IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR WEDNESDAY, THE 28TH MAY 2008 / 7TH JYAISHTA 1930 ST.Rev..No. 50 of 2006 ----------------------------- TA.100/2004 of STAT ADDL.BENCH, KOTTAYAM .................... REVISION PETITIONER/ASSESSEE/RESPONDENT --------------------------------------------------------------------- M/S.ALAPPATTU AGENCIES (PVT) LTD., THODUPUZHA, MUVATTUPUZHA BRANCH, A PRIVATE LIMITED COMPANY, REP. BY ITS MANAGING DIRECTOR, CHINNAMMA JOY. BY ADV. SRI.E.P.GOVINDAN RESPONDENT: REVENUE/APPELLANT ------------------------------------------------------- STATE OF KERALA, REP. BY SECRETARY, TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM. BY SR.G.P. SHRI MUHAMMED RAFIQ THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 28/05/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.Dattu, C.J. & T.R. Ramachandran Nair, J. - - - - - - - - - - - - - - - - - - - - - - - - S.T.Rev. No.50 of 2006 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 28th day of May, 2008. O R D E R H.L.Dattu, C.J.: The petitioner is a private limited company having its registered office at Thodupuzha. It is also a dealer registered both under the provisions of Kerala General Sales Tax Act (for short 'KGST Act') and Central Sales Tax Act (for short 'CST Act'). The nature of business of the petitioner is that of sale of Refrigerators, Mixie, BPL Audio, etc. 2. The Intelligence Inspector, Squad No.III, Idukki had intercepted a transport vehicle bearing registration No.KL-7 F 3393. After inspection, it was noticed that the vehicle in question was loaded with Mixie and BPL Audio valued at Rs.1,15,894/- and they were being transported by the petitioner to different consignors, viz. M/s. S.M. Home Shine, Adimaly, Shine Shoe Mart, Cheruthoni, Nedumparambil Agencies, Kumily, Mymoon Agencies, Vandiperiyar and Oramadathil Agencies, Adimaly. The person in charge of the vehicle had also produced before the Intelligence Inspector bill Nos.96 to 100 dated nil. 3. The Intelligence Inspector, after verification of the bills, had noticed the following defects: Firstly, bill Nos.98 to 100 are undated and there is interpolation in bill No.98 and secondly, the carbon copy of bill No.100 does not tally with the original bill No.100. It would be useful to notice the precise defects STRv.50/2006 -2- pointed out by the intelligence officer on his inspection report. It is as under: “The bill No. 98 to 100 are not dated. In bill No.98 the quantity is strike off, in bill No.99 the amount is strike off and in bill No.100 the amount and quantity is strike off, but no corresponding correction in the carbon copy. In bill No.100, the amount noted in the original is Rs.21,520/- whereas in the carbon copy it is Rs.18830/-.” 4. The authority who intercepted the vehicle, being of opinion that there is an attempted evasion of payment of tax by the dealer concerned, after issuing notice to the person in charge of the vehicle, had detained the vehicle initially and thereafter after executing security deposit offered by the dealer, had released the vehicles and the goods in favour of the dealer. 5. The show cause notice issued and the connected records were transmitted by the Intelligence Inspector to the Intelligence Officer, Squad No.III, Idukki at Devikulam, for further enquiry as required under Section 29A (4) of the Act. 6. The Enquiry Officer thereafter had issued a notice on the owner of the goods for the purpose of enquiry and before imposing penalty as required under Section 29A(4) of the Act. The owner of the goods had filed his reply denying the allegation made in the notice. After receipt of the reply, the Enquiry Officer had directed not only the dealer but also the consignors to produce the books of accounts maintained by them in the regular course of business. Except one STRv.50/2006 -3- consignor, others did not produce the books of accounts as directed by the Enquiry Officer. Further, the dealer had offered an explanation stating that it was because of the mistake committed by the person who had issued bill Nos.96 to 100, that there was omission in not mentioning the date of the bills and discrepancies in the original of bill No.100 and the carbon copy of the said bill. 7. After hearing the representative of the petitioner and after analysing the relevant materials, the Intelligence Officer has come to the conclusion that there is an attempted evasion of payment of tax due to the State and has levied a penalty of Rs.28,974/- which is double the amount of tax attempted to be evaded by the dealer. Aggrieved by the said order, the dealer had filed appeal before the First Appellate Authority in S.T.A. No.415/2003. Strangely, the First Appellate Authority not only has allowed the appeal, but also directed the assessing authority to refund the amount of penalty collected from the dealer. 9. The Revenue had carried the matter in appeal before the Sales Tax Appellate Tribunal in T.A. No.100/2003. The Tribunal, in our opinion, rightly has allowed the Revenue's appeal and thereby has set aside the order of the First Appellate Authority dated 26.8.2003. The Tribunal, in its well considered order, has observed as under: “From the order of the first appellate authority it can be seen that the first appellate authority has not considered the defects pointed out in the records accompanied the transport. He has also not cared to see whether the goods transported suffered STRv.50/2006 -4- tax in the State or not or that whether there was any attempt to evade tax by transporting the goods with the defective records. On going through the sale bills which accompanied the transport which are filed as pages 899 to 917 of the assessment records it is seen that none of the bills are dated. So also the entries in the original and duplicate copies differ in quantity and also in value. Bill Nos.98, 99 and 100 are seen scored and corrected without any authentication. This being the position, the Intelligence Officer's finding that the transport of the goods using the defective and undated bills were with the intention to evade the taxes due on the goods. There are no evidence on record to show that the goods under transport have suffered tax at any prior point. Therefore, the first appellate authority's finding that the respondent is only a second seller is without any basis. It is also seen that the first appellate authority allowed the appeal without appreciating the facts of the case in the correct perspective and without entering into any finding regarding the points raised by the Intelligence Officer in the related sale bills. Considering these facts we find that the order of the first appellate authority is unsustainable. So, we cancel the same and restore the penalty proceedings of the Intelligence Officer.” 9. Aggrieved by the order passed by the Tribunal, the dealer has filed this revision petition. The questions of law raised by the assessee are as under: “i) Whether on the facts and in the circumstances of the case the Tribunal was justified in confirming the order of the Int. Officer, Squad No.III, Idukki at Devikulam? STRv.50/2006 -5- ii) Whether on the facts and in the circumstances of the case the Tribunal was justified in not following the decisions of this Hon'ble Court in V. Ramachandran v. State of Kerala (reported in 92 STC 221)? iii) Whether on the facts and in the circumstances of the case the Tribunal was justified in confirming the penalty order when there was no findings to the effect that there was attempted evasion of tax by the petitioners? iv) Whether on the facts and in the circumstances of the case the Tribunal was justified in reversing the findings of the First Appellate Authority?” 10. Shri Govindan, learned counsel for the petitioner submits, that, since the petitioner is a second dealer in Mixie, BPL Audio, Refrigerators, etc., he is the second seller in the State and therefore is not liable for payment of tax under the Act and there was no justification for the Intelligence Officer to have invoked the provisions of Sections 29A(2) and 29A(4) of the Act to levy a penalty in a sum of Rs.28,974/-. It is further stated by the learned counsel that the Tribunal ought not to have interfered with a well considered order passed by the first appellate authority. Learned counsel placed reliance on the observations made by this court in the case of V. Ramachandran Nair v. State of Kerala (92 STC 221). 11. Per contra, learned counsel for the Revenue ably justifies the impugned STRv.50/2006 -6- order passed by the Tribunal. 12. The question for our consideration and decision is, whether the Enquiry Officer of the Department was justified in levying penalty under Section 29A(4) of the Act. 13. Sub-section (1) of Section 29 provides for establishment of check posts and inspection of goods in transit. Sub-section (2) 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 the person in charge of the vehicle or the driver, is in possession of either a bill of sale or delivery note or way bill or certificate of ownership containing such particulars as may be prescribed. It also provides for a declaration in such form and containing such particulars as may be prescribed when the vehicle or vessel enters or leaves the State limits. Explanations appended to sub- section (2) need not be noticed by us, since for the purpose of disposal of this case, they are unnecessary. 14. For the purpose of sub-section (2) of Section 29 of the Act, the rule making authority has framed rules prescribing the documents to be possessed by the transporter of the goods. 15. Sub-section (4) of Section 29 of the KGST Act says that, where the goods transported exceed the quantity or value prescribed under sub-section (2), the officer in charge of the notified area or the officer empowered under sub- STRv.50/2006 -7- section (3) of Section 29 shall have the power to detain or seize and confiscate the goods. 16. Then we come to Section 29A of the Act. The said provision provides for the procedure for inspection of goods in transit through notified areas. The legislature gives powers to the officer in charge of a notified area or any other officer empowered by the State Government to direct the driver or other person in charge of a vehicle or vessel to stop the vehicle or vessel for the purpose of enabling such officer to verify the documents prescribed as required under sub- section (2) of Section 29 of the Act to satisfy himself that there is no evasion of tax. 17. Sub-section (2) of Section 29A of the KGST Act envisages to verify any document, if the officers mentioned in sub-section (1) has reason to suspect that the goods under transport are not covered by proper and genuine documents or that any person transporting the goods is attempting to evade payment of the tax due under the Act, he may, for reasons to be recorded in writing detain the goods and shall allow the same to be transported only on the owner of the goods, or his representative or the driver or other person in charge of the vehicle or vessel on behalf of the owner of the goods, furnishing security for double the amount of tax likely to be evaded as may be estimated by such officer. 18. Sub-section (4) of Section 29A is as under: “(4) The officer authorised under sub-section (3) shall, STRv.50/2006 -8- before conducting the inquiry, serve notice on the owner of the goods and give him an opportunity of being heard and if, after the enquiry, such officer finds that there has been an attempt to evade the tax due under this Act, he shall, by order, impose on the owner of the goods a penalty not exceeding twice the amount of tax attempted to be evaded, as may be estimated by such officer.” 19. Sub-section (4) of Section 29A is in two parts. The first part provides the procedure that requires to be followed by the officer authorised under sub- section (3). The sub-section says that the officer empowered is required to hold an enquiry by issuing an appropriate notice to the owner of the goods and secondly, he should give him an opportunity of being heard in the matter. The second limb of sub-section (4) of Section 29A provides the procedure that requires to be followed by the officer after completing the enquiry. After the enquiry, if the officer finds that there is an attempt made by the dealer or the person in charge of the vehicle or the owner of the goods to evade payment of tax, he may pass an order in writing imposing a penalty not exceeding twice the amount of tax attempted to be evaded. Having seen the possible construction that could be placed on sub-sections (2) and (4) of Section 29 and sub-sections (2) and (4) of Section 29A of the Act, let us come back to the fact situation in the instant case. 20. The admitted facts are: The petitioner was transporting the goods such as Refrigerators, Mixie, BPL Audio, etc. in vehicle bearing registration No.KL-7 STRv.50/2006 -9- F 3393. The said vehicle was intercepted by the Intelligence Inspector of Squad No.III, Idukki at Devikulam. On demand, the driver or the person in charge of the vehicle had produced the sale bill Nos. 96 to 100. Those bills did not bear any date. Unfortunately for the petitioner, it is noticed by the Intelligence Inspector that the carbon copy of bill No.100 does not tally with the original of bill No.100. As we have already stated, the documents required to be carried by the owner/transporter/person in charge of the vehicle while transporting the goods either within the State or outside or while consigning the goods, are expected to bear the date of issuance of the same. The original requires to tally with the carbon copy of the bill. The rules prescribed for the purpose of Section 29A(2) specifically provides that the bills should bear the date of issuance of the same. Further, it is expected that the carbon copy of the bill tallies with the original bill. Keeping all these omissions in view, the Intelligence Inspector suspected evasion of tax by the petitioner who is the owner of the goods in question. Therefore, as envisaged under sub-section (2) of Section 29A of the Act, he had detained the vehicle and after accepting the security offered by the owner of the goods, he had released the goods in favour of the petitioner. 21. The Intelligence Inspector thereafter transmitted all the relevant papers to the Intelligence Officer to make enquiries. As required under sub-section (4) of Section 29A of the Act, the said officer had issued notice to the petitioner and had directed him to produce the books of accounts, the sale bills, etc. He had also STRv.50/2006 -10- issued notices to the consignors to verify the transaction under bill Nos.96 to 100. After verifying the books of accounts and also the bills produced by the petitioner and the books of accounts produced by one of the consignors, the Intelligence Officer has come to a conclusion on facts that the petitioner is attempting to evade payment of tax due to the State. Having come to that conclusion with reference to the records maintained by the dealer, the Intelligence Officer has levied the penalty as provided under sub-section (4) of Section 29A of the Act. 22. The first appellate authority, whose orders have been sufficiently commented on by the Tribunal, has allowed the assessee's appeal. This order of the first appellate authority has, in our opinion, rightly been reversed by the Tribunal. We have also perused the order of the Tribunal and the reasons assigned by it to modify the orders passed by the first appellate authority. In our view, but for the detention and inspection of the goods carried in the vehicle which was intercepted by the Intelligence Officer of the Department, the goods would have been sold in the State without suffering tax. A revision under Section 41 of the Act would lie only on the ground that the Tribunal had either decided erroneously or failed to decide a question of law. The Tribunal in this case had considered the entire facts and circumstances and had arrived at the finding that the petitioner had deliberately attempted to evade the payment of tax due to the State and that the enquiry officer had clearly established a case for imposition of penalty under Section 29A (4) of the Act. These were pure findings of fact. These findings STRv.50/2006 -11- arrived at by the Tribunal cannot be said to be illegal, unreasonable or erroneous. It could not also be said that the Tribunal has failed to decide any question of law. 23. In that view of the matter, the questions of law framed by the assessee require to be answered against the assessee and in favour of the Revenue. Accordingly, the revision petition is rejected. Ordered accordingly. H.L.Dattu, Chief Justice. T.R. Ramachandran Nair, Judge. kav/dk.