2006 (3) TMI 717 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Violation of Section 28A(2) of the Karnataka Sales Tax Act, 1957.
2. Justification of the penalty imposed under Section 28A(4) of the Act.
3. Legitimacy of the document carried by the person-in-charge of the goods vehicle.
4. Tribunal's decision to set aside the penalty.

Issue-wise Detailed Analysis:

1. Violation of Section 28A(2) of the Karnataka Sales Tax Act, 1957:
The respondent, a registered dealer dealing in Hero Honda Motorcycles, transported ten motorcycles without stopping at the sales tax check-post. The vehicle was chased, intercepted, and brought back to the check-post. The person-in-charge presented a letter stating the motorcycles were for demonstration but did not produce the required declaration in form 39 or any sale bill, violating Section 28A(2) of the Act.

2. Justification of the penalty imposed under Section 28A(4) of the Act:
The check-post authority issued a show cause notice proposing a penalty for the violation. Upon the person-in-charge's request for reduction, the penalty was reduced and paid without protest. The respondent challenged this order before the Joint Commissioner of Commercial Taxes, who dismissed the appeal. The Tribunal later set aside the penalty, deeming the violation as technical and not indicative of tax evasion.

3. Legitimacy of the document carried by the person-in-charge of the goods vehicle:
The respondent argued that the letter head constituted "such other document" under Section 28A(2)(b). However, the court clarified that "such other documents" must refer to documents showing the title or legal possession of the goods, not just any document the party relies on. The letter head did not suffice as it did not meet the mandatory requirements of a bill of sale or a delivery note obtained from the prescribed authority.

4. Tribunal's decision to set aside the penalty:
The Tribunal's decision was based on the assumption that the motorcycles could not be sold without necessary invoices and delivery notes, thus no tax evasion could occur. The court found this reasoning flawed, emphasizing that the statutory provisions were clear and mandatory. The Tribunal erred in interfering with the concurrent findings of fact by the authorities. The court concluded that the penalty was justified given the clear contravention of statutory provisions and the respondent's admission of non-compliance.

Conclusion:
The court allowed the revision petition, set aside the Tribunal's order, and restored the penalty imposed by the check-post authority, as affirmed by the first appellate authority. The statutory requirements under Section 28A were deemed mandatory, and the respondent's failure to comply warranted the penalty. The Tribunal's interference was found to be unjustified and contrary to law. No costs were awarded.