1997 (4) TMI 470 - HC - VAT and Sales Tax

Summary

Issues:
Tax revision case under Kerala General Sales Tax Act, 1963 - Assessment year 1989-90 - Rejection of accounts based on penalty under section 29A - Addition to taxable turnover - Appeal and revision process.

Analysis:
The petitioner, a public limited company engaged in medicine manufacturing, filed a return for the assessment year 1989-90, declaring turnover. The assessing authority rejected the return due to interception of goods en route from Bangalore to Ernakulam, imposing a penalty under section 29A. The rejection was based on suspicion of tax evasion. The Additional Deputy Commissioner upheld the rejection but reduced the addition to two times the value of the goods. The Sales Tax Appellate Tribunal further limited the addition to the actual suppression amount. The petitioner contended that the penalty was paid by the transporters without their involvement. The Special Government Pleader argued that the diversion of goods showed intent to evade tax. The key issue was the rejection of accounts based solely on the penalty imposed.

The Court examined the circumstances and found that the goods were transported through a public transport organization, Raj Kamal Transport, and the petitioner had no control over the transporters' actions. The penalty was paid by the driver, allegedly on behalf of the petitioner. The petitioner promptly accounted for the goods upon receipt, paying the due tax. The first appellate authority noted that while the transport lacked proper documents, the transactions were accounted for, questioning the excessive 5 times addition by the assessing authority. The Appellate Tribunal deemed the two times addition excessive, limiting it to the actual suppression amount. As the goods were duly accounted for and taxed, with no other irregularities found, the Court held that no addition to the returned turnover was justified, directing the deletion of the Tribunal's addition.

In conclusion, the Court allowed the petition, directing the assessing authority to modify the assessment by deleting the addition sustained by the Tribunal. The decision emphasized that since the consignment value was properly accounted for and taxed, no further addition to the turnover was warranted.