IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 3RD APRIL 2008 / 14TH CHAITHRA 1930 ST.Rev..No. 111 of 2008 ------------------------- TA.477/2004 of STAT ADDL.BENCH, KOTTAYAM .................... REVISION PETITIONER/APPELLANT/ASSESSEE: ---------------------------------------------------------------------- KURUVITHADAM AGENIES(P)LTD., MOOVATTUPUZHA (REPRESENTED BY ITS DIRECTOR MATHEW GEORGE). BY ADV. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMARAN SRI.TOMY PAUL MAMPILLY RESPONDENTS/REVENUE/RESPONDENT: ----------------------------------------------------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, THIRUVANANTHAPURAM. BY SR. GOVT. PLEADER SRI. MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 03/04/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L. DATTU, C.J. & K.M. JOSEPH, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T.Rev. No.111 of 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 3rd day of April, 2008. ORDER H.L.DATTU, CJ, Assessee is a dealer registered under the provisions of Kerala General Sales Tax (“the KGST Act” for short).He is a trader in home appliances having his Head Office at Muvattupuzha. According to him he has Branch Offices and godowns at various places in and around Muvattupuzha. It is further stated that in order to keep enough stock for the Onam festival season, it appears that the petitioner had taken a temporary godown and the same was intimated to the Sales Tax authorities. This assertion is disputed by the respondents. 2.Petitioner asserts that in the regular course of business, had purchased 20 units of washing machines from M/s.Videocon International Ltd., M.G. Road, Ernakulam and stored it in the temporary godown, and while transporting 16 units of the washing machines from his temporary godown to the Showroom at Muvattupuzha, the Intelligence Wing of the Department had intercepted the petitioner's vehicle and on such interception, the person in charge of the goods vehicle or the driver did not produce the documents prescribed under Section 29 of the KGST Act. After issuing a show cause notice, the goods were released to the petitioner after receiving a sum of Rs.39,960/- from the person in charge of the goods vehicle, which is an amount, which is double the amount of tax due on the value of the goods as the security deposit. 3. The intelligence Officer, by his order dated 12.6.2003, after hearing the petitioner, has come to the conclusion that the petitioner had attempted to evade tax and accordingly has converted the security deposit offered by the petitioner as penalty. 4. Aggrieved by the order so passed by the Sales Tax Officer, the petitioner had filed an appeal before the first appellate authority. S.T.Rev.111/2008. 2 5. The first appellate authority has granted some relief to the petitioner/assessee. 6. The revenue, being aggrieved by the orders so passed by the first appellate authority, had carried the matter by way of an appeal before the Tribunal in T.A. No.477 of 2004. The Tribunal, by its order dated 17th April, 2006, has allowed revenue's appeal and thereby has confirmed the orders passed by the Sales Tax Officer. 7. The assessee, being aggrieved by the aforesaid order passed by the Tribunal, is before us in this Tax Revision Case. 8. The assessee has framed the following questions of law for our consideration and decision. They are as under: “i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in law in reversing the reasoned order of the 1st appellate authority and allowing the State Appeal without showing that the order suffers from any factual or legal infirmity? ii) Whether on the facts and in the circumstances of the case, the appellate Tribunal is justified in “presuming intention in evading tax” on the ground on non-production of the supporting delivery note at the time of transit relying on the decision in C.P.Fathima Vs. State of Kerala reported in (1998) 6 KTR 670 ignoring the re-iterated decisions of this Hon'ble Court reported in Sunitha Diesel Sales & Services Vs. State of Kerala (102 STC 448), V.Ramachandran Vs. State of Kerala (1994) 2 KTR 150 (Ker), South India Wire Ropes Ltd. v. State of Kerala (116) 4 KTR 470, 133 STC 478 (Ker), V.V. Agencies Vs. State of Kerala reported in 129 STC 56 (Ker) etc. rendered in identical situation. iii) Whether the appellate Tribunal is justified in confirming the order or imposition of penalty merely on the ground on non-production of document as per Rule 36(2) of the KGST Rules without establishing any contumacious or blame-worthy conduct on the part of the petitioner?” 9. Learned counsel appearing for the assessee, at the time of hearing of the revision petition for admission, would submit that the assessee had produced the necessary documents before the first appellate authority and therefore, the first appellate S.T.Rev.111/2008. 3 authority was justified in granting some relief to the assessee. Further, it is stated that the goods in question had already suffered tax and the petitioner is only a second dealer in the State and therefore, the Sales Tax Officer was not justified in imposing any penalty for the so-called attempted evasion of the tax due under the KGST Act. 10. Sri.Muhammed Rafiq, learned counsel appearing for the revenue, would submit that when the goods vehicle in question was intercepted by the Intelligence Wing of the Department, the person in charge of the goods vehicle did not produce the documents prescribed under Section 29 of the Act and therefore, a presumption would arise that there is an attempted evasion of tax by the person carrying the goods and therefore the authorities under the Act as well as the Tribunal is justified in levying penalty in exercise of their power under sub-section (4) of Section 29 of the KGST Act. 11. The one and the only question that arises for our consideration and decision is, whether the Tribunal was justified in modifying the orders passed by the first appellate authority and thereby confirming the orders passed by the Sales Tax Officer? 12. To answer the aforesaid legal issue, the provisions of sub-section (2) of Section 29 and sub-section (4) of Section 29 of the KGST Act requires to be noticed. They are as under: “29 (2). 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 or 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. x x x x x x x x x (4) Where the goods transported exceed the quantity or value prescribed under Sub-section (2), the officer in charge of the notified area S.T.Rev.111/2008. 4 or the officer empowered in the preceding Sub-section shall have power to detain or seize and confiscate the goods,- (a) which are being transported by a vehicle or vessel and not covered by a bill of sale or delivery note or way-bill or certificate of ownership and where the vehicle or vessel enters or leaves the State limits, the declaration referred to in Clause (b) of Sub-section (2) also, or (b) where the declaration is false or is reasonably suspected to be false in respect of the particulars furnished therein: Provided that before taking action for the confiscation of goods under this Section, the officer shall give the person in charge of the goods and the owner, if ascertainable, an opportunity of being heard and make an enquiry in the matter prescribed.” 13. Section 29 of the KGST Act provides for establishment of check posts and inspection of goods in transit, if there is a reasonable suspicion of evasion of tax by the Inspecting/Check Post officers. The Section authorises the Officers to detain the vehicle and the goods to make enquiry as envisaged under this Section. 14. Sub-section (2) of Section 29 of the KGST Act mandates that the person in charge of the goods vehicle or driver of the vehicle is expected to carry the documents prescribed under Sub-section (2) of Section 29 and the Rules framed thereunder and produce the same before the officer at the Check Post or before the Mobile Squad. Sub-section (4) of Section 29 of the KGST Act empowers the Sales Tax Officer to presume that there is an attempted evasion of tax, if for any reason the person in charge of the goods vehicle or the driver in charge of the goods vehicle does not produce those documents when the vehicle is intercepted by the authorities under the KGST Act. 15. In the instant case, it is the case of the petitioner that after purchasing 20 units of washing machines from M/s. Videocon International Ltd., he was transporting 16 units of washing machines from the temporary godown to the showroom. 16. Under the provisions of the KGST Act, whenever a dealer wants to transport the goods either from the Head Office to the godown or from the godown to the S.T.Rev.111/2008. 5 showroom, he is expected to carry delivery notes prescribed under the Act and produce the same when it is checked by the officers of the Intelligence Wing of the Department. If, for any reason the person in charge of the goods vehicle does not produce the documents at the time of interception of the goods vehicle, a presumption would arise that there is an attempted evasion of tax due under the Act and that presumption can be rebutted by the person incharge of the goods vehicle after he is served with a show cause notice before levying penalty. In the instant case, at the time of interception of the vehicle, the driver in charge of the goods vehicle admittedly did not produce the aforesaid document. Therefore, in our opinion, the Sales Tax Officer was justified in converting the security deposit offered by the petitioner as penalty. Therefore, we cannot find fault with the action of the officer. Keeping all these aspects of the matter in view and following the principle under the provisions of Sales Tax Act, the Tribunal has allowed the appeal filed by the revenue. We do not find any error in the orders passed by the Tribunal, which would call for our interference. Therefore, the revision requires to be rejected and it is rejected. Ordered accordingly. H.L. DATTU, CHIEF JUSTICE K.M. JOSEPH, JUDGE sb.