2013 (12) TMI 1130 - HC - VAT and Sales Tax

Inter-state sales of diesel generator - Penalty u/s 45A of the K.G.S.T. Act - Held that - The minimum requirement to be shown is that the petitioner had in fact purchased the aforesaid generators and thereafter it is sold to the buyers in question - offer and acceptance of the deal in question was between the local purchasers and the revision petitioner. It is found that the despatch of goods by the Pondicherry dealer and the consequential delivery as per the instructions given by the petitioner to local customers would make it a local sale between the local purchaser and the petitioner and therefore the transactions falls within the sale - the Pondicherry dealer had transferred the property in the goods to the buyers in Kerala directly. If that is the position, necessarily a person who had procured the orders for the Pondicherry seller for the buyers in Kerala would not become a purchaser of the goods and for that reason itself the petitioner will not become a purchaser - Decided against Revenue.

Summary

Issues:
Challenge to order setting aside penalty on alleged inter-state sales of diesel generator sets.

Analysis:
The writ petition challenged an order setting aside a penalty imposed on the petitioner for alleged inter-state sales of diesel generator sets. The petitioner, a dealer in engineering goods, was accused of canvassing purchase orders for diesel generator sets from Pondicherry to buyers in Kerala. The first revisional authority set aside the penalty, but the Commissioner of Commercial Taxes restored it. The petitioner argued that the transactions were pure inter-state sales between the Pondicherry dealer and buyers in Kerala, citing relevant Supreme Court judgments. The Single Judge found that there was no evidence of the petitioner purchasing and reselling the goods within Kerala, as the goods were directly dispatched to buyers in Kerala by the Pondicherry dealer. The Single Judge concluded that there was no suppression of turnover or evasion of tax, setting aside the penalty and restoring the earlier order.

The Special Government Pleader contended that the Single Judge's findings were unjustified, claiming that the transactions constituted local sales between the petitioner and buyers in Kerala. The Pleader argued that the petitioner did not purchase the goods and therefore could not be held liable for the penalty. The Pleader referenced legal definitions of "sale" under relevant tax acts to support their argument. However, the Court found the Pleader's argument baseless, as the goods were directly transferred from the Pondicherry dealer to buyers in Kerala, making the transactions inter-state sales. The Court upheld the Single Judge's decision, dismissing the appeal and affirming that there was no reason to interfere with the findings made.

In conclusion, the High Court dismissed the appeal, upholding the Single Judge's decision that the transactions in question were inter-state sales, and there was no evidence to support the imposition of a penalty on the petitioner for alleged suppression of turnover.