2022 (1) TMI 445 - HC - VAT and Sales Tax

Levy of penalty under Section 53(12) of Karnataka Value Added Tax Act, 2003 for breach of Section 53(2) of the Act - transporter has carried the scrap of Copper, Aluminium and Brass in vehicle bearing No. HR-61-A-4041 which was alleged to be robbed and the police had found the same in vehicle Nos.KA-05-AC-7002 and KA-13-8671 before a godown at Madanayakanahalli, Bengaluru, intercepted the vehicle - HELD THAT - The appellate authority came to a conclusion that the original documents tendered at the HRCP (in), Attibele, which is the border entry check post of Karnataka were not traceable on account of theft and since the enforcement authority had only an access to verify the duplicate set of documents, could not have arrived at a conclusion that the consignor M/s Bhagawathi Enterprises is from Salem, Tamil Nadu, and the Cosignee being at New Delhi, in transit, no penalty could have been levied by the check post officer. The revisional authority having found the same being erroneous and prejudicial to the interest of the Revenue, has rightly initiated the suo moto revisional proceedings, more particularly, when the check post officer and ACCT (Enforcement) had conducted thorough investigation into the genuineness of the consignment, the goods and had come to a conclusion that the goods have been loaded in Karnataka by M/s Bhagawathi Enterprises, the movement of goods not being established with the relevant documents, in the background of non existing address of the consignee M/s Metal Traders, Delhi, has held that the order of the first appellate authority was unjustifiable. The check post officer has categorically given a finding that the documents have not been tendered for examination at the inward check post of the Karnataka State and no seal of the check post in the State was found in invoices in addition to the transit pass required for inter-State transit. The said discrepancies would certainly come within the ambit of Section 53(2) of the Act and thus, imposition of penalty under Section 53(12) for violation of the provisions of Section 53(2) of the Act cannot be found fault with. The proceedings initiated by the Additional Commissioner of Commercial taxes to set aside the order of the first appellate authority cannot be held to be unjustifiable - Appeal dismissed.

Summary

Issues:
1. Appeal under Section 66(1) of the Karnataka Value Added Tax Act, 2003 against order dated 27.1.2018.
2. Alleged violation of Section 53(2) of the Act by the appellant.
3. Restoration of penalty order passed under Section 53(12) of the Act.
4. Revisional proceedings initiated by the Additional Commissioner of Commercial Taxes under Section 64 of the Act.
5. Discrepancies in transit pass and documents related to inter-State transit goods.

Analysis:
1. The appellant, a transporter of goods, appealed against the penalty order passed by the Additional Commissioner of Commercial Taxes, Bengaluru, under Section 64(1) of the Karnataka Value Added Tax Act, 2003. The penalty was imposed for an alleged violation of Section 53(2) of the Act related to the transportation of scrap of Copper, Aluminium, and Brass valued at ?58,56,130.

2. The appellant transported goods from Salem, Tamil Nadu, to Delhi without complying with the provisions of Section 53(2) of the Act. The first appellate authority allowed the appeal, but the Additional Commissioner of Commercial Taxes set aside this order, initiating revisional proceedings under Section 64 of the Act. The revisional authority found the lack of possession of transit pass by the appellant as a violation of Section 54, leading to the restoration of the penalty order under Section 53(12) of the Act.

3. The Check Post Officer levied the penalty for breaching Section 53(2) of the Act, which was challenged by the appellant. The appellate authority noted the absence of original documents due to theft and concluded that the penalty was unjustified. However, the revisional authority disagreed, stating that thorough investigation by the enforcement authorities revealed discrepancies in the consignment details, justifying the penalty under Section 53(12) of the Act.

4. The Coordinate Bench decision of the Court in a similar case upheld the imposition of penalty for non-recording of transit pass at the inward check post. The discrepancies in document verification and lack of proper seals led to the conclusion that the penalty under Section 53(12) was warranted. The Additional Commissioner's decision to set aside the first appellate authority's order was deemed justifiable, and the appeal was dismissed for lacking merit.