1996 (8) TMI 509 - HC - VAT and Sales Tax

Summary

Issues:
Levy of penalty under section 29A of the Kerala General Sales Tax Act, 1963.

Detailed Analysis:
The petitioner, a partnership firm dealing in soaps, was penalized for allegedly attempting to evade tax during the transport of goods to Trichur. The Sales Tax Officer imposed a penalty of Rs. 3,837, which was confirmed by the Appellate Tribunal. The main issue was whether the penalty under section 29A(4) of the Act was justified. The Sales Tax Inspector suspected tax evasion due to incomplete consignee address on sale bills, leading to the penalty. An enquiry revealed the consignee's address was Apsara Stores, but the officer concluded an attempt to help the consignee evade tax. The petitioner produced evidence of the sale to Apsara Stores and tax payment by Tata Oil Mills Limited, the first seller, but the enquiry officer did not consider this. The Court noted that the goods were taxable at the first sale point and had already been taxed, making it unlikely that there was a conscious attempt to evade tax. Consequently, the Court set aside the penalty orders and directed the refund of the penalty amount to the petitioner within one month.

The detention of goods under section 29A requires valid reasons related to improper documentation or tax evasion by the transporter. Subsequent enquiry under section 29A(4) allows for penalty imposition if there is evidence of an attempt to evade tax. The distinction between section 29A(2) and 29A(4) is crucial, as detention can occur based on incomplete documents, but penalty levy necessitates proof of tax evasion. The officer must establish a conscious and definite attempt to evade tax, not mere suspicion. In this case, incomplete consignee details did not conclusively indicate tax evasion, especially considering the goods were already taxed at the first sale point. Therefore, the Court found the penalty unjustified and ordered its refund to the petitioner.

In conclusion, the Court's decision centered on the lack of concrete evidence supporting the allegation of tax evasion by the petitioner. The incomplete consignee details did not prove a deliberate attempt to evade tax, especially when the goods had already been taxed at the first sale point. By emphasizing the necessity of clear proof of tax evasion for penalty imposition under section 29A(4), the Court set aside the penalty orders and directed the refund of the penalty amount to the petitioner.