IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN MONDAY, THE 16TH AUGUST 2010 / 25TH SRAVANA 1932 ST.Rev..No. 21 of 2010() ------------------------ TA.259/2008 of S.T.A.TRIBUNAL,ADDL.BENCH,KZD. .................... PETITIONER: ------------------------------- M/S.NAVAYUGA ENGINEERING CO.LTD., NAVAL ACADEMY PROJECT, EZHIMALA, RAMANTHALI P.O., KANNUR DISTRICT REPRESENTED BY ITS AUTHORISED SIGNATORY AND VICE PRESIDENT G.R.PRASAD. BY ADV. SRI.V.P.SUKUMAR SRI.KURYAN THOMAS RESPONDENT: --------------- STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT THIRUVANANTHAPURAM. BY G.P. SRI.MOHAMMED RAFIQ THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 16/08/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... S.T. Rev. No.21 of 2010 .................................................................... Dated this the 16th day of August, 2010. JUDGMENT Ramachandran Nair, J. The order under challenge is penalty levied under Section 29A(4) of the KGST Act for attempted evasion of tax in respect of a consignment consisting of 98 boxes of electrical items brought by the appellant from Vapi in Daman to Ezhimala in Kerala. Goods were detained for the reason that they were found in the Godown of the transporter located far down the place of destination at Kozhikode. A major violation noticed was showing of incorrect CST Registration Number in the bill issued by the supplier which was the transport document. The penalty got confirmed upto the Tribunal level and, therefore, revision is filed against the Tribunal's order. We have heard Adv. Sri.V.P.Sukumar, appearing for the petitioner and Sri.Mohammed Rafiq, Government Pleader appearing for the respondent. 2. The main case of the petitioner is that goods happened to reach Kozhikode because the transporter was transporting goods for several S.T.Rev. No.21/2010 2 persons in the same truck and as usual, the truck reaches Kozhikode where entire goods are unloaded and thereafter the goods are despatched to various consignees to their place of destination in separate lorries. The transporter has no system of unloading any packet from a truck despatched to a particular destination which is called transshipment centre or yard. Counsel has relied on the details of goods transported in the truck which shows that the consignment in the truck was for as many as 35 persons, even though lion share of the goods was meant for the petitioner. In order to verify whether goods were accounted enroute after it crossed the place of destination namely, Ezhimala in Kannur, we called for the records, which show that the goods had crossed Azhiyoor Chungam Check Post at Kuzhippilly which is south of the place of destination. In the normal course, the Check Post should not have released the consignment transported beyond the place of destination and probably the practice of transshipment by the transporter is known to the Check Post or the Check Post was informed about it and that is the reason why they allowed onward transport of the goods beyond the place of destination. S.T.Rev. No.21/2010 3 If this is so, then the remaining defect is only with regard to the wrong CST Registration Number shown in the invoice. Here again, counsel submitted that in other consignments also the same consignor showed same defective number by mistake and inspite of the same, goods were not detained. The Check Post seal at Azhiyoor Chungam does not even contain the date of release of the goods. The indifference of the Check Post officials is writ large on the transport document. However, we do not think the petitioner should be penalised for lapses of the Check Post officials. Further, petitioner's case is that petitioner is not a trader engaged in purchase and sale of goods in Kerala. On the other hand, the only work petitioner has done is construction of the building with electrification work for the Indian Navy at Ezhimala. Counsel for the petitioner relied on sales tax assessment produced in court which shows assessment of tax at compounded rate on the turnover on works contract. Government Pleader pointed out that the detained goods were released to the petitioner only in April 2005 and so much so, the assessment produced for 2004-2005 does not disclose the assessment of turnover pertaining to the goods transported. In any case we feel the S.T.Rev. No.21/2010 4 order of the Tribunal sustaining the penalty cannot be upheld because petitioner has produced atleast some materials before us to show that goods reached Kozhikode only for transshipment and petitioner has no role in it. No enquiry is seen made with regard to the actual utilisation of materials because assessments are produced in court wherein additions, if made on account of this transaction is for the year 2004- 2005. In fact, the addition to be considered in assessment that is attributable to this would be for the year 2005-2006 i.e. after the goods are released to the petitioner. In the circumstances, we feel a detailed enquiry is called for in this matter as to whether the petitioner really tried to evade payment of tax in respect of the transaction which will be disclosed in the assessment records pertaining to the Ezhimala work executed by the petitioner for the Navy. We, therefore, set aside the order of penalty confirmed by the Tribunal and remand the matter to the Intelligence Officer for calling for the assessment records of the petitioner for all the relevant years pertaining to the work and to verify whether petitioner has paid tax in respect of the consignment in question, though later, and whether petitioner has done only the work S.T.Rev. No.21/2010 5 for Ezhimala Academy and to exclude them from penalty, if petitioner was not engaged in any tax evasion scheme. The Intelligence Officer is directed to issue fresh orders after considering the matter afresh in the light of the observations in this judgment, within a period of three months from now. The petitioner will produce copy of this judgment for compliance. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms