2024 (10) TMI 1050 - HC - VAT / Sales Tax

Evasion of tax - person responsible for such evasion - whether the petitioner can be seen as person who sought to evade the tax payable in respect of the consignment of jewellery that was brought by him from Mumbai to Cochin? - HELD THAT - Taking in isolation the fact that the petitioner had not covered the consignment that was brought by him from Mumbai to Cochin by a valid Form 8FA declaration as mandated under the Kerala Value Added Tax Rules, the Commercial Tax Authorities in the State were perhaps justified in assuming that but for the detection, the petitioner might have well evaded his tax liability by clandestinely selling the consignment of jewellery within the State of Kerala. The imposition of a penalty on him in that event would have been acceptable. In the instant case however, we find that it is admitted by the Commercial Tax Officer at the Check Post in Walayar that the very goods that were brought by the petitioner from Mumbai to Cochin were taken back in their entirety to Mumbai via Coimbatore. The document produced by the petitioner as Annexure IV along with the O.T. Revision sufficiently corroborates the said fact. As a matter of fact, there was no sale occasioned of the jewellery items brought by the petitioner from Mumbai to Cochin within the State of Kerala. Although at the stage of determining the penal liability of the petitioner under Section 67 of the Act, the State was justified in presuming that but for the detection/apprehension of the petitioner, the petitioner could well have evaded the tax due to the State, in the light of the subsequent events which clearly points to the petitioner not having actually sold any items within the State, and having taken the goods outside the State a lenient view in the matter of the imposition of penalty is called for. The O.T. Revision is disposed off.

Summary

Issues:
1. Impugning an order of the Kerala Value Added Tax Appellate Tribunal regarding penalty imposition for attempted tax evasion.
2. Failure to carry requisite declarations in Form 8FA as mandated by the Kerala Value Added Tax Rules.
3. Proceedings under Section 47 and Section 67 of the Kerala Value Added Tax Act.
4. Consideration of evidence regarding the return of goods to Mumbai after being detained at Cochin airport.
5. Imposition of penalty under Section 67 of the Act.

Analysis:
The petitioner, a dealer in gold and diamond jewellery, was detained at Cochin airport for not carrying the required declarations in Form 8FA as per the Kerala Value Added Tax Rules. The petitioner generated the necessary form after being served with a notice under Section 47(6) of the Act. The petitioner took the consignment back to Mumbai via Coimbatore, and documents indicated the goods were taken entirely out of the state. The proceedings under Section 47 concluded in favor of the petitioner. However, in proceedings under Section 67, a penalty was imposed despite evidence of the goods being returned to Mumbai not being considered by the authorities. The Appellate Tribunal confirmed the penalty, leading to the petitioner challenging the decision.

Upon hearing both parties, the court considered the provisions of Section 67, which allow for a penalty not exceeding twice the evaded tax amount or Rs. 10,000 in other cases. The court examined whether the petitioner intended to evade tax by not declaring the consignment. Despite initial justifications for penalty imposition, the court noted that the goods were returned to Mumbai as evidenced by Annexure IV. As no sale occurred within Kerala, a lenient view was taken, and the penalty was reduced to Rs. 1 lakh, considering the petitioner's infringements of the tax rules. The court set aside the Appellate Tribunal's order and disposed of the O.T. Revision accordingly.