2007 (10) TMI 584 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to order revising penalty amount under section 37 of Kerala General Sales Tax Act, 1963.

Analysis:
The case involved an appeal against an order passed by the Commissioner of Commercial Taxes, Thiruvananthapuram, revising a penalty imposed on an assessee under section 37 of the Kerala General Sales Tax Act, 1963. The Intelligence Officer had initially imposed a penalty of Rs. 6 lakhs on the assessee for contravention of tax provisions. Subsequently, the Deputy Commissioner reduced the penalty to Rs. 5,000. However, the Commissioner, utilizing powers under section 37, reversed the Deputy Commissioner's decision and reinstated the original penalty amount. The issue revolved around the imposition and revision of the penalty amount on the assessee.

The assessee, a dealer in cement, was found to have omitted accounting for 83 sale bills of cement in their books, leading to a penalty imposition of Rs. 6 lakhs by the Intelligence Officer. The assessee argued that being a second seller in cement, there was no tax liability, and hence, no evasion of tax to warrant the penalty under section 45A of the Act. However, the Commissioner, after thorough examination, found the assessee's contentions unsubstantiated. The Commissioner noted the lack of evidence supporting the exemption claim from tax under the Kerala General Sales Tax Act. Additionally, discrepancies were identified between the assessee's claims and statements made by the managing partner of the firm to the Intelligence Officer, further weakening the assessee's case.

The court emphasized the burden of proof on the assessee to establish non-tax liability under section 12 of the Kerala General Sales Tax Act. Referring to Rule 32(13) of the Kerala General Sales Tax Rules, the court highlighted the requirement for dealers to obtain certificates for goods not liable to tax due to being subsequent sellers. Citing a precedent from Sreekrishna Trading Company v. State of Kerala, the court clarified that in cases of turnover originating from unaccounted purchases, the dealer could be treated as a first seller unless evidence was presented to prove non-tax liability. Ultimately, the court upheld the Commissioner's decision to invoke section 37 and restore the original penalty amount, dismissing the appeal for lacking merit.