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TMI Blog2008 (9) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 transaction and hence section 29A of the KGST Act will not be attracted? 4.. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has erred in law in confirming the imposition of maximum penalty in the light of the principles of law laid down by the honourable Supreme Court and this High Court through the decisions reported in [1970] 25 STC 211 (SC) (Hindustan Steel Ltd. v. State of Orissa), reported in [1992] 85 STC 337 (P.D. Sudhi v. Intelligence Officer, Agricultural Income-tax and Sales Tax, Mattancherry), [2003] 3 KLT (SN) 56, etc.?" The revision petitioner is common in all these six revision petitions. The facts and legal issues are identical and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Hyundai Corporation, Korea. However, subsequently on the advice from Hyundai Corporation, Korea, the rejected materials were de-bonded and handed over to Universal Steel Corporation, Coimbatore. CSL, Cochin enclosed copies of the documents in proof of their explanation. For the reply made to the Check-post Notice No.183/03-04, dated September 25, 2003, CSL has also enclosed a copy of the letter of Hyundai Corporation, Korea dated May 16, 2003, authorising them to handover the rejected goods to Universal Steel Corporation. In response to the notice issued, Universal Steel Corporation appeared before the Sales Tax Officer (Enquiry) through their authorised representative on November 12, 2003 and had sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced 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 filled up their registration number in Form 27B declaration, the name of the person who has signed the declaration has not been declared in the relevant portion and the total value of the goods is also not filled up; that there was no bill of sale, deliver note, certificate of ownership, way bill, transit pass or permit issued under section 30E of the KGST Act; that the contention at the time of hearing that USC had entered into an agreement with Hyundai Corporation is not supported by documentary proof; that it is highly unlikely that USC did only a rescue operation to bail out Hyundai Corporation and that there was no financial consideration between them; that CSL cannot be considered as bailee of the goods as it is well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials 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 being transported, much less could have imposed any penalty under section 29A(4) of the Act. In aid of his submission, the learned counsel has relied on the observations made by this court in the case of K.G. Thommen v. State of Kerala [1994] KLJ (TC) 477 and E.K. Hajee Mohammed Meera Sahib & Sons v. Sales Tax Officer, II Circle, Trivandrum [1992] 86 STC 99 (Ker) and the observations made by the apex court in the case of Shahnas Trading Co. v. State of Kerala [2002] 127 STC 1. Sri Mohammed Rafiq, learned Government Advocate, ably justifies the impugned order passed by the Tribunal. To resolve the lis, in our view, firstly, we require to ascertain the exact nature of the transaction between the parties and secondly in relation to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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-bond the goods before any action Hyundai Corporation could take. De-bonding would require payment of duty and interest. 6.. Admittedly, Hyundai Corporation under some agreement with USC arranged USC to lift the rejected goods after payment of duty and interest. CSL merely obliged Hyundai Corporation in handing over the goods to the nominee of Hyundai Corporation. 7.. If CSL had taken delivery of the goods, then CSL had to pay duty and the ownership would have vested with it even after it had rejected the goods. This is not the case. CSL has not paid the duty. It merely de-bonded to facilitate Hyundai Corporation to take further action. Hyundai Corporation's action was to instruct USC to pay the duty and take delivery from CSL. The reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fact it was Hyundai Corporation who was the actual non-resident consignor of the goods. Thus form 27B tendered incorrectly states CSL as the consignor and it is not clear from the records as to who signed as consignor. One of the documents submitted by the driver of the goods vehicle is a letter of the consignee USC which states that custom duty, Central sales tax, sales tax, bond interest have been paid. This declaration is incorrect to the extent of the Central sales tax and sales tax being paid. No proof has been shown at the check-post or subsequently to any of the appellate authorities that either CST or local sales tax has been paid. The Check-post Officer while detaining the goods has correctly observed in the notices issued that the detention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Hyundai Corporation and USC, which is not available on record nor produced in this revision petition filed. The only conclusion that can be inferred from the fact that there was an agreement is that it could be an agreement for the purchase of the rejected steel. It is this agreement that pre-supposes a concluded sale and consequently, the goods were being transported with documents other than what is statutorily required under the Act. That the goods vehicle did not tender the appropriate documents has been clearly observed and detailed by the Check-post Officer and subsequently the Sales Tax Officer (Enquiry) and the Tribunal all of whom came to the same conclusion that the goods were not accompanied by the prescribed document as required under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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