2019 (8) TMI 35 - HC - VAT and Sales Tax

Evasion of tax - demand based on the defect noted in the Delivery Note - Rule 67 of the Kerala Value Added Tax Rules, 2005 - HELD THAT - It is the burden of the revision petitioner to discharge such suspicion at the time of enquiry. The suspicion could have been repelled by producing the Delivery Note Book, which the petitioner failed despite opportunity given - Contention that the transport was also accompanied by an invoice and the subsequent production of the books of account, does not by itself can be considered as sufficient discharge of the burden, because any entries contained in the books of account, which could have made after the interception cannot be accepted as a clear proof to arrive at a conclusion that there existed no attempt at evasion of payment of tax. The best evidence which could have produced before the authorities was the Delivery Note Book, which would indicate that it was drawn in triplicate, even though double sided carbon was not used. Since the best evidence was suppressed by the revision petitioner, it cannot be held that the inference drawn by the authorities is in any manner illegal, erroneous or improper. Revision dismissed.

Summary

Issues involved:
Interception of goods for suspicion of tax evasion based on irregularity in the Delivery Note, imposition of penalty on the assessee, failure to produce the Delivery Note Book as evidence, contention regarding the genuineness of the transport supported by invoice and account books, burden of proof on the revision petitioner to dispel suspicion of tax evasion.

Analysis:
The revision petition was filed against an order of the Kerala Value Added Tax/Agricultural Income Tax & Sales Tax Appellate Tribunal regarding an incident where the assessee had transported steel products within the state and was intercepted due to suspicion of tax evasion. The interception was based on the irregularity in the Delivery Note, which did not use double-sided carbon paper as required by the rules. A penalty was imposed on the assessee for this irregularity, and despite opportunities, the assessee failed to produce the Delivery Note Book during the enquiry, leading to the penalty. The contention raised was that the failure to use double-sided carbon paper did not indicate an attempt at tax evasion, but the Appellate Authority rejected this argument, citing the violation of mandatory provisions as creating suspicion of tax evasion.

The Tribunal confirmed the orders of the authorities below, stating that the assessee did not prove the defect was due to inferior quality carbon paper by producing the Delivery Note Book. The revision petitioner argued that the consignment was accompanied by an invoice and supported by entries in account books, proving the genuineness of the transport and challenging the penalty imposition based on lack of evidence of tax evasion. However, the burden of proof was on the revision petitioner to dispel the suspicion of tax evasion during the enquiry, which could have been done by producing the Delivery Note Book. The failure to produce this key evidence led to the dismissal of the revision petition.

The High Court upheld the orders of the authorities, emphasizing that the best evidence to dispel suspicion would have been the Delivery Note Book, which was not produced by the revision petitioner. The production of account books and invoices after the interception was not considered sufficient to prove the absence of tax evasion. Consequently, the Court found no grounds to interfere with the lower authorities' orders and dismissed the revision petition, stating there was no substantial question to be decided in this case.