Karnataka High Court
Wipro Ge Healthcare P. Ltd vs The Addl Commissioner Of Commercial ... on 6 December, 2013
Bench: N.Kumar, Rathnakala
1
THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 6TH DAY OF DECEMBER 2013
PRESENT
THE HON'BLE MR. JUSTICE N.KUMAR
AND
THE HON'BLE MRS.JUSTICE RATHNAKALA
SALES TAX APPEAL NO.13 OF 2011 (TAX)
BETWEEN :
WIPRO GE HEALTHCARE P. LTD.
(FORMERLY WIPRO GE MEDICAL
SYSTEMS LTD.), NO.4
KADUGODI INDUSTRIAL ESTATE
BANGALORE - 560 067
REP BY ABRAHAM KURUVILLA
TAXATION MANAGER ... APPELLANT
(BY SRI.K.P.KUMAR, SR. COUNSEL FOR
M/S. KING & PARTRIDGE, ADVS.)
AND :
THE ADDL. COMMISSIONER OF
COMMERCIAL TAXES
ZONE-II, VANIJYA THERIGE
KARYALAYA, KALIDASA ROAD
GANDHINAGAR
BANGALORE - 560 009 ... RESPONDENT
(BY SMT.SUSHEELA, AGA.)
---
This STA is filed under Section 24(1) of the KST Act,
1957, against the revision order dated 10.02.2011 passed
2
in No.SMR/KST/APP-2/CR-96/10-11 T.No.882/2010-11
passed by the Additional Commissioner of Commercial
Taxes, Zone-II, Bangalore, revising the appeal order
dated:05.10.10 of FAA and restoring the penalty order
dated 22.01.2003 of CTO.
This appeal coming on for Hearing this day,
N.KUMAR J., delivered the following:
JUDGMENT
This appeal is by the appellant challenging the order passed by the Additional Commissioner of Commercial Taxes setting aside the order passed by the Joint Commissioner of Commercial Taxes who had set aside the order imposing the penalty and restoring the penalty.
2. The appellant - M/s. Wipro GE Health Care Pvt. Ltd. is a private limited company dealing with manufacturing and sale of medical diagnostic equipments and also trades in these commodities by importing the same from other countries. M/s. Vijaya Medical Centre, Vishakapatnam has obtained quotation from M/s. GE Pacific Pvt. Ltd., Singapore for purchase of used medical diagnostic equipments by name a magnetic resonance imaging system. The purchaser M/s. Vijaya Medical 3 Centre who is at Vishakapatnam informed the seller that the site for installation will be ready by the end of March 2002. Meanwhile, the appellant received the goods from the customs authorities on an authorization from M/s. Vijaya Medical Centre and the goods, after release, were stored with Transport Corporation of India, a transporting agency for the purpose of shifting the goods to Vishakapatnam from Bangalore. The goods consignment notes were also raised by consignment Nos.04990 and 04991, both dated 26.3.2002. These consignment notes were raised without delivery of the goods to the transporting agency. The goods were transported by air way bill No.546717863T dated 29.3.2002. The goods were cleared by the customs authorities on 25.5.2002. The goods were under the custody of C and F agent M/s.Jayem Impex Pvt. Ltd., Bangalore till it was delivered to the transporting agency TCI. These goods, in the meanwhile was shifted to the appellant's godown in the compound of Alembic Glass Company. M/s. Vijaya Medical Centre requested the appellant to transport the goods to Vishakapatnam. Therefore, these goods were 4 moving from godown of TCI to Vishakapatnam with necessary documents on 23.12.2002. On 24.12.2002, the vehicle was intercepted by the check post authorities. On such interception, it was called upon to produce documents. 14 documents were tendered to the authorities. The said documents are as under:
i. Lorry copy No.4990/26-3-2002 issued by T.C.I. Ltd., K.R.Puram branch to Vishakapatnam (AP) ii. Carbon copy of the above.
iii. Letter issued from M/s. Vijaya Medical Centre, Vishakapatnam (AP) on 26th March, 2002 to hold the consignment i.e. 04990 & 04991 dated 26.3.2002 iv. Commercial Invoice issued by M/s. GE Pacific Pte. Ltd., Singapore dated 26th March, 2002 to M/s. Vijaya Medical Centre for the sale of One GE GOLDSEAL 1.5T Magnetic Resonance Inage System for the value of $4,74,603.00 v. Custom Document dated 24.5.2002 letter from M/s. Vijaya Medical Centre, Vishakapatnam for authorization for M/s. Wipro GE medical Centre to clear the consignment with Customs.5
vi. Lorry copy No.4991/26.3.2002 issued by TCI Ltd.
K.R.Puram branch to Vishakapatnam (AP)
vii. Carbon copy of the above
viii. Copy of the above serial No.3
ix. Copy of the serial No.4
x. Copy of the serial No.5
xi. Form-39 No.6350702/14.12.2002 issued by M/s.
Wipro GE Medical Systems, Bangalore to move Helium Magnet from TCI Ltd. godown at Nelamangala to M/s. Wipro GE Alembic Godown.
xii. Duplicate copy of Form 39 xiii. Letter issued by M/s. Wipro GE Medical Systems Bangalore as 'to whom so it may concern' dated 14.12.2002 xiv. Copy of the above.
3. On verification of the said documents, authorities got certain doubts. The same was brought to the notice of the Joint Commissioner of Commercial Taxes (Vigilance) who directed the authorities to cause verification at the transport godown and accordingly, verification was done. After verification, a notice was duly served on the driver on 2.1.2003 proposing as to why a penalty of `78,44,555/- being thrice the amount of tax applicable on the value of 6 the goods at `3,92,22,776 should not be levied. On 8.1.2003, the assessee appeared before the authorities, filed their reply to the notice. After considering their objections, the authority was of the view that there are various inconsistencies in the transaction and establishes a case of evasion of sales tax. Therefore, he deemed it fit to confirm the penalty proposed in the notice issued and therefore, the penalty of `78,44,555/- was levied. Aggrieved by the same, the appellant preferred an appeal under Section 20(5) of the Karnataka Sales Tax Act, 1957 (for short, hereinafter referred to as 'the Act').
4. The Appellate Authority, after considering the entire material on record, was of the view that the goods were imported from outside the country and were on movement to Vishakapatnam. There was a delay in the process of movement because of the purchaser's instruction, not to transport the goods till the site is ready. Therefore, these goods were lying in the city of Bangalore, sometimes in the Transport Corporation of India and sometimes with the Appellant's godown in Almbic Glass 7 factory's compound. Therefore, the Taxing Authorities looked at them with suspicious eyes and inferred malafide intention in the movement of the goods. The appellant, instead of clarifying the confusion, has adopted a policy of confrontation. However, the material on record discloses that there is no malafide intention of evading tax. When these goods were imported goods with valid documents from customs authorities, the goods being technically sensitive, they had to be transmitted from one place to another to keep them in good condition, which happened in this case. The purchaser created unnecessary problems in requesting not to transport the goods till the site is ready, but for this lapse, the documents produced clearly shows the transaction in question is a bonafide one. The authorities, without verifying carefully the documents, in the facts of this case, have proceeded to impose a penalty which is unsustainable. Therefore, the appeal came to be allowed setting aside the penalty imposed.
5. The Addl. Commissioner of Commercial Taxes, by virtue of the power conferred under Section 22(a)(1) of the 8 Act initiated suo motu revision proceedings. He issued a show cause notice calling upon the appellant to show cause why the order of the Appellate Authority should not be set aside and the order imposing penalty should not be restored. The appellant filed a detailed reply setting forth his case. After overruling all the objections raised by the appellant, the reviewing authority was of the view that the transporter raised the LR much before the arrival of the goods from the foreign destination. The dealer company has taken delivery of goods though it was earmarked to M/s. Vijaya Medical Centre, which goes to prove that there was a contravention of provisions of Section 28 of the Act and an attempt was made to evade the tax under the Act.
The documents submitted by the authorised representatives have not answered the points raised in the show cause notice dated 21.12.2010. The document had not explained how there was no contravention of the provisions of Section 28(2) of the Act and there is no attempt on the part of the appellant to evade the taxes under the Act. The perusal of the record reveals that the goods have moved in the course of import from a foreign 9 destination and has not reached the ultimate destination and in between, goods have been delivered to the dealer company which was a clear contravention and accordingly, he set aside the order of the Appellate Authority and restored the original order imposing penalty. It is against the said order, the appellant has preferred this appeal.
6. The learned Senior Counsel appearing for the appellant assailing the impugned order contended that, in the course of transportation of goods in the vehicle, it was intercepted, the person in-charge of the goods vehicle did carry with him the bill of sale and the goods vehicle record, which was delivered to the officer in-charge. When he entertained a doubt and called upon him to produce the documents, they have produced in all about 14 documents. After examining the same, on imagination, the penalty is imposed, which is contrary to Section 28-A of the Act. Therefore, he submits that, the impugned orders require to be set aside and the Revisional Authority without any justification interfered with the order of the Appellate Authority, which was based on the legal evidence.
10
7. Per contra, the learned Government Advocate supporting the impugned order contended that, there were several discrepancies in the documents, which are produced and the appellant was not able to clarify the same and therefore, the authorities were not satisfied and were justified in imposing penalty, which order was unnecessarily set aside by the first appellate authority, which has now been restored by the revisional authority. Therefore, she submits that no case for interference is called for.
8. Section 28-A of the Act deals with establishment of checkpost or barrier and inspection of goods while in transit. The object behind this provision is to prevent or check evasion of tax under the Act. It is for that purpose, the checkpost and barriers are established and such places have to be notified. Sub-section (2) of Section 28-A provides for what are the obligations of the owner or person-in-charge of a goods vehicle. It provides that he has to carry with him a goods vehicle record, a trip sheet or a log book, as the case may be and carry with him a bill of sale or a delivery note obtained from the prescribed authority or such other documents, containing such particulars as may be prescribed, in respect of the goods other 11 than those mentioned in sub-clause (c) carried in the goods vehicle.
9. Rule 23-B of the Karnataka Sales Tax Rules, 1957 (for short hereinafter referred to as 'the Rules') gives the particulars of bill of sale. It provides that it should contain the full name and address of the selling dealer with his Registration Certificate number; serial number of the bill and date; name and address of the buyer; Registration Certificate of the buyer if he is a dealer; description of the goods; quantity of the goods; value of the goods and signature of the selling dealer. However, where any dealer issues bills of sale by means of computer or any other similar device, he shall notify the Assessing Authority in advance, so that his signature could be examined. Once these particulars are contained in the bill of sale and shown to the authorities of the checkpost, the owner of the goods is entitled to carry the goods without any obstruction. However, Section 28-A (3-B) of the Act provides, where the officer-in- charge of the checkpost or barrier or the officer empowered as aforesaid on interception of the goods vehicle or inspection of any godown, is of the opinion that further verification is necessary with respect to either accuracy of the particulars furnished in the documents accompanying the goods under 12 transport or in transit, or as to the sufficiency and the cause adduced in respect of any contravention of sub-section (2), he may verify the particulars himself or cause it to be verified by referring the matter to any other officer. The said verification is to be confined only to the accuracy of the particulars furnished or the sufficiency and the cause justifying the contravention of sub-section (2). This is the scheme under the Act by which evasion of payment of tax is prevented.
10. In the instant case, from the facts set out above, it is clear that the goods, which was transported, was imported from Singapore by air and received at Bangalore. From Bangalore, it had to be transported to Vishakhapatnam where the purchaser resides. After the goods reached Bangalore, it was taken to the godown of Transport Corporation of India - transporter. It was first taken to the clearing agent M/s.Jayem Impex Pvt.Ltd., Bangalore. Then it was taken to the appellant's godown at Whitefield (within the compound of Alembic Glass Factory). From there it was moved to TCI's godown in Nelamangala and again it was taken to appellant's godown in Whitefield for refilling helium under a delivery note issued in Form No.39 dated 14.12.2002 and thereafter, after receiving the instructions from the purchaser, the goods were 13 transported through the vehicle. The bill of sale is at Annexure-F, which is styled as "Commercial Invoice No.48409". A perusal of the same shows that, it had the full name and address of the selling dealer; the date and serial number of the bill is mentioned. The name and address of the buyer is clearly set out. The description of the goods, quantity of the goods and the value of the goods are clearly mentioned. The invoice being a computer generated document, it does not bear the signature. Therefore, all that is prescribed under Rule 23-B of the Rules is clearly set out in Annexure-F - the commercial invoice. In addition to the commercial invoice, at the time of interception, as set out above, 14 documents are handed over, such as, lorry receipt, letter addressed by the purchaser to hold the consignment, customs documents, Form No.39 and letter issued by the appellant. The main grievance appears to be that in the commercial invoice, the date mentioned is 26th March 2002. Admittedly, the goods reached Bangalore only on 24.5.2002. Therefore, even before the arrival of the goods, the lorry receipt had been issued. It is a mistake. As per the clarification, the appellant has stated that when the vehicle was intercepted, the staff had raised these documents even before arrival of the goods. On verification by the authorities, it 14 is found out to be correct and therefore, on the score, they cannot impose penalty on the appellant. Even otherwise, the documents produced show that the customs clearance was given only on 24.5.2002. Therefore, the date 26.3.2002 loses its significance. The other documents produced show that the purchaser requested the appellant to hold the consignment as the site is not ready to receive the goods, that is the reason why it was not immediately transported to the purchaser, though the goods had reached Bangalore. In the meanwhile, before transportation, they wanted to ensure that the goods is in good condition and therefore, it was taken to the appellant's godown for filling up helium gas and it is thereafter it was transported. All these documents clearly establish that the goods after it is imported remained in Bangalore without being transported to the destination because of the request made by the purchaser. The date mentioned in the lorry receipt/goods consignment note is not correct and it is nobody's case that in the meanwhile the goods has changed hands. Admittedly, no tax liability is there on the goods because it is imported goods.
11. It was contended that, commercial invoice cannot be construed as a bill of sale and therefore, if the delivery note is a document, which they ought to have produced, is taken into 15 consideration, that the delivery note was not in accordance with law. The word "bill of sale" has been specifically defined under the Rules. It is not the word "bill of sale" on the document which is a crucial one, but it is the particulars mentioned in the bill of sale. The commercial invoice satisfied the requirement of a bill of sale and all the particulars mentioned in Rule 23-B of the Rules find a place in commercial invoice and therefore, the question of appellant producing a delivery note would not arise. Therefore, we do not see any substance in the said contention.
12. Keeping in mind the object with which Section 28-A of the Act is enacted viz., to prevent evasion of tax, when no tax was liable to be paid with this particular goods, the question of authorities holding that, there is an attempt to evade tax on the face of it is perverse. They have not kept the object of the legislation behind their mind. Even though 14 documents were produced and necessary clarifications were issued and on verification, it was found to be correct and legal, still the authorities wanted to impose penalty. This is not the way the statutory authority and its officials should function and hinder free movement of goods and thereby create problems for a businessman, which would indirectly affect the development of 16 the country and prosperity of the country. People would be shy to start any new ventures if such hindrance are created by the authorities in transportation of goods. Unfortunately, the revisional authority has not kept in mind the object behind this legislation, in particular, the relevant provision. The appellate authority on proper appreciation of the entire material on record has rightly set aside the order passed by the Assessing Authority. The said order is unsustainable and therefore, it is liable to be set aside. Hence, we pass the following order:
The appeal is allowed. The impugned order is hereby set aside. The order passed by the lower Appellate Authority is restored.
The material on record discloses that, inspite of an order of stay by the appellate authority on the premise that said order was not communicated to them, the bank guarantee has been encashed. If the authorities are so active in discharge of the duties, when it is found that they have exceeded their limits and interfered unnecessarily thereby the appellant suffered a lot of inconvenience, he has to be compensated. In that view of the matter, the respondent shall pay a cost of Rs.1,00,000/-.
However, it is made clear that if the authorities promptly repay 17 the amount with interest @ 12% per annum, which they have received by way of encashment of bank guarantee within 15 days from the date of receipt of copy of this order, the cost of Rs.1,00,000/- imposed is waived.
Sd/-
JUDGE Sd/-
JUDGE RV/KNM