2010 (9) TMI 975 - HC - VAT and Sales Tax

Whether along with the driver of the vehicle, the owner of the goods also travelled because the consignor and the consignee were one and the same? Held that - As a matter of fact, the revisional authority did not even refer to what was the rebuttable evidence relied upon by the owner of the vehicle and whether the order of the assessing authority had reached finality or not. On the other hand, the learned Government Advocate is fair enough to bring to our notice that the order of assessment pertaining to M/s. Vivek Petro was the subject-matter of suo motu revision under section 21, but the revisional authority confirmed the said order of assessment of the assessing officer. When once the order of assessment of M/s. Vivek Petro has reached finality, it would not be open to the Department to say that the presumption under sub-section (4) of section 28AA is still available and the same is not rebutted. In view of the above discussion and reasoning, we are of the opinion, the appeal deserves to be allowed. Accordingly, the appeal is allowed setting aside the order of the revisional authority dated October 25, 2008.

Summary

Issues Involved:
1. Non-surrender of transit pass at the exit check-post.
2. Imposition of tax and penalty on the transporter.
3. Rebuttable presumption under sub-section (4) of section 28AA of the Karnataka Sales Tax Act.
4. Validity of the appellate authority's decision.
5. Revisional authority's suo motu revision and setting aside the appellate order.

Issue-wise Detailed Analysis:

1. Non-surrender of Transit Pass at the Exit Check-post:
The Department contended that the transit pass, required to be surrendered at the exit check-post, was not handed over, leading to a presumption under sub-section (4) of section 28AA that the consignment was sold within the State. The transporter's defence was that the authorized representative of the consignor was responsible for the transit pass, not the vehicle owner.

2. Imposition of Tax and Penalty on the Transporter:
Due to the non-surrender of the transit pass, the assessing officer imposed a tax of Rs. 16,200 and a penalty of Rs. 16,200 on the transporter. The appellate authority later concluded that there was no tax evasion, as the goods were proven to have moved out of the State, leading to the setting aside of the tax and penalty.

3. Rebuttable Presumption under Sub-section (4) of Section 28AA of the Karnataka Sales Tax Act:
The presumption under sub-section (4) is rebuttable, meaning the transporter could provide evidence to show that the goods did move out of the State. The transporter relied on the assessment order of the consignor, which indicated that the goods reached Pondicherry and were accounted for, thus rebutting the presumption of sale within the State.

4. Validity of the Appellate Authority's Decision:
The appellate authority found that the goods were indeed transported to Pondicherry and not sold within Karnataka. This conclusion was based on the assessment records and evidence from the Central Excise Department. The appellate authority's decision to set aside the tax and penalty was based on the lack of evidence for tax evasion.

5. Revisional Authority's Suo Motu Revision and Setting Aside the Appellate Order:
The revisional authority issued a show-cause notice and eventually set aside the appellate authority's order, restoring the original tax and penalty. The revisional authority argued that the appellate decision was improper and prejudicial to the State's revenue. However, the High Court found that the revisional authority failed to consider the rebuttable evidence provided by the transporter and the finality of the assessment order of the consignor.

Conclusion:
The High Court allowed the appeal, setting aside the revisional authority's order and reinstating the appellate authority's decision. The Court emphasized that the rebuttable presumption under sub-section (4) of section 28AA was successfully countered by the transporter's evidence, showing that the goods were transported out of the State. The Court directed the refund of any amounts recovered towards tax or penalty within three months.