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 TUESDAY, THE 11TH NOVEMBER 2008 / 20TH KARTHIKA 1930 S.T.Rev..No. 244 of 2005 ---------------------------------- ORDER DATED 1.9.2004 IN TA.581/2003 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAYAM .................... REVISION PETITIONER/APPELLANT/REVENUE: ------------------------------------------------------------------- STATE OF KERALA , REPRESENTED BY JOINT COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY SR.GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ RESPONDENT/RESPONDENT/ASSESSEE: ------------------------------------------------------------ JULY JINS, JAY AND JAY RUBBERS, KANJIRAPPALLY. ADV. SRI.V.S.AFSAL KHAN THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 11/11/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- S.T.Rev.No.244 of 2005 ------------------------------------------ Dated, this the 11th day of November, 2008 ORDER H.L.Dattu, C.J. The Revenue being aggrieved by the orders passed by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Kottayam in T.A.No.581 of 2003 dated 1st September, 2004 is before us in this Sales Tax Revision. (2) The Intelligence Inspector, Squad No.II, Kottayam had intercepted the vehicle bearing Registration No.KL 5A.2460 on 17.4.2003. The vehicle was carrying 1500 Kgs. of crepe rubber and the said commodity was being transported from Teekoy to Kanjirappally. (3) On verification of the documents produced, the Intelligence Inspector had noted the following defects. They are: (1) while the date noted in the delivery note No.220513 in figures is 10.4.2003, in words, it is written as 17.4.2003; (2) the purchase bill No.3 is not accompanied with the consignment; (3) the date is seen manipulated; (4) the time of commencement of journey is not shown in the delivery note. (4) In view of the aforesaid defects, the Intelligence Inspector suspected that the said goods are transported for the second time S.T.Rev.No.244 of 2005 2 on the strength of the same documents. Therefore, he had detained the vehicle and after receiving security deposit had released the vehicle in favour of the driver in charge of the vehicle. (5) The Intelligence Inspector thereafter has transmitted the papers to the Intelligence Officer, Squad No.II, Kottayam to make appropriate enquiries as required under Section 29A(4) of the Kerala General Sales Tax Act, 1963 ('the Act' for short). After receipt of the records, the Intelligence Officer had issued notice to the petitioner and also to the person in charge of the goods vehicle. (6) Before the Intelligence Officer the petitioner had produced the relevant records to demonstrate that the goods were purchased by him only on 17.4.2003 from M/s.Johns Mount Estates, Kottukapally Centre, Pala, vide Invoice No.3 dated 17.4.2003 and also had produced the sale bill of M/s.Johns Mount Estates issued on 17.4.2003. In spite of the production of these documents, the Intelligence Officer has proceeded to pass the impugned order dated 18.6.2003 and the security deposit that was collected from the petitioner is ordered to be adjusted towards the penalty imposed under Section 29A(4) of the Act. (7) The assessee had carried the matter in appeal before the first appellate authority. The first appellate authority after noticing the sale S.T.Rev.No.244 of 2005 3 invoice of M/s.Johns Mount Estates dated 17.4.2003, has granted relief to the assessee and while doing so in his order has observed as under: “The contention of the appellant is that in the place of time of journey, date is noted as 10.4.03. Actual date is 17.4.03. The appellant has purchased the above goods from Johns Mount Estates, Kottukapally Centre, Pala vide Invoice No.3 dtd.17.4.2003. Sale bill of Johns Mount Estates has been issued vide Invoice No.26 dtd.17.4.2003. In this case, the appellant is only as intermediatory dealer. The vehicle was not checked in border area. Since the appellant is not a last purchaser in the state, there is no tax liability and as such the defects noted are only of technical nature and therefore the security deposit of Rs.24,470/- is not in order. I am of the view that there is no evasion of tax in this case. Therefore, I direct the Intelligence Officer to refund the security deposit of Rs.24,470/- collected by the Intelligence Inspector, Squad No.II, Kottayam vide Receipt No.167694 dtd.17.4.2003 and later converted as penalty by the Intelligence Officer, vide order No.OR 40/03.04 dated 15.6.2003 to the appellant.” (8) The State, as usual, had carried the matter before the Tribunal in T.A.No.581 of 2003. The assessee had filed his cross objection in No.16 of 2004. The Tribunal by its common order dated 1st September, 2004, has confirmed the finding of facts by the first S.T.Rev.No.244 of 2005 4 appellate authority. It is the correctness or otherwise of the said order that is called in question by the State in this revision petition. (9) The Revenue has framed the following questions of law for our consideration and consequent decision. They are as under: “i. Whether the order of the Tribunal is sustainable in view of the decisions of this Hon'ble Court reported in 104 STC 516 and 6 KTR 670 regarding the imposition of penalty under Section 29A of the KGST Act? ii. Whether in the facts and circumstances of the case the Tribunal erred in finding that the penalty is not attractable on the ground that the respondent is only an intermediary dealer having no tax liability in the State? iii. Whether the Tribunal failed to consider that an attempt to evasion of tax is established in the circumstances that the same delivery note contain two different dates and has been used for two transactions on different dates?” (10) In the instant case, when the vehicle was inspected by the Intelligence Inspector, he had noticed certain defects and being of the opinion, that, there is an attempt to evade payment of tax due to the State, had directed the assessee to offer security deposit in a sum of Rs.24,470/- S.T.Rev.No.244 of 2005 5 for release of the vehicle (11) The assessee had offered the security deposit and thereafter had got the vehicle released in his favour. (12) Before the Intelligence Officer (Enquiry) the assessee had produced the necessary documents to demonstrate firstly, that, he is an intermediary and, therefore, there is no question of any tax liability on him and secondly, he had produced the sale invoice received from M/s.Johns Mount Estates which bears the date 17.4.2003. The first appellate authority being convinced that the defects pointed out by the Intelligence Inspector are hyper technical in nature, has proceeded to grant relief to the assessee and while doing so the first appellate authority has not decided any question of law as such. (13) The Tribunal, once again re-appreciated the facts and thereafter has confirmed the finding of facts by the first appellate authority. In fact, the Tribunal has not decided any question of law as such. Both the first appellate authority as well as the appellate Tribunal are of the opinion, that, the assumption of the Department is hyper technical in nature and the same cannot be sustained by any authority under the Act. S.T.Rev.No.244 of 2005 6 (14) We have heard Sri.Muhammed Rafiq, learned Government Advocate, and also perused the orders passed by the Intelligence Officer (Enquiry), the first appellate authority and also by the Tribunal. (15) The main defect pointed out by the Intelligence Officer is that there is some discrepancy while mentioning the date in the delivery note. That has been explained by the assessee by producing necessary documents, namely the sale invoice from M/s.Johns Mount Estates which would clearly demonstrate that the sale was only on 17.4.2003 and pursuant to that sale the goods in question were being transported in the vehicle bearing registration No.KL 5A 2460. There is no other material for the the Intelligence Officer (Enquiry) to come to the conclusion that the very same documents are being used by the petitioner for transportation of the goods for the second time. In our opinion, both the first appellate authority and the Tribunal are justified in coming to the conclusion that the Intelligence Officer (Enquiry) has not substantially proved that with the help of the very same documents the assessee was transporting goods for the second time and thereby is trying to evade payment of tax due to the State. (16) In that view of the matter, while confirming the orders S.T.Rev.No.244 of 2005 7 passed by the first appellate authority and the Tribunal we reject this revision petition filed by the Revenue. The questions of law framed by the Revenue are answered against the Revenue and in favour of the assessee. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns