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TMI Blog2018 (6) TMI 1620X X X X Extracts X X X X X X X X Extracts X X X X ..... clared and estimated at Rs. 20,63,324/-. The assessee imported the goods and was transporting it to its factory. The assessee is engaged in the manufacture of machinery and Mesto Positioner is one of the components of a machine so manufactured and then sold by the assessee. The assessee did not file Form 8F(A) under the Kerala Value Added Tax Act 2003 (for short KVAT Act only) as provided under Section 46(3)(e) of the Act. The goods were detained and assessee produced the invoice as also the Bill of Entry. The goods were released on execution of bank guarantee which later was enforced after the penalty order was affirmed by the Tribunal. The questions of law are re-framed as follows: Whether the Tribunal was right in affirming the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to consider whether there is an attempt to evade tax; which is necessary for imposition of a penalty under Section 47(3) (e). The learned Government Pleader also brought our attention to Sub section (6) of Section 47 which speaks of an attempt to evade tax due under the Act. Though the import may not be taxable by the State; the further sale of the machinery, in which the imported goods are embedded, the value of which is added to the total sale price, definitely will be taxable and on suppression of the goods so imported, the attempt to evade tax on the further sale is very glaring. 4. The learned Counsel appearing for the petitioner would rely on Sunitha Diesel Sales & Services v. State of Kerala [(1996) 102 STC 448]. Therein an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical defects of venial nature. 6. Herein there is a lack of declaration of imported goods used in manufacture, the value of which is added on to the sale price of the final manufactured product; which is taxable. The production of documents, evidencing subsequent sale of the machinery, in which the goods imported were embedded, cannot necessarily dispel the suspicion of attempt to evade tax, since the sale occurred subsequent to the detection of offense. The presumption regarding the evasion for reason of non-declaration of goods persists and it is this offense which is sought to be penalised. The further sale made cannot absolve the assessee from the liability for penalty especially when there could have been an attempt to evade tax if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown that there has been no evasion of tax on the sale of the machinery, in which the imported item was embedded. 8. On the first question of law, it cannot be said that the bill of entry before the Customs authorities would by itself negative any allegation of attempt to evade tax on sale of goods after import. The mandate to file a declaration of the import before the CTO alone would be valid intimation to the department assessing the sale of goods. The first question is answered against the assessee and in favour of the Revenue. The sale of a manufactured product subsequent to the detection of an offense relating to a component in the final product, cannot efface the suspicion of evasion of tax. The defect cannot be said to be a mere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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