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2018 (6) TMI 1620 - HC - VAT and Sales Tax


Issues:
1. Imposition of penalty for non-declaration of imported goods under Kerala Value Added Tax Act.
2. Whether the Tribunal was correct in affirming the penalty despite no tax evasion in the import transaction.
3. Whether the Tribunal should have considered the lack of declaration as a technical defalcation not necessarily leading to tax evasion.

Analysis:
1. The revision pertains to the imposition of a penalty on the assessee for not declaring imported goods under the Kerala Value Added Tax Act. The assessee imported three packets of "Metso Positioners" valued at ?20,63,324 for use in manufacturing machinery. The issue centers around the non-filing of Form 8F(A) as required under Section 46(3)(e) of the Act. The Tribunal affirmed the penalty order, leading to the framing of questions regarding the correctness of the penalty imposition.
2. The Court emphasized that the absence of tax effect in the import transaction does not negate the attempt to evade tax, as the subsequent sale of the machinery incorporating the imported goods would attract tax. The failure to declare the imported goods could lead to tax evasion on the subsequent sale, justifying the penalty under Section 47(3)(e) of the Act. The Court cited precedents to highlight that technical defects in documentation do not absolve the assessee from potential tax evasion charges.
3. The Court rejected the argument that the subsequent sale of the machinery should absolve the assessee from penalty, as the offense of non-declaration persisted even after the sale. The obligation to declare imported goods is crucial to prevent undisclosed imports used in manufacturing from evading taxation. The burden of proving no attempt to evade tax rests on the assessee, and mere subsequent tax payment on the sale does not negate the initial offense of non-declaration. The Court upheld the Tribunal's decision, emphasizing the importance of compliance with declaration requirements to prevent tax evasion.

 

 

 

 

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