2006 (9) TMI 527 - HC - VAT and Sales Tax

Summary

Issues:
Sales tax assessments under Kerala General Sales Tax Act, 1963 for the year 1991-92 based on purchases made in Mahe under Pondicherry General Sales Tax Act, 1965. Assessment under section 17(3) of the Act vs. section 30B(3) for transit of goods through the State.

Analysis:
The judgment involves tax revision cases arising from the Tribunal's order sustaining sales tax assessments under the Kerala General Sales Tax Act, 1963 for the year 1991-92. The petitioners held registration under the Pondicherry General Sales Tax Act, 1965 in Mahe, a Union territory area under Pondicherry in Kerala. The issue at hand is the evasion of sales tax due to Kerala by accounting sales in Mahe, where the tax rate is lower. The case involves the sale of ghee, with a significant price difference between Kerala and Mahe, leading to suspicions of tax evasion. The Intelligence Department's investigation revealed discrepancies in the transportation of goods, indicating potential local sales in Kerala.

The petitioners contended that the assessment should have been made under section 30B(3) of the Act on the driver or owner of the vehicle. However, the Tribunal confirmed the assessment under section 17(3) of the Act. The key question was whether the assessment should be on the owner or driver of the vehicle. Section 30B deals with the transit of goods through the State and the issue of transit passes. The petitioners argued that the driver or owner should be assessed under sub-section (3) of section 30B, which seems correct. However, the department's findings established purchases, ownership, and sales in Kerala by the petitioners, justifying the assessment under section 17 of the Act.

The court upheld the Tribunal's order, confirming the assessment on the petitioners under section 17(3) read with section 30B(2) of the Act. The judgment emphasized that the department's right to assess the driver or owner under section 30B(3) does not negate their ability to assess the actual dealer conducting business in the State. The decision highlights the importance of correctly attributing liability for tax evasion and ensuring compliance with the relevant statutory provisions.