there is an attempt to evade tax; that Form 27B was not duly filled up and that none of the documents required under the KGST Act or Rules accompanied the goods; that CSL has not fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plates. Hence the purchase is made from CSL and transported to Coimbatore without any valid documents prescribed under the KGST Act such as bill of sale, delivery note, certificate of ownership, way-bill, etc. The petitioner, being aggrieved by the common order passed in six appeals, is before us in these tax revision cases. We have already noticed the questions of law framed by the assessee for our consideration and consequent decision. We have heard Sri. V.K. Shamsudheen, the learned counsel for the petitioner and Sri Mohammed Rafiq, learned Government Advocate. We have also perused the original records produced by the learned Government Advocate. Sri Shamsudheen, learned counsel, primarily contends that since the materials were being transported with the required documents as envisaged under section 29(2) of the KGST Act, there was no occasion or reason for the authorities under the Act to levy any penalty under section 29A(4) of the Act. Secondly, since there is no finding by any of the authorities under the Act, that, there is an attempt to evade payment of tax due to the State, the authorities under the Act could not have detained the lorries in which goods were bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addressed to CSL and other correspondence and explanations offered by the authorised representative of USC the following conclusion can be deduced: 1.. That, it was at the behest of Hyundai Corporation that CSL handed over the rejected goods to USC once custom duty and interest was paid by USC. Therefore, if the rejected goods were to be the property of CSL then the question of Hyundai Corporation issuing the letter to CSL to hand over the goods to USC would not arise. 2.. Since CSL had rejected the goods it would follow that either Hyundai Corporation could ship it back to Korea or dispose it of in any manner within the country subject to duty and other levies being paid. 3.. From the records it is not known how the consideration of the quantities of rejected material was settled between CSL and Hyundai Corporation. But from the circumstances of the case, this aspect may not be relevant to this case. 4.. Once CSL rejected the material and Hyundai Corporation accepted the rejected material, it would make little difference to CSL how Hyundai Corporation disposed of the material. 5.. Since the rejected material was apparently bonded, it would be necessary for CSL to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at the hands of Hyundai Corporation and not at the hands of USC, on the grounds that CSL is the consignor. This is an incorrect appreciation of facts. If CSL were the consignor, then the CSL would be obliged to issue a bill of sale and collected the appropriate local taxes. CSL has in fact categorically stated that they are not involved in this transaction other than to deliver the goods to the nominee of Hyundai Corporation. This was not an afterthought by CSL as one of the document tendered by the goods vehicle at the check-post is a letter issued by CSL informing that they, as per the instruction of Hyundai Corporation, have delivered the rejected goods to USC. Therefore, Hyundai Corporation in giving instruction to CSL to deliver the goods has acted in the capacity of a non-resident dealer and hence had full control of the rejected goods and therefore requested CSL to deliver the goods to whomsoever they directed. The sales tax department appears to have lost sight of the fact that the Hyundai Corporation could be considered as a non-resident dealer liable for tax. The Sales Tax Officer (Enquiry) has erroneously come to the conclusion that CSL is the consignor, while in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and that the taxes due to the State were not paid and hence confirmed the penalty. The appeal before the first appellate authority is also dismissed and the Appellate Tribunal too on the nature of documents tendered found it defective and confirmed the penalty. Since, Hyundai Corporation is not a dealer in the State, the transaction would have escaped being subjected to tax had the Check-post Officer not detained the goods. The representative of USC has stated that there is an agreement between Hyundai Corporation and USC. Though the agreement is not part of the submission and part of the record, it is clear that there is some privity of contract between Hyundai Corporation and USC which resulted in USC getting delivery of the goods after they cleared the custom duty and interest. The only person who could have issued a sale bill and a valid permit under 30E is Hyundai Corporation. This aspect of Hyundai Corporation being a non-resident dealer, as mentioned earlier has been examined. The fact now remains that the goods under transport had not suffered tax in the State. From the statement of the authorised representative of USC, it is clear that there was an agreement between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt has observed that the power of the Check-post Officer under section 29A of the Kerala General Sales Tax Act, 1963, is not merely limited to verifying the documents required by sub-section (2) of section 29 to be in the possession of the person transporting the goods, but is to satisfy himself that there is no evasion of tax. The learned counsel for the petitioner has also placed reliance on the observations made by this court in the case of K.G. Thommen v. State of Kerala [1994] KLJ (TC) 477, wherein, this court has observed, that mere fact that the transport of the goods was not accompanied by proper documents by itself will not be sufficient to attract levy of penalty under section 29A(4) of the Act. It is essential that the officer should find that there has been an attempt to evade tax due under the Act and that should be based on proper material. The observations made by the learned judges in the above decision are binding on us. Secondly, we cannot have any quarrel on the proposition of law enunciated either by the apex court or by this court. In fact, while analysing the facts of this case, we have stated that the Sales Tax Officer, (Enquiry), has not just levied t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
