2001 (12) TMI 856 - HC - VAT and Sales Tax

Summary

Issues:
Penalty under section 29A(4) of the Kerala General Sales Tax Act, 1963 for evasion of tax during transportation of goods by an automobile dealer.

Detailed Analysis:

Issue 1: Evasion of Tax and Penalty Levied
The petitioner, an automobile dealer with branches in Thrissur and Ernakulam, transported goods valued significantly higher than declared in the delivery note. The Sales Tax Intelligence Department intercepted the vehicle and found goods worth Rs. 1,64,906.78, while the delivery note only mentioned Rs. 8,000. The Intelligence Officer levied a penalty under section 29A(4) of the Act, which was initially canceled but later reinstated by the Tribunal. The Tribunal found deliberate exclusion of goods in the delivery note, indicating an attempt to evade tax, justifying the penalty.

Issue 2: Legal Interpretation and Precedents
The petitioner argued that the transaction was a branch transfer, not a sale, and cited various court decisions to support the claim that no tax evasion attempt was made. However, the Tribunal disagreed, emphasizing that the dealer intentionally excluded goods from the delivery note, constituting conscious suppression. The court upheld the Tribunal's decision, stating that the omission of goods in the departmentally issued document indicated an intention to evade tax, as per section 29A(4) of the Act.

Issue 3: Penalty Reduction
While affirming the Tribunal's decision on tax evasion and penalty imposition, the court considered reducing the penalty amount due to subsequent accounting of the goods. Despite acknowledging the evasion attempt, the court decided to reduce the penalty to one and a half times the tax evaded, emphasizing that subsequent accounting did not absolve the dealer of the initial evasion. The court modified the Tribunal's order accordingly, concluding the tax revision case.

In conclusion, the court upheld the penalty under section 29A(4) of the Kerala General Sales Tax Act, 1963, for the deliberate evasion of tax by the automobile dealer during the transportation of goods. The judgment highlighted the importance of accurate documentation and the consequences of omitting goods in departmentally issued documents. While acknowledging subsequent accounting, the court reduced the penalty amount but affirmed the evasion attempt and the necessity of penalty imposition.