2023 (8) TMI 113 - HC - VAT and Sales Tax

Levy of penalty in terms of Section 47(6) of the KVAT Act - gold ornaments brought into Cochin by the petitioner were in fact taken back to Mumbai by the petitioner on the same day or not - scope of term baggage for the purposes of the Explanation I to S. 46 (3) of KVAT Act - HELD THAT - It is not in dispute that in respect of the amount of Rs. 15 lakhs that was paid by the petitioner towards alleged tax due on the said consignment, he has disputed his tax liability by preferring an application for refund, which has not been adjudicated by the intelligence officer till date. Rather than issue a direction to the intelligence officer to adjudicate the matter at this belated stage, it is felt that on account of lapse of time this aspect can now be adjudicated by the Appellate Tribunal, which is the final fact finding authority, after calling for the refund application filed by the petitioner from the Intelligence officer concerned. The other issue raised by the petitioner, namely whether for the purposes of imposition of penalty under Section 47 of the KVAT Act, the transportation of gold ornaments as personal luggage would have any implication considering the provisions of Explanation 1 to Section 46(3) of the KVAT Act, also has to be considered by the Appellate Tribunal. The said aspect although specifically raised by the petitioner in the appeal before the Tribunal and noticed by the Tribunal at paragraph 3(2) of the order impugned herein, was not adverted to in the operative part of the order of the Tribunal. The issue requires to be considered by the Tribunal since it may have a bearing on the legality of the penalty imposed on the petitioner. Matter remanded back to the Tribunal for a fresh adjudication of the matter - appeal allowed by way of remand.

Summary

Issues involved: Impugning order of Kerala Value Added Tax Appellate Tribunal regarding penalty imposition and refund application adjudication.

Issue 1: Penalty Imposition

The petitioner was found in possession of gold ornaments without necessary documents as per KVAT Act, leading to penalty proceedings under Section 47(6) of the Act. Despite the petitioner's contention that the goods were part of his luggage, the Tribunal upheld the penalty, citing potential tax evasion if not apprehended. The Tribunal also dismissed the appeal based on lack of valid documents proving the goods were taken back to Mumbai. The petitioner argued that the refund application for the tax paid was not adjudicated, questioning the justification for demanding tax when the goods were returned to Mumbai on the same day.

Issue 1 Resolution:
The High Court remanded the matter to the Tribunal for re-examination. Specifically, to determine if the gold ornaments were indeed taken back to Mumbai on the same day and whether they qualified as "baggage" under the KVAT Act. The Court emphasized the need for the Tribunal to consider the pending refund application and the implications of transporting gold ornaments as personal luggage on the penalty imposition.

Issue 2: Refund Application Adjudication

The petitioner's application for tax refund remained unadjudicated by the intelligence officer, with the Government Pleader arguing against belated adjudication. The Court acknowledged the lapse in adjudication and opted for the Appellate Tribunal to review the refund application alongside the penalty imposition issue.

Issue 2 Resolution:
The High Court set aside the Tribunal's order and instructed a fresh adjudication by the Tribunal, considering the observations in the judgment. The petitioner was granted the opportunity to present all relevant contentions during the re-examination, with a three-month time limit for the Tribunal to issue a new decision.

In conclusion, the High Court remanded the case back to the Tribunal for a comprehensive review, focusing on the unresolved issues of penalty imposition and refund application adjudication. The petitioner's concerns regarding the transportation of gold ornaments and the pending refund claim were deemed essential for a fair determination of the matter. The Tribunal was directed to reevaluate the case within a specified timeframe, allowing the petitioner to present additional arguments in support of their position.