2014 (4) TMI 368 - HC - VAT and Sales Tax

Inter-State transfer All documents except Delivery note present Penalty for alleged movement of goods within State - Held That - The provisions of Section 53 of the KVAT Act applied to a transfer of goods inter-states i.e. from place to place in the state It is not disputed by Revenue that is a inter-state transport and the assessee has produced sufficient material to show that the transport was genuine transport from branch to branch - The Contention that there was no delivery note, the assesse should suffer penalty, appears to be untenable contention - The check post is almost on the border of the Karnataka State Boundary - There was no possibility to divert the goods inter- state - The goods were accompanies by the authenticated documents - It is evident from the material that it is a inter-state movement and branch to branch transfer in which event the question of liability U/s 53. of the KVAT Act does not arise - Section 53 is applied when there is a movement of goods within the State itself - When it is a inter-state transport, the provisions of Section 53 do not apply - Therefore, the order of the appellate authority is sound and proper - The order passed by Addl. Commr is set aside Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Section 53 of the KVAT Act in the context of inter-state transport.
2. Validity of penalty under Section 53 (12) of the KVAT Act for a branch transfer of goods without a delivery note.

Analysis:
1. The case involved a dealer in plywood transporting goods from Bangalore to Chennai, claiming it as a branch transfer. The check post authorities detained the vehicle for not producing a delivery note, issuing a notice under Section 53 (12) of the KVAT Act. The Appellate Authority accepted the explanation of the assessee, emphasizing the genuine inter-state nature of the transport. The High Court noted that Section 53 of the KVAT Act applies to goods transferred within the state, not inter-state movements. The court found the absence of a delivery note for a branch transfer insufficient to justify the penalty, as the documents presented indicated a legitimate inter-state transfer, leading to the setting aside of the revision order upholding the penalty.

2. The crux of the issue was the application of Section 53 of the KVAT Act to inter-state transport scenarios. The respondent conceded the inter-state nature of the transport, supported by documentation proving the branch-to-branch transfer. The court highlighted that Section 53 pertains to movements within the state, making it inapplicable to inter-state transfers. The proximity of the check post to the state boundary and the presence of authenticated documents reinforced the legitimacy of the inter-state transfer, negating the need for compliance with Section 53 requirements. Consequently, the appellate authority's decision in favor of the assessee was deemed appropriate, warranting the reversal of the revision order that imposed the penalty under Section 53 (12) of the KVAT Act.