2015 (3) TMI 662 - HC - VAT and Sales Tax

Imposition of penalty - Sales tax registration not obtained - Bonafide belief that registration not required as doing second sale of goods within the State - Held that - In view of the specific findings of the 3rd respondent in Ext.P6 order, and in the absence of any vitiating circumstances that would justify an interference with the said order in proceedings under Article 226 of the Constitution of India, I see no merit in the present writ petition - Decided against assessee.

Summary

Issues:
- Penalty imposed for non-registration under Kerala General Sales Tax Act for assessment years 1999-2000 and 2000-2001.
- Validity of penalty orders (Exts.P1, P2, P3, P6) challenged in writ petition.

Analysis:
1. The petitioner, engaged in second sale of goods within the State, did not obtain sales tax registration under the Kerala General Sales Tax Act, believing transactions would not attract sales tax. Sales Tax Authority initiated penalty proceedings resulting in Exts.P1 and P2 orders imposing penalties for 1999-2000 and 2000-2001. Revision petitions before 2nd and 3rd respondents were dismissed, leading to the writ petition challenging the penalty orders.

2. The respondent justified penalties stating the petitioner, a dealer in various goods, did not comply with tax registration, filing, and payment requirements. The petitioner's claim of second sales was refuted as investigations revealed fictitious suppliers and unreliable evidence. Procedural formalities were followed, including examination and cross-examination of alleged suppliers, exposing discrepancies and lack of compliance by the petitioner.

3. After hearing both parties, the court found the writ petition challenging penalty orders to be meritless. The 3rd respondent's detailed examination in Ext.P6 order confirmed procedural compliance and lack of merit in the petitioner's contentions. Investigations revealed false claims of purchases from unregistered dealers and non-compliance with exemption requirements under the KGST Rules 1963. The burden of proof for exemption lies with the dealer, and in this case, the evidence presented was deemed fabricated, leading to justified penalties.

4. Based on the specific findings of the 3rd respondent and absence of vitiating circumstances warranting interference, the court dismissed the writ petition under Article 226 of the Constitution of India. The judgment upheld the penalty imposition for non-registration under the Kerala General Sales Tax Act for the assessment years 1999-2000 and 2000-2001, concluding that the penalties were justified based on the evidence and non-compliance by the petitioner.