2014 (5) TMI 1056 - HC - VAT and Sales Tax

Goods for commercial use indicated as for personal use Imposition of Penalty Respondent-Assesse purchased scanner with accessories, same was transported on strength of form 16 Notice was issued under section 47(2) of Kerala Value Added Tax Act by Commercial Tax Inspector suspecting genuineness of transaction Penalty under section 70B was imposed as goods were shown for personal use whereas it was for commercial use Tribunal vide impugned order upheld order revoking penalty Held that - section 70B contemplates that any person bringing goods from outside State projecting purchase as one for its own use and utilising goods so brought otherwise than for own use shall, without pre judice to any other provisions in Act, be liable to pay by way of penalty Fact that when person make use of goods it may generate profit, will not detract from use being its own use though word commercial figures in heading of section 70B What is required for attracting section 70B is bringing goods from outside State declaring it for own use, but not using it for own use In such circumstances, no reason to take different view than view taken by appellate authority and as affirmed by Tribunal Decided against revenue.

Summary

Issues:
1. Interpretation of section 70B of the Kerala Value Added Tax Act regarding penalty for commercial use of goods brought from outside the State.
2. Application of section 70B to a hospital purchasing goods for own use but using them for commercial purposes.
3. Validity of penalty imposed under section 70B on the hospital for using goods purchased for own use for commercial purposes.

Analysis:
1. The main issue in this case revolves around the interpretation of section 70B of the Kerala Value Added Tax Act, which deals with the penalty for the commercial use of goods brought from outside the State but declared as for own use. The petitioner, the State of Kerala, imposed a penalty under this section on the respondent, a hospital, for suspected misuse of goods purchased.

2. The contention raised by the State was that the hospital, despite declaring the goods as purchased for own use, used them for commercial purposes, thereby attracting section 70B. The State argued that the hospital's profit-making activities fall under the commercial use mentioned in the section, justifying the penalty imposed.

3. However, the High Court, after careful consideration, disagreed with the State's argument. The Court emphasized that section 70B penalizes the use of goods brought from outside the State for purposes other than the declared own use. In this case, the hospital, being the assessee, did use the goods for its own purposes, even if it generated profit from such use.

4. The Court highlighted that the crucial aspect for invoking section 70B is the discrepancy between the declared own use and the actual use of the goods. Since the hospital utilized the purchased goods for its intended purposes, the declaration made under form 16 did not impact the applicability of the penalty provision in this scenario.

5. Ultimately, the High Court upheld the decisions of the first appellate authority and the Tribunal, dismissing the revision. The Court concluded that the hospital's use of the goods for its own purposes, despite any profit generated, did not warrant a penalty under section 70B as the essential requirement of using goods contrary to the declared own use was not met in this case.