Revision vs By Advs.Dr.K.B.Muhamed Kutty (Sr.) on 30 July, 2014

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Kerala High Court

Revision vs By Advs.Dr.K.B.Muhamed Kutty (Sr.) on 30 July, 2014

Of the three revisions, O.T.Rev.Nos.3 and 10 of 2015 are on identical facts. The same arose from penalties imposed under Sections 47 and 69 of the Kerala Value Added Tax Act, 2003 ('Act', for short). We need not labour much on the specific facts, since the defalcation is admitted. Detention was made of a vehicle transporting taxable goods, timber. On verification, it was found that there were no documents supporting the transport. Proceedings were initiated and penalty was imposed under Section 47 on the petitioner as dealer and again under Section 67, on the dealer itself in his capacity as owner of the vehicle.

2. The petitioner/dealer had a contention that the lorry was half loaded on the previous night and in the morning, checking was carried out by the Intelligence Squad in the premises of the OTRev.3,7&10/15 -2- petitioner and then directed the vehicle to be taken to the Police station. The Department counters with the assertion that the vehicle was sought to be detained in the course of transportation, for inspection. The vehicle having not been stopped, had to be chased and waylaid before inspection was carried out. We do not intend to consider the allegations and counter allegations on this aspect, since both the lower authorities, the fact finding authorities, have found against the dealer. The question of law raised is only as to whether penalty could be imposed under Sections 47 and 69 of the Act, thus, in effect, mulcting the petitioner/dealer with a double jeopardy on the same defalcation.

3. Section 47 of the Act speaks of detention and inspection of vehicles, upon which any defalcation noticed would be intimated to the driver of the vehicle with a demand for security deposit at twice the amount of tax sought to be evaded. Subsequently, proceedings are taken under Section 47 with due notice to the dealer as also to the transporter, and on the defalcation found to be proved, the adjudicating officer is entitled to impose penalty at OTRev.3,7&10/15 -3- twice the amount of tax sought to be evaded. The security deposit, then would be converted to penalty to the extent it is imposed by the adjudicating officer. This is the proceeding that is challenged in OT Rev.No.10 of 2015.

4. Under Section 69 of the Act, a transporting agency or a contract carriage, which is involved in a transport leading to imposition of penalty, could also be proceeded against. The agency or the owner of the contract carriage would be imposed with a like penalty to the extent of two times the tax sought to be evaded. In the present case, the owner of the vehicle was the dealer himself. It was hence, proceedings was initiated against the dealer in his capacity as owner and a penalty imposed again, at twice the tax sought to be evaded. The Tribunal upheld the proceedings taken but interfered with the penalty to the extent of reducing it to Rs.1,00,000/- from Rs.1,85,930/-, as imposed by the adjudicating officer.

5. We are of the opinion that the question of law has to be answered against the assessee. Merely because the dealer himself is OTRev.3,7&10/15 -4- the owner of the vehicle, it cannot be said that the proceedings under Sections 47 and 69 of the Act cannot be taken simultaneously. The proceedings under Section 47 of the Act is with respect to the defalcation of, supporting documents having not accompanied the transport, thus attempting an evasion of tax due to the Government. The said defalcation warrants imposition of penalty on the dealer at maximum of twice the amount of tax sought to be evaded. The transporter too has a liability to ensure due compliance of the provisions of the Act, and hence, there can be no defect found in the owner of the vehicle being proceeded against for such defalcation. This is the proceeding contemplated under Section 69. If the dealer and the owner of the vehicle are the same, proceedings can be initiated against the very same person in the different capacities; as the dealer and as the owner of the vehicle. Otherwise, the liability as imposed under Section 69 of the Act could be avoided, if the dealer purchases a vehicle of his own. The dealer in the present case is guilty of two offences, one as a dealer who attempted evasion of tax due to the Government and OTRev.3,7&10/15 -5- then as a transporter who failed to comply with the obligations of the transporter as enjoined under the Act and the refusal to stop the vehicle for inspection, when directed so to do. The vehicle had evaded checking by the authorities and as is seen from the records, it had to be chased and intercepted for carrying out the inspection. This clearly brings out the connivance of the dealer in having attempted to evade tax. We do not see any reason to interfere with the orders of penalty, one of which was modified by the Tribunal.

6. OT Rev.No.7 of 2015 is also with respect to penalty imposed on inspection of a transport, wherein there was a correction in the delivery note which raised a suspicion of multiple transport having been effected. The dealer was imposed with a penalty at twice the tax amount sought to be evaded and the security deposit made at the time of detection was converted to penalty. Both the appellate authorities have found against the petitioner. We do not see any question of law arising from the order impugned. The allegation as to multiple transport for reason of correction carried out in the delivery note is quite plausible. The OTRev.3,7&10/15 -6- penalty imposed at the maximum is also proper considering the habitual evasion practiced by the dealer. We decline to interfere with the order impugned.

These revision petitions are ordered accordingly. The parties are directed to bear their respective costs.

K.VINOD CHANDRAN JUDGE ASHOK MENON JUDGE jg

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