IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER THURSDAY, THE 12TH JUNE 2008 / 22ND JYAISHTA 1930 S.T.Rev.No.81 of 2004 ------------------------------------ T.A.196/2002 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, THIRUVANANTHAPURAM - ORDER DATED 10.06.2003, [ASSESSMENT YEAR 1998-99 (KGST)] .................... PETITIONER/APPELLANT IN T.A./ASSESSEE:- ------------------------------------------------------------------ M/S. SOUTHERN REFINEREIS LTD., KOWDIAR P.O., THIRUVANANTHAPURAM, REPRESENTED BY ITS FINANCE MANAGER, MR. J. SREEKUMAR. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.ANIL D. NAIR SMT.PRIYA MAHESH SMT.PRIYA MANJOORAN RESPONDENT/RESPONDENT IN T.A./REVENUE:- ------------------------------------------------------------------------ STATE OF KERALA. BY SPECIAL GOVERNMENT PLEADER (TAXES ) SRI.VINOD CHANDRAN. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 12/06/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.DATTU, C.J. & A.K. BASHEER, J. ------------------------------------------ S.T.Rev.No.81 of 2004 ------------------------------------------ Dated, this the 12th day of June, 2008 ORDER H.L.Dattu, C.J. M/s.Southern Refineries Limited, Thiruvananthapuram is a company incorporated under the provisions of the Companies Act. It is also a registered dealer under the provisions of the Kerala General Sales Tax Act, 1963 ('KGST Act' for short) and the Central Sales Tax Act (“CST Act” for short). In this revision petition we are primarily concerned with the levy of penalty by the Sales Tax Officer (Enquiry), Thiruvananthapuram dated 29.1.2000. The said order is also confirmed by the first appellate authority and the Appellate Tribunal. 2. The brief facts are: The Sales Tax Inspector in charge of the Sales Tax Check Post, Amaravila, while checking the goods vehicle bearing Registration No.KL01 L 8182 on 9.12.1998 found that lubricating oil worth Rs.49975/- being transported from Thrissur to Parasala was not supported by proper and genuine documents as prescribed under Section 29(2) of the Act. The Check Post authority suspecting an attempt to evade payment of tax by the person in charge of the goods vehicle/owner of the goods, had detained the vehicle, and after accepting the security deposit offered by the petitioner by way of bank guarantee, had released the goods. S.T.Rev.No.81 of 2004 2 3. At the time of inspection, the check Post authority had noticed the following discrepancies. They are as under: “1. Description of goods were not noted in the duplicate copy of the delivery note produced. 2. The date noted in the transporting copy of the delivery note is not the carbon impression, but written subsequently. 3. The consignment to which they are consigned is not seen entered in the delivery note. 4. The name and date have not been entered under the signature of the consignor.” 4. Subsequent to the checking of the aforesaid vehicle and releasing the goods after accepting bank guarantee, the Sales Tax Inspector had forwarded the records pertaining to the instant case to the Sales Tax Officer to make enquiries as envisaged under Section 29A(4) of the Act. The Enquiry Officer had issued notice to the petitioner asking him to appear before him along with books of accounts, etc. 5. Before the Enquiry Officer, the representative of the assessee had raised two contentions. Firstly, the consignor had sent the goods to the consignee at Thrissur and since the goods were not in conformity with the purchase order, the same had to be returned to the consignor by the consignee. In order to facilitate transportation of the goods by the consignee to the consignor, the consignor had sent the delivery notes by filling up all the other S.T.Rev.No.81 of 2004 3 columns except the columns relating to the date of transportation, name of the driver and the vehicle number. It was further contended that since the assessee is not exigible for payment of sales tax, even assuming that certain omissions are found in the delivery note, there is no attempt to evade payment of tax. 6. The Enquiry Officer after taking note of the discrepancies pointed out by the Sales Tax Inspector and the contentions canvassed by the representative of the assessee, has rejected the contentions of the assessee and has proceeded to pass the order dated 29.1.2000 imposing a penalty of Rs.14993/-. For doing so, the Sales Tax Officer in his order has observed as under: “I have examined these contentions with regard to the documents available in the OR file and subsequently produced by the owner of the goods. The Duplicate copy of the Delivery note accompanied with transported goods does not contain the description of goods. Hence it cannot be said that it relate to the transport of goods in question. As per the delivery note the goods were seen transported from Kowdiar to Parasala, but in the letter dated 10.12.98 the accounts Manager of the company had stated that the same was returned from Thrissur by M/s.RM Co. Agencies, Thrissur, which are contradictory. The date and the nature of transaction noted in the transporting copy of the delivery note is not the carbon impression but written subsequently. All these can be taken as wilful S.T.Rev.No.81 of 2004 4 acts on the part of the owner of the goods with a view to evade payment of tax. The contention of the owner of the goods that they are exempted from Sales tax is not correct. They are only exempted from payment of tax as certain conditions but not exempted from the liability of tax under section 5 of the Act. In this case attempt of evasion of tax is with a view to keep the amount of tax due, below the maximum limit fixed for exemption. Further, the authorised representative failed to produce the books of accounts to substantiate their conditions. In the circumstances stated above, I am convinced that there is clear attempt at evasion of tax in this case. ORDER OR.3166/98-99 DTD: 29.1.2000 In the circumstances explained above evasion of tax is proved and I impose a penalty of Rs.14993/- (Rs.Fourteen thousand nine hundred and ninety three only) on M/s.Southern Refineries Ltd., Trivandrum in exercise of the powers conferred on me under section 29A(4) of the KGST Act 1963. The security deposit collected by the Sales Tax Inspector, Sales Tax Check Post, Amaravila by way of Bank Guarantee No.36/98-99 dt.10.12.98 is adjusted towards the penalty imposed. The Manager, State Bank of Travancore, Trivandrum Branch shall remit the penalty amount either into the Government Treasury or by a D.D. In favour of the Sales Tax Officer, Ist Circle, S.T.Rev.No.81 of 2004 5 Thiruvananthapuram within 7 days of receipt of this order”. 7. Being aggrieved by the order passed by the Sales Tax Officer, the assessee had filed first appeal before the Appellate Assistant Commissioner, Commercial Taxes, Thiruvananthapuram and the same was registered as S.T.A.No.84 of 2000. The first appellate authority has concurred with the finding of the Enquiry Officer and accordingly by his order dated 20.12.2001 has rejected the assessee's appeal. While doing so, the first appellate authority in its order has observed as under: “The case was subsequently enquired into by the Salestax Officer (Enquiry), Thiruvananthapuram who having observed that there existed attempt of evasion of tax has imposed a penalty of Rs.14,993 on the appellant under Section 29A(4) of the KGST Act. The Salestax Officer (Enquiry) during the course of the enquiry proceedings has observed that the documents produced in support of the goods under transport was not related to the goods under transport and the copies of the delivery note produced in support of the goods under transport were not the one drafted simultaneously. The case of the appellant in appeal is that the goods in question were originally sold to M/s.R.M.Co., Agencies, Trissur, who returned the goods for the reason that the same does not confirm to their requirements. Also contended that the S.T.Rev.No.81 of 2004 6 appellant were returning the goods as requested by the purchaser and as that there exist no attempt of evasion of tax. In support of the contention raised the learned representative at the time of hearing has produced before me copies of the Journal voucher No.509 dated 15.12.'98. I have evaluated the materials available before me. When considering the fact that the transaction in question occurred on 9.12.'98 and the said transaction was brought to book only on 15.12.'98 indicate that the documents now produced before me were not the one maintained in the ordinary course of business. The above irregularities noted coupled with the defects notice in the documents produced in support of the goods under transport indicate that there was attempt of evasion of tax in this case on the part of the appellant. I therefore find no reason for interference on the findings of the Enquiry Officer in this case. The appeal filed by the appellant therefore fails and hence stands dismissed devoid of merit”. 8. Since the assessee did not get any relief in the hands of the first appellate authority, he was constrained to file second appeal before the Sales Tax Appellate Tribunal, Thiruvananthapuram in Appeal No.196 of 2002. Even before the Tribunal, the learned representative appearing for the S.T.Rev.No.81 of 2004 7 assessee had contended that the goods in question were originally sold to the consignee/M/s.Rm.Co. Agencies, Thrissur, who returned the goods for the reason that the same did not conform to its requirement. Further, it was contended that the petitioner had sent the duplicate forms to the consignee to facilitate him to return the unwanted goods, and thirdly, it was the omission on the part of the clerk in the concerned office that certain columns had not been filled up properly in the delivery note and lastly, since the petitioner is not exigible to pay tax under the Act, the Enquiry Officer could not have presumed that the petitioner is attempting to evade payment of tax due to the State. 9. The Tribunal after careful consideration of the contentions canvassed, has rejected the assessee's appeal and while doing so the Tribunal has observed as under: “The duplicate copy of delivery note accompanying the transport was not properly filled up. Description of goods, name and date with the signature of the consignor etc. are not noted in the duplicate copy of the delivery note. Similarly date in the duplicate copy is not carbon impression but written subsequently. The purpose of delivery note in form 26 is to verify the genuineness of the transport. The argument of the appellant is that the required details were not given in the delivery note as the appellant was not aware as to when he could take delivery of the goods from Thrissur. The claim is that S.T.Rev.No.81 of 2004 8 these goods were returned as requested by the purchaser for the reason that the same does not confirm to their requirements. The defects in the documents show that the delivery note is not filled up properly. The explanation to that respect is not convincing. The Enquiry Officer has established an attempt of evasion and hence the conversion of security to penalty is according to law and facts. In the circumstance no interference is called for and the appeal stands dismissed”. 10. The assessee being aggrieved by the concurrent findings on facts by the Enquiry Officer, the first appellate authority and the Tribunal, is before us in this tax revision case filed under Section 41 of the Act. The assessee has raised the following three questions of law for our consideration and decision. They are as under: “i) Whether on the facts and circumstances of the case, the Hon'ble Appellate Tribunal was right in upholding the levy of penalty under Section 29A(4) of the KGST Act? ii) In the facts and circumstances of the case ought not the tribunal have held that the transaction is a stock transfer and that there was no element of sale? iii) In the facts and circumstances of the case ought not the tribunal have held that since there is no sale involved, there could be no attempt of evasion of tax and therefore the levy of penalty is unjustified? S.T.Rev.No.81 of 2004 9 11. Sri.Anil D.Nair, learned counsel appearing for the assessee, as usual very vehemently would contend before us, that, the consignee was returning the goods to the consignor and therefore, the consignor had sent delivery notes to the consignee in triplicate and since transportation of the goods was being accompanied by the delivery note, there was no reason for the Enquiry Officer to have come to the conclusion that there is attempted evasion of tax by the assessee. It is further contended by the learned counsel, that, the transaction in question is only in the nature of stock transfer and therefore, there is no element of sale and therefore, penalty could not have been imposed by the Enquiry Officer and could not have been sustained by the first appellate authority as well as by the Appellate Tribunal. 12. Sri.Vinod Chandran, learned Special Government Pleader (Taxes) has produced the records maintained by the Enquiry Officer and further would argue that the entries in the delivery note are suspicious and therefore, the only inference that could be drawn by the Enquiry Officer is that there is an attempted evasion of tax by the assessee. In support of the aforesaid submission, learned counsel would draw our attention to the entries made in the original of the delivery note, vis-a-vis, with the duplicate and triplicate copies of the delivery note. He would further contend that the assessee is a company incorporated under the provisions of the Companies Act and further S.T.Rev.No.81 of 2004 10 it is a prudent businessman and it is unimaginative that such a company while returning the goods to the consignor would not use carbon sheet while filling up the delivery note. He would further submit that in the original delivery note there is an entry with regard to the nature of goods that were sent back by the consignee to the consignor, namely 'PREMIUM 20W50 (LUBRICATING OIL)' and the same is not reflected either in the duplicate or triplicate copies of the delivery note. Secondly, it is stated that the entries in duplicate or triplicate copy in so far as the date, number of vehicle and name of driver is concerned, the same has been written in ink and further that no prudent businessman would fill up those columns separately with a pen. Lastly, the learned counsel would submit that the attempted evasion of tax by the assessee is only with a view to keep the amount of tax due below the maximum limit fixed for exemption and therefore, by manipulation of the delivery note, there is every possibility of the assessee to evade payment of tax due to the State. 13. We have carefully perused the records produced by the learned Government Pleader with specific reference to the original delivery note and duplicate of the delivery note which was produced at the time of inspection of the vehicle by the Intelligence Officer of the Department. The Intelligence Officer when he checked the vehicle at the Check Post had specifically noted four discrepancies in the delivery note submitted at the Check Post. One was S.T.Rev.No.81 of 2004 11 with regard to non-mention of description of the goods in the duplicate copy of the delivery note produced; the date noted in the transporting copy of the delivery note is not the carbon impression but written subsequently; the consignment to which they are consigned is not seen entered in the delivery note; and the name and date have not been entered under the signature of the consignor. 14. Sub-section (2) of Section 29 of the Act envisages that no person shall transport within the State across or beyond the notified area any consignment of goods exceeding such quantity or value as may be prescribed by any vehicle or vessel, unless he is in possession of (a) either a bill of sale or delivery note or way bill or certificate of ownership containing such particulars as may be prescribed, and (b) a declaration in such form and containing such particulars as may be prescribed when the vehicle or vessel enters or leaves the State limits. Explanation appended to sub-section (2) of Section 29 of the Act need not be noticed by us. 15. Clause (a) of sub-rule (13) of Rule 35 of the Kerala General Sales Tax Rules, 1963 ('the Rules' for short) provides that the bill of sale referred to in sub-rule (2) shall contain the particulars specified in sub-rule (11) of Rule 32. Clause (b) of sub-rule (13) of Rule 35 provides for the particulars required in a delivery note and it says the same shall be in Form 26 and the delivery S.T.Rev.No.81 of 2004 12 note shall be deemed to be a way bill for the purpose of sub-rule (2) and sub- section (2) of Section 29 of the Act. Form 26 contains the details required to be mentioned by the person transporting the goods. The Form so provided specifically requires the description of the goods to be mentioned, the date, name of the driver and the vehicle in which the goods are transported require to be noticed. If for any reason, if the columns as required under the delivery note are not properly filled up by the consignor or the person transporting the goods and if the explanation offered by the person in charge of the goods vehicle or the owner of the goods vehicle is not satisfactory, the Enquiry Officer can presume that there is an attempt to evade payment of tax due to the State. In the instant case, as we have already noticed, the duplicate delivery note produced by the person in charge of the goods vehicle did not contain the details as required under the Rules and the Form prescribed. A perusal of the original delivery note, the duplicate and the triplicate copies of the same, which are available in the records would clearly demonstrate that these documents are manipulated at some stage by some person, either by the consignee, or by the consignor or by the person who was in possession of those documents. Keeping in view, the manipulation of the records and the prescribed documents under the Act and the Rules, and further being of the opinion that the dealer attempted to evade payment of tax due to the State, the Enquiry Officer has S.T.Rev.No.81 of 2004 13 imposed a meagre penalty of Rs.14993/-. The contention that the State Government was not entitled to recover tax is not relevant because the impugned order levied penalty for violation of the statutory provisions regarding carrying the necessary documents and not tax which is distinct from penalty. As we have already indicated earlier, all the authorities under the Act have concurrently held that there was an attempt to evade payment of tax due to the State by the assessee. 16. Sri.Anil D.Nair, learned counsel for the assessee, would further contend that since the petitioner was enjoying the exemption from payment of tax due under the Act, there was no reason for him to manipulate the documents to evade any tax liability under the Act. This argument of the learned counsel though looks attractive at the first blush, on a deeper consideration, it has no merit. As observed by the Enquiry Officer attempted evasion is only for the purpose of keeping the amount of tax below the maximum limit fixed for exemption. Therefore, even this submission of the learned counsel, in our opinion, has no merit whatsoever. A revision under Section 41 of the Act would lie only on the ground that the Appellate Tribunal had either decided erroneously or failed to decide a question of law. The Tribunal in this case, has considered the entire facts and circumstances and has arrived at the finding that the petitioner had deliberately attempted to evade the payment of tax due to the S.T.Rev.No.81 of 2004 14 State and that the Enquiry Officer had clearly established a case for imposition of penalty under Section 29A(4) of the Act. These are all pure findings of fact. These findings arrived at by the Tribunal cannot be said to be illegal, unreasonable or erroneous. 17. In view of the above discussion, we are of the opinion, that the questions of law framed by the assessee require to be answered against the assessee and in favour of the Revenue. Accordingly, while rejecting the revision petition, we affirm the orders passed by the Tribunal and the authorities under the Act. 18. I.A.No.2405 of 2004 is closed. Ordered accordingly. (H.L. DATTU) CHIEF JUSTICE (A.K. BASHEER) JUDGE vns/dk.