2014 (1) TMI 829 - SC - VAT and Sales Tax

Contravention of Section 5(3)(7) of the KGST Act - Penalty u/s 45 A(g) - Held that - assesses M/s. Apollo Tyres Ltd., have contravened the provisions of Section 5(3) (7) of the KGST Act, 1963 by purchasing Carbon black and Rubber chemicals to the tune of Rs.1,64,24,079.10 by issuing form 18 declarations for the period from 12/82 to 3/83. Out of this Rubber chemicals and carbon black for Rs.1,34,79,016/- were utilized for the production of tyres, tubes & flaps transferred to other Branch offices outside the Kerela for sale - Therefore, there is no infirmity in the impugned judgment(s) and order(s) which would call for interference - Decided against assessee.

Summary

Issues:
1. Contravention of Section 5(3)(7) of the KGST Act leading to penalty imposition.
2. Appeal against the order passed by the High Court.

Analysis:
1. The appellant, a company engaged in manufacturing automobile tyres and tubes in Kerela, was issued a notice for contravention of Section 5(3)(7) of the KGST Act. The assessing authority imposed a penalty under Section 45 A(g) of the KGST Act after finding the contravention proven. The penalty was imposed for purchasing Carbon black and Rubber chemicals using form 18 declarations, with a portion of these materials utilized for production and sale outside Kerela. The penalty amount imposed was Rs. 11,86,150, being twice the amount of tax sought to be evaded. The appellant appealed against this order through various levels of authorities but was unsuccessful, leading to the matter being brought before the Supreme Court.

2. The Supreme Court, after hearing arguments from both the appellant and the Revenue, reviewed the orders passed by the lower authorities. The Court found no infirmity in the impugned judgment and orders of the lower courts, thereby dismissing the civil appeal. The appellant's plea for interference was rejected, upholding the penalty imposed for the contravention of Section 5(3)(7) of the KGST Act.