2008 (11) TMI 637 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to penalty under section 45B of the Kerala General Sales Tax Act, 1963 based on misdeclaration of goods during transportation.

Analysis:
The petitioner challenged the penalty levied under section 45B of the Act for misdeclaration of goods during transportation. The petitioner, a transporter, transported a consignment described as dinner plates but containing liquor. The Department seized the liquor and imposed a penalty on the petitioner. The petitioner argued that they had no mechanism to verify the contents of the goods. However, the court noted that without opening the packets, it could have been detected that the contents were glass bottles containing liquid. The court found that the petitioner did not exercise necessary diligence in accepting the goods as crockery. The court observed that the petitioner should have been more careful, especially since the goods were transported from a major outlet in liquor trade like Goa. The petitioner also failed to verify the genuineness of the consignee. The court concluded that the penalty was rightly levied under section 45B of the Act.

The court acknowledged that the penalty amount of Rs. 1,34,928 was high considering the nature of the goods and the circumstances of the case. The court noted that the goods were not sold in Kerala but were seized and handed over to excise authorities. The court reduced the penalty to Rs. 75,000, taking into account that the goods were not premium brand liquor and included low-value items. The court also considered that the goods were confiscated to prevent revenue loss and that the valuation was done roughly due to lack of detailed inventory. The court agreed with the petitioner's argument that the valuation of goods was excessive and, therefore, reduced the penalty amount. The court specified that if the petitioner had already paid Rs. 30,000 as per interim orders, only the balance would be recovered.

In conclusion, the court upheld the penalty under section 45B of the Act for misdeclaration of goods during transportation but reduced the penalty amount from Rs. 1,34,928 to Rs. 75,000, considering the circumstances of the case and the nature of the goods involved.