1993 (8) TMI 276 - HC - VAT and Sales Tax

Summary

Issues:

1. Interpretation of sales tax laws regarding the transportation of goods for van sales.
2. Imposition of penalty for alleged tax evasion based on lack of proper documentation during transportation.
3. Failure of the Appellate Tribunal to consider the plea of the revision petitioner regarding exemption from tax as a second seller.

Analysis:

Issue 1: Interpretation of sales tax laws regarding transportation of goods

The petitioner, a dealer in various items including milk powder, hired a van for sales and was intercepted during transportation. The Tribunal found that the petitioner failed to comply with the requirement of having a permit and stock book during the transportation of milk powder, as mandated by the Kerala General Sales Tax Rules. The Tribunal concluded that the necessary records were not available during the inspection, leading to a violation of the law.

Issue 2: Imposition of penalty for alleged tax evasion

The Tribunal justified the imposition of a penalty under section 29-A(4) of the Act, citing the absence of proper records during transportation as evidence of an attempt to evade tax. The petitioner argued that even without the required documents, there was no intention to evade tax as the milk powder purchased had already been taxed at the point of first sale. The Tribunal failed to address this crucial argument, leading to the decision being challenged.

Issue 3: Failure to consider exemption plea as a second seller

The petitioner contended that as a second seller of milk powder purchased from manufacturers who had already collected sales tax, there was no tax liability on the petitioner's sales. This argument was raised at multiple stages, including before the Intelligence Officer and the Appellate Assistant Commissioner, but was not adequately addressed. The failure to consider this plea led to the decision being set aside for a fresh investigation by the Sales Tax Appellate Tribunal.

The High Court set aside the Tribunal's decision and remitted the matter for a proper investigation, emphasizing the importance of considering the petitioner's claim of exemption as a second seller. The Court also noted the significant delay in the proceedings, highlighting the need for timely and thorough adjudication in tax matters. Ultimately, the revision was allowed, with costs awarded to the petitioner.