9911796707
TMI Blog2003 (3) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is suspected". The petitioner got the goods released on furnishing security deposit for Rs. 5,31,912 at Walayar. The Sales Tax Inspector thereafter forwarded the files to the Sales Tax Officer (Enquiry) for adjudication. Subsequently, pursuant to the order of the Board of Revenue, the files were forwarded by the Sales Tax Officer (Enquiry), Palakkad to the Sales Tax Officer (Enquiry), Kozhikode, for adjudication as contemplated under section 29A(4) of the Act. The Sales Tax Officer (Enquiry) by his order dated August 27, 1992 imposed a penalty of Rs. 5,31,912 on the petitioner and ordered recovery of the penalty by way of adjustment of the security. The petitioner took up the matter in appeal before the Appellate Assistant Commissioner. Agricultural Incometax and Sales Tax, Kozhikode, who by his order dated November 1, 1997 dismissed the appeal. The further appeal filed before the Tribunal was also dismissed. 2.. Sri Jayasankaran Nambiar, learned counsel for the revision petitioner submitted that the transport of the machinery was supported by all statutory documents prescribed and that there was no attempt to evade any tax due to the Kerala Government. The counsel submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is exigible to tax under the Act and since the transport of the machinery was not supported by proper documents, penalty was rightly imposed. The counsel also relied on the decision of the Supreme Court in 20th Century Finance Corpn. Ltd. v. State of Maharashtra [2000] 119 STC 182 and submitted that since the transaction being one of inter-State sale there is no question of any attempt of evasion of tax. 3.. We have also heard the learned Government Pleader for the respondent. He sought to sustain the orders of the Tribunal and the authorities below. As already noted, the three consignments of machineries sent by Presswell Industries, Belgaum to the petitioner, C/o. M/s. English India Clays Ltd., Thiruvananthapuram, were intercepted at the sales tax check-posts at Feroke and Walayar and the consignments were released on their furnishing security as contemplated under section 29A(2) of the Act. Thereafter the files were forwarded to the Sales Tax Officer (Enquiry), Kozhikode. The contention taken by the petitioner is that the petitioner is a financier, that under the agreement between the petitioner and English India Clays Ltd., Thiruvananthapuram, for giving machinery on a monthl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the hirepurchase agreement is paid by the customer. There is also no dispute with regard to the fact that the delivery is given by the outside supplier to the customer in Kerala, obviously through public carriers. The question is whether the transactions of this nature come within the definition of 'sale' as contained in Explanation (3) to section 2(xxi) of the Kerala General Sales Tax Act, 1963 which was introduced in the Act pursuant to the Constitution 46th (Amendment) Act, which provided for, among other things, levy of tax on transaction of hire purchase. The definition of 'sale' incorporated in Explanation (3) to section 2(xxi) is the same as the definition of 'sale' contained in article 366(29A)(c) of the Constitution of India. The point of sale contemplated under Explanation (3) to section 2(xxi) is delivery of goods under hire-purchase. Therefore, the only question is whether delivery of goods by the assessee to the customers is in Kerala to enable the department to levy sales tax on the hire charges in Kerala. From the nature of transaction narrated in the Tribunal's order, we find that there is purchase of goods by the assessee from outside Kerala and delivery o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Builders Association of India v. Union of India [1989] 73 STC 370 and in Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 204 relied on by the assessee the division Bench observed that the said decisions have application only in respect of first of the two transactions, i.e., purchase of goods by the assessee from the outside State suppliers and, therefore, so far as the supplier's sales to the assessee are concerned, they are inter-State sales falling within section 3(a) of the Central Sales Tax Act, 1956. The division Bench however observed that the question is with regard to the second transaction between the assessee and the customer in Kerala, which gives rise to the liability for the disputed tax. The division Bench further observed thus: "We feel, as already observed by us above, there are two transactions, one is the inter-State purchase by the assessee, and the other is the delivery of goods under the hire-purchase agreement by the assessee to the customer in Kerala, which is the deemed sale under Explanation (3) to section 2(xxi) of the Kerala General Sales Tax Act, 1963. Therefore the decisions referred to above do not affect the assessee's liability for tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement already executed, for their use on payment of licence fee Rs. 70,000 per mensem. The appellants have no case that they have not received the licence fee so agreed to from the English India Clays Ltd., so, it is clear that the appellants are entitled to get Rs. 8,40,000 per year as licence fee for the machinery they purchased and made available for the use of English India Clays Ltd., Thiruvananthapuram. There can be no doubt that such receipts tantamount to taxable turnover at the hands of the appellants as per section 5(1)(iii) of the Kerala General Sales Tax Act, 1963." The Tribunal has further observed as follows: "Their contention that there are no transactions effected within the Kerala State has no force in the light of the agreement and the relevant recitals therein. The agreement itself is seen executed in Kerala. So, as rightly observed by the Enquiry Officer and the first appellate authority, if there had been no interception and detention of goods by the sales tax authorities at check-posts, this transaction would have been un-noticed by the department and that would have ultimately resulted in loss of revenue to the State. It is in the above circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 of 2000. 8.. The Tribunal had entered a categorical finding that the contract between the petitioner and English India Clays Ltd., was entered into in Kerala. It was also held that there was no privity of contract between the outside seller and English India Clays Ltd., and that the sellers have delivered the goods to the said party only as per the instructions of the petitioner. It was held that under the purchase order placed by the petitioner with the outside supplier, there is an inter-State purchase, as per which the outside supplier has to deliver the goods to the assessee in Kerala. The invoice (annexure B) issued by the outside supplier also shows that the consignee is the petitioner C/o. English India Clays Ltd. These facts, as found by the Tribunal do not fit in with the principles laid down by the Supreme Court in 20th Century Finance Corpn. Ltd. case [2000] 119 STC 182 mentioned supra. For the application of the propositions laid down by the Supreme Court in the said case there should have been an agreement between the petitioner and the licensee for the inter-State movement of the goods from one State to another as an incident of sale. The findings of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities. 12.. Considering the facts and circumstances and the legal plea discussed above we are of the view that the imposition of the maximum penalty is not justified. It is not clear from the records as to whether the transaction in question has been subjected to sales tax under the Act. If the transaction has already been subjected to tax under the Act and the same has become final the penalty imposed as per annexure C order will be limited equal to the tax sought to be evaded. On the other hand, if the transaction has not been subjected to tax at the hands of the petitioner the penalty imposed as per annexure C order will be limited to one and a half times the tax sought to be evaded. 13.. The Sales Tax Officer (Enquiry) will modify the penalty order with notice and opportunity to the petitioner and the consignee, viz., English India Clays Ltd., Veli, Thiruvananthapuram, in that regard. The petitioner is free to adduce evidence as to whether it was assessed to tax on the transaction in question. The Sales Tax Officer (Enquiry) will also verify as to whether the transaction in question had been subjected to tax under the Act from the concerned assessing authority before passi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
