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2001 DIGILAW 675 (KER)

James v. Agrl. Income Tax and Sales Tax Officer

2001-11-22

M.RAMACHANDRAN

body2001
Judgment :- M. Ramachandran, J. The impact of S. SOB of the Kerala General Sales Tax Act and the procedural formalities to be observed in the penalty proceedings initiated under S.45A of the Kerala General Sales Tax Act are requested to be examined in the present Original Petition which is filed by an assessee under the Sales Tax Act. Petitioner is engaged in the proprietary business of dealing in plastic furniture at Valara in Idukki District. On 16.8.2001, a notice had been issued to him by the Agricultural Income Tax and Sales Tax Officer, Adimali initiating him that it has come to his notice that few consignments, sent by M/s. National Flask Industries Ltd., Silvassa and G. Sarma Corporation, Mumbai in the name of the petitioner during 1999 had not been accounted by him and therefore, it had been decided to impose penalty under S.45A of the K.G.S.T. Act. A copy of the notice is produced as Ext. PI. Petitioner claims that he had filed objection thereto showing that as regards the consignment of M/s. National Flask Industries Ltd. the purchase did not materialise as goods were returned since they were defective, and debit note had been issued to the sellers during August, 1999. In respect of six consignments which are alleged to have been sent by M/s. Sarma Corporation valued Rs. 8,53,538/-, the petitioner had taken a stand that he had not effected any such purchase and had no information about the consignment. He therefore had required the Sales Tax Officer to give him details of the consignment and the address of the alleged supplier. The complaint of the petitioner is that ignoring the above, penalty proceedings have been finalised wherein he is made liable to pay an amount of Rs. 1,97,580/- being double the amount of tax calculated as evaded. 2. The Government Pleader had opposed the allegations and claims of the petitioner. He had submitted that an opportunity had been given to the petitioner to respond, but no objection had been received within the time notified and proceedings were therefore finalised. He also points out that the petitioner has got an effective remedy by way of revision, and for this reason also, the Original Petition is not entertainable. 3. Advocate Sri. He had submitted that an opportunity had been given to the petitioner to respond, but no objection had been received within the time notified and proceedings were therefore finalised. He also points out that the petitioner has got an effective remedy by way of revision, and for this reason also, the Original Petition is not entertainable. 3. Advocate Sri. Thanu Pillai, appearing for the petitioner, submits that even if the explanation was received late, that was very much in the possession of the Officer before he had finalised the proceedings, and the technical approach never was justified. He had also heavily relied on the methodology adopted in arriving at the conclusion that he had evaded tax. The counsel had brought pointed attention to Ext. P7 Circular No. 19/88 dated 14.12.1988 which governs the modalities in respect of declarations collected at the check posts. The Government Pleader was right in pointing out that petitioner has remedy by way of revision, but according to him, the Writ Petition was filed as there was total arbitrariness. 4. I am of the view that the Original Petition is not to be entertained as the petitioner can approach the revisional authority to ventilate his grievances. I am sure that the defence placed will be examined by the revisional authority and appropriate orders passed. The counsel for the petitioner is justified in submitting that the explanation furnished could not have been abjectly ignored. True, the assessee is expected to utilise the opportunity with diligence, but nothing prevents the Officer from taking note of the explanations if they reach him before the final adjudication is attempted. 5. Since the counsel has heavily relied on Ext. P7, Ss. SOB and 45A of the Act, before leaving the matter I feel it is appropriate that the above also be subjected to examination. 6. The submission is that the first respondent has to oversee the functioning of the Department and take earnest effort for a house cleaning programme. According to the petitioner, he has a right to suggest the above as he has become a victim due to the lethargy of the officialdom. The minimum to be done is to ensure that the provisions of the statute are strictly followed. In his endeavour, Advocate Sri. Thanu Pillai had referred to S. SOB of the Act which had been brought into force with effect from 25.11.1988. The minimum to be done is to ensure that the provisions of the statute are strictly followed. In his endeavour, Advocate Sri. Thanu Pillai had referred to S. SOB of the Act which had been brought into force with effect from 25.11.1988. When a vehicle carrying goods from any place outside the State and bound for any place outside the State passes through the Kerala State, the owner or driver or person in charge of the vehicle are obliged to obtain transit passes in the prescribed form. Sub-s.4 provides as following: "(4) Where any person consigns any goods or transports any goods from another State into the State and where the particulars furnished in the declaration prescribed in clause (b) of sub-s..(2) of S.29 are false or the consignor or purchaser stated therein is found to be bogus or nonexistent or is not traceable or denies such purchase, it shall, unless the consignor or the owner of the vehicle or the person in charge of the vehicle proves to the satisfaction of the assessing authority that the particulars furnished in the declaration are true, be presumed that such goods which are liable to tax under this Act have been sold in the State by the consignor or the owner of the goods or the owner or driver or person in charge of the vehicle or the person in charge of the goods or all of them jointly and they shall be jointly or severally liable to pay tax on such sales, which shall be assessed and recovered in the manner provided in sub-s.(3)." 7. From the check post reports, it is clear that substantial consignments had entered the State's boundary, and the petitioner is shown as the consignee. The petitioner emphatically submits that he had denied such purchase and it was the duty of the Department to see whether there was observance of the responsibilities that are expected from a dealer. It ought not have been permissible to ignore the statutory prescriptions and proceed against innocent assessee. It is further submitted that improper handling and forwarding of sales tax declarations expected to be collected at the check post and the delay in processing them was causing headache to honest assessees. Therefore had reconciliation from month to month as initially contemplated got exercised, there would have been no possibility for heartburn as presently experienced. Reference to Ext. It is further submitted that improper handling and forwarding of sales tax declarations expected to be collected at the check post and the delay in processing them was causing headache to honest assessees. Therefore had reconciliation from month to month as initially contemplated got exercised, there would have been no possibility for heartburn as presently experienced. Reference to Ext. P7 had been made in the aforesaid context. 8. It is obvious that if the grievances highlighted are real, it do present a dismissal management of the affairs. The wisdom behind Circular No. 19/88 dated 14.12.1988 cannot but be emphasised. They operate to the advantage of the Revenue as well as confer relief to the assessee. The misuse of declarations obtained, according to the petitioner, has resulted in the penalty being imposed on him. Though it is too premature for this Court to pronounce upon the point, the circular has pointed out that laxity may destroy the very purpose for which the check posts are established. The circular has further laid down the instructions to minimise the possible malpractices. The Sales Tax Inspectors of the Intelligence Wing are expected to take down extracts of transported goods and cross verify it with consignee dealers. This is expected to be reviewed by the Deputy Commissioners, every month, and the proceedings in turn are to be forwarded to higher authorities. These procedural safeguards would not only be to the advantage of the Department for asserting themselves, but will also be welcomed by assessees whose names every often are alleged to be misused by unscrupulous persons. The petitioner has rightly pointed out to his predicament, viz., that, during 2001, it has been threatened that the declarations made in 1999 are decided to be used against him. This practice, at least in certain cases may work out prejudice. 9. It has to be noticed that under S. SOB of the K.G.S.T. Act, for the purpose of the section, the owner or driver or person in charge of the vehicle and the vessel shall, even if not registered under the Act, be deemed to be a registered dealer for the assessment of tax under the Act. 9. It has to be noticed that under S. SOB of the K.G.S.T. Act, for the purpose of the section, the owner or driver or person in charge of the vehicle and the vessel shall, even if not registered under the Act, be deemed to be a registered dealer for the assessment of tax under the Act. Counsel also invited my attention to R.57 of the Kerala General Sales Tax Rules which mandated operator of a vehicle or vessel to submit to the assessing authority the copies of bill of sale, delivery-notice, way bill, certificate etc., regarding the ownership of the goods giving details of delivery and duly signed by purchaser, consignee. It is their obligation to submit such reports every month. Likewise, the necessity for submission of returns by forwarding agency and clearing house etc., prescribed under R.58 and the obligation of banks and other institutions to forward every month returns showing the bills relating to goods discounted, cleared and negotiated through their branches indicated that there was no dearth of statutory provisions. It may be only a failure to enforce such duties appropriately and in a timely manner, and of course in effective supervision. 10. I therefore direct that if there is no obedience made to the statutory provisions and circulars, relating to declarations and returns, the second respondent should see that expeditious steps are taken for obvious reasons for enforcement of the same. Facts of this case prima. facie, show that there has been lethargy on the part of the Departmental Officers. At least, till such time the check posts exist and the present taxation system is in vogue, it has to be ensured that the system as envisaged works. 11. In view of the statutory remedy available, in this Original Petition, I decline to grant relief to the petitioner. The revision, if filed within one month should be entertained as filed within time. I also make it clear that enforcement of penalty proceedings will stand suspended for a period of one month and it will be appropriate for the revisional authority to examine the applications for interlocutory orders as and when that are made in the revisional proceedings. The Original Petition is closed with the above observation.