IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN WEDNESDAY, THE 21ST OCTOBER 2009 / 29TH ASWINA 1931 ST.Rev..No. 177 of 2009() ------------------------- TA.202/2008 of S.T.A.T.ADDL.BENCH,TVM. .................... REVISION PETITIONER --------------------------------------- STATE OF KERALA REPRESENTED BY JOINT COMMISSIONER (LAW) COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER SRI. MOHAMMED RAFFIQ RESPONDENT(S): --------------- SMT.DHANOOJA GOPALAKRISHNAN RANGANATH FUELS, KADAKKAL. ADV. SRI.V.CHITAMBARESH, SENIOR ADVOCATE FOR R1 SRI.T.C.SURESH MENON FOR R1 SRI.JIBU P THOMAS FOR R1 SRI.P.S.APPU FOR R1 SRI.A.R.NIMOD FOR R1 SRI.C.A.ANOOP FOR R1 THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 21/10/2009, ALONG WITH STRV 179 OF 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- S. T. Rev.Nos. 177 & 179 OF 2009 -------------------------------------------- Dated this the 21st day of October, 2009 JUDGMENT Ramachandran Nair, J. Connected revisions filed by the State arise from the orders of the Tribunal disposing of penalty appeal and assessment appeal, both pertain to the respondent for the assessment year 2005-06. Respondent is a lady engaged in retail sale of petrol and diesel at Kadakkal and the retail outlet was granted by ESSAR. It is seen that products, namely, motor spirit (petrol) and diesel (HSD) are substantially brought from outside Kerala and balance is sourced in Kerala. For the quantity brought from outside Kerala, respondent is remitting tax on first sale and for the quantity purchased in Kerala respondent has been exempted on second sales. On 21.12.2005 at around 3.45 A.M. a tanker load of diesel and petrol transported in the truck owned by the respondent's husband was detained at Kottarakkara for the reason that transport was without any documents prescribed under the KGST Act and Rules. Even though respondent produced purchase bills from various petrol 2 bunks before the Enquiry Officer, he rejected the same as the driver had given a contrary statement at the time of seizure of goods that the goods were lifted from IOC depot at Irumbanam. Consequently, penalty was levied for attempt of evasion of tax in respect of transport of one truck load of diesel and petrol under Section 29A(4) of the KGST Act. Penalty levied at double the amount of tax is Rs. 2,12,390/-. Even though first appeal against penalty order was dismissed, the Tribunal after holding that there is no attempt of evasion of payment of tax still retained the penalty of Rs. 10000/- for the reason that transport was not accompanied by any documents. It is against this order of the Tribunal that the State has come up with ST Rev. 177 of 2009. Connected revision, ST Rev. 179/2009 is against the order of the Tribunal cancelling the addition made in the assessment on account of penalty levied in the connected case for the very same year. We have heard Government Pleader appearing for the revision petitioner and counsel appearing for the respondent. 2. We are of the view that Enquiry Officer was perfectly justified in rejecting the purchase bills produced by the respondent for the goods transported as bogus for more than one reason. In the first place, the driver at the time of detention of goods gave a voluntary statement 3 stating that the goods were lifted from the IOC godown at Irumbanam. On departmental enquiry, the IOC officials confirmed that on the previous night at around 7.20 P.M. the very same truck was loaded with 8000 litres of diesel and 4000 litres of MS for transport to petrol bunk owned by one Mr. Damodaran at Fort Kochi. The place of seizure of the vehicle at 3.45 A.M. on next day is around 140 KMs. away from IOC depot, and therefore the case put forward by the driver appears to be quite probable and genuine. On the other hand, the purchase bills produced by the petitioner from various bunks showed that part of the items purchased was high speed petrol for which there is no storage facility in the tanker. Above all, petrol and diesel business cannot be run viably by making retail purchases from petrol bunk for sale in petrol bunk because these transactions of pumping, loading and transport will lead to handling loss and transit loss and besides this, after paying retail price no dealer selling at the same price can make any profit. Therefore we are of the view that the purchase bills obtained from various petrol bunks and produced by the respondent are bogus bills and the same were rightly rejected by the Enquiry Officer. The Tribunal's observation that the bills were not found to be bogus is therefore unacceptable. However, the Tribunal's 4 alternate finding that going by the driver's evidence confirmed by the IOC officials, there cannot be any evasion of tax because IOC has actually billed another dealer of petrol and diesel who probably allowed the respondent to purchase in their name, whether for commission or not. In other words, the transaction is purchase by the respondent from IOC in the name of another authorised dealer for sale in her petrol bunk. Since the commodity has suffered tax at the hands of IOC on first sale, there is no evasion of tax in respect of the same. Therefore the Tribunal cancelled penalty levied for attempt of evasion of tax. However, we feel that the Tribunal's order reducing the penalty of Rs. 10,000/- is also not sustainable because the Tribunal found that goods were not accompanied by any documents at the time of detention which is a violation of the provisions of the Act and Rules. Besides we feel the respondent is liable to be penalised for producing bogus bills and trying to prove the same as local purchases from petrol bunks. Therefore we feel modification of penalty is called for. However, since counsel for the respondent contended that respondent has already suffered disability on account of IOC cancelling the contract for truck transport of petroleum products by the respondent, we feel a total penalty of Rs. 25,000/- on this ground will serve the ends of justice . 5 Therefore we dispose of the Revision Petition, ST Rev. 177 of2009, filed against penalty proceedings by modifying the Tribunal's order and refixing the penalty at Rs. 25,000/- as against Rs. 10,000/- fixed by the Tribunal. 3. So far as the revision, ST REv. 179/2009, filed against the order of the tribunal cancelling the addition made in the assessment, is concerned, we find no ground to interfere with the order of the Tribunal because we have confirmed the Tribunal's order holding that the transaction which lead to levy of penalty did not really involve any evasion of tax. It is seen that turnover returned is accepted in all other respects and addition is only on account of penalty levied, which stands modified by our judgment rendered hereinabove. We therefore dismiss this S.T. Revision. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 6