Kerala High Court
State Of Kerala vs M/S. Tmk Traders on 6 November, 2013
Author: K.Vinod Chandran
Bench: K.Vinod Chandran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
TUESDAY, THE 27TH DAY OF FEBRUARY 2018 / 8TH PHALGUNA, 1939
OT.Rev.No. 69 of 2014
AGAINST THE ORDER/JUDGMENT IN TAVAT 642/2013 OF KERALA VALUE ADDED TAX
ADDITIONAL APPELLATE TRIBUNAL, PALAKKAD DATED 06-11-2013
REVISION PETITIONER(S)/APPELLANT/REVENUE :
STATE OF KERALA
BY ADV.MOHAMMED RAFEEQ, SR.GOVERNMENT PLEADER
RESPONDENT(S)/APPELLANT/ASSESSEE:
M/S. TMK TRADERS,
VENGARA, MALAPPURAM, PIN - 676 505.
R1 BY ADV. SRI.T.M.SREEDHARAN (SR.)
R1 BY ADV. SRI.V.P.NARAYANAN
R1 BY ADV. SMT.DIVYA RAVINDRAN
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 27-02-2018,
THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
OT REV.69/2014
APPENDIX
PETITIONER'S ANNEXURES
ANNEXURE-A : COPY OF PENALTY ORDER DATED 24.1.2008 PASSED BY THE
INTELLIGENCE OFFICER III, COMMERCIAL TAX, MALAPPURAM.
ANNEXURE-B : COPY OF FIRST APPELLATE ORDER DATED 2.7.2011 PASSED BY
THE ASSISTANT COMMISSIONER (APPEALS), OFFICE OF THE DEPUTY COMMISSIONER
(APPEALS), COMMERCIAL TAXES, PALAKKAD IN KVATA NO.1838/2008.
ANNEXURE-C : COPY OF SECOND APPELLATE ORDER DATED 6.11.2013 IN TA
(VAT) NO.642/2013.
//TRUE COPY//
PS TO JUDGE.
jg-7/3
K.VINOD CHANDRAN & ASHOK MENON, JJ.
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O.T.Rev.No.69 of 2014
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Dated this the 27th day of February, 2018
O R D E R
Vinod Chandran, J.
The revision petitioner is the State which challenges the order of the Kerala Value Added Tax Additional Appellate Tribunal in a batch of cases, where security deposit was demanded on detention of goods and then penalty was imposed. There were, in fact, ten cases on which penalty was imposed in a particular assessment year. The preliminary ground taken by the learned counsel for the respondent to non- suit the State is that the State has not filed appeals from the other nine instances on which penalty was imposed.
2. The learned counsel to buttress the preliminary objection, relies on (2001) 249 ITR 0219 [Union of India v. Kaumudini Narayan Dalal] . In that decision we find that before the Honourable Supreme Court, a judgment of the High Court was challenged in which an earlier judgment of the very same High Court was followed. The earlier judgment was accepted by the O.T.Rev.69/14 -2- Department and hence the Honourable Supreme Court said that there cannot be an appeal in a subsequent assessment year, when the earlier judgment had been accepted. We do not think that there is any application of the aforesaid dictum in this case. Imposition of penalty in each of the instances was different and distinct. We do not have the files of the earlier years. But we see from the order of the Tribunal that in every case, it was found that the delivery note was not accompanying the transport. The State thought it fit to file appeal only from one of the said penalty orders. We do not think that is a reason to non-suit the State in the revision filed by them against one of the penalty orders.
3. The question of law as raised by the State is whether the Tribunal was right in deleting the penalty imposed on the ground that there was no evasion of tax since the transaction was reflected in the accounts.
4. The learned counsel for the respondent contends first that iron scrap dealt with by the respondent assessee is not a notified goods. Section 2(xxx) of the Kerala Value Added Tax Act, 2003 is O.T.Rev.69/14 -3- pointed out to advance the case. Iron and steel definitely is included in the notified goods and the contention is that the goods under transport in the instant case was iron scrap. We asked a specific question as to whether iron scrap and iron are differently taxable in the Schedules. Iron scrap is not specifically mentioned in the definition clause. Serial No.43 of Third Schedule indicates a number of items, which come under the common family of ferrous and non ferrous metals and alloys; non ferrous metals such as aluminium, copper, zinc and extrusions of those. In such circumstances, iron scrap which is the common terminology used in the market cannot be treated as goods distinct or different from iron.
5. The further contention is with respect to transaction having reflected in the accounts. We should notice that the defect noticed is that the goods were not accompanied with delivery note which is a necessary requirement as per the KVAT Act. On detention and registration of crime, if the assessee has included the transaction in the accounts, it would not absolve the assessee from the liability to penalty O.T.Rev.69/14 -4- under Section 47. We, hence answer the question raised by the Revenue in favour of the Revenue and against the assessee.
6. The learned counsel for the assessee then pointed out that there is no specific finding as to evasion of tax. It is pointed out that sub-Section (6) of Section 47 enables imposition of penalty only if there is evasion of tax. In the present case, we find that by Annexure-A, there is no explicit finding but however, it can easily be inferred that the imposition of penalty was on account of there being no delivery note accompanying the transport which was a clear attempt to evade tax. We, hence, do not find any reason to accept the claim of the assessee.
However, we see from the order that there has been an estimation made of the value of the goods to demand security deposit. This is without any basis. The invoice accompanying the transport showed the value of Rs.78,000/-. Hence, the evasion would be only with respect to the tax element as per the invoice. Computation of tax being possible, the penalty imposed has to be confined to maximum of twice the amount of O.T.Rev.69/14 -5- tax sought to be evaded. The tax due for Rs.78,000/- would be computed and double the amount evaded would be imposed and the respondent allowed refund of the balance from Rs.10,000/-, if there is any. If there is any excess computation, then of course the State is liable to recover the same. The OT Revision is allowed.
Sd/-
K.VINOD CHANDRAN JUDGE Sd/-
ASHOK MENON JUDGE jg