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2003 DIGILAW 302 (KER)

TATA TETLEY LTD. v. STATE OF KERALA

2003-04-10

G.SIVARAJAN, J.M.JAMES

body2003
JUDGMENT G. SIVARAJAN, J. – M/s. Tata Tetley Ltd., Willingdon Island, which is an assessee on the files of the Sales Tax Officer, Special Circle (Produce), Mattancherry with KGST Registration No. 24141403 and CST Registration No. 24146403 is the revision - petitioner. It is a company promoted jointly by Tata Tea Ltd., and Tetley International Ltd., mainly engaged in export of tea bags. It has got a factory which is registered as a 100 per cent export oriented concern. The petitioner has been procuring tea from various auction centres like Calcutta, Kochi, Coonoor, etc. According to them, the tea so purchased are brought to Cochin where it is blended, packed and exported. It is also stated that though the petitioner has sales tax registration in Calcutta where the petitioner is purchasing tea in auction, the petitioner had no staff to manage their office at Calcutta and therefore the services of employees of Tata Tea Ltd., are utilised for purchase of tea in Calcutta auction for stock transfer to Cochin. According to the assessee it sent a consignment of 8565.800 kg., of tea purchased by it from J. Thomas and Company Ltd., at Calcutta auction through Tata Tea Ltd., was despatched by Tata Tea Ltd., on behalf of the petitioner to Cochin. The said consignment was intercepted at Walayar check-post on August 22, 1996 on the ground that the transport was not accompanied by the documents contemplated under section 29(2) of the Act. A notice dated August 22, 1996 was issued to Tata Tea Ltd. Thereupon the petitioner approached the Sales Tax Inspector, Sales Tax Check-Post, Walayar, and got the goods released on furnishing security deposit of Rs. 82,000 by way of bank guarantee evidenced by an order dated August 22, 1996. Subsequently the matter was adjudicated by the Sales Tax Officer (Enquiry) as contemplated under section 29A(4) and passed an order dated January 28, 1997 (annexure B) imposing a penalty of Rs. 81,665 and ordered conversion of the security amount to penalty. Being aggrieved by the said order, the petitioner filed appeal before the Additional Appellate Assistant Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam, who by his order dated January 28, 1998 (annexure C) dismissed the appeal confirming the penalty order. This was affirmed in further appeal by the assessee before the Tribunal. Being aggrieved by the said order, the petitioner filed appeal before the Additional Appellate Assistant Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam, who by his order dated January 28, 1998 (annexure C) dismissed the appeal confirming the penalty order. This was affirmed in further appeal by the assessee before the Tribunal. Sri Jayasankar Nambiar, learned counsel appearing for the petitioner submits that the assessee is a 100 per cent export oriented concern which is registered under the Kerala General Sales Tax Act, 1963 and under the Central Sales Tax Act, 1956 the assessee purchases tea from Calcutta, Kochi, Coonoor, etc., brings the same to Willingdon Island at Ernakulam where the tea is blended, packed and exported to foreign countries. The counsel also submits that the petitioner also effects sale of tea dust locally and the tax due in respect of the said transactions is also being paid to the sales tax department. The counsel further submitted that the consignment in question was purchased from Calcutta through Tata Tea Ltd., which is a sister concern of the petitioner on behalf of the petitioner in Calcutta auction and the same was transported to Kochi as per the instructions of the petitioner. The counsel also submitted that the entire tea so brought was exported after blending and packing at Willingdon Island. The counsel submits that the transaction in question is only a stock transfer and by a mistake the employees of the Tata Tea Ltd., to whom instructions were issued had inadvertently omitted to mention the name of the petitioner as consignor. The counsel also submitted that the petitioner had accounted the entire quantity in the books of account maintained at Kochi and corresponding entries were effected in the books maintained at Calcutta. He further submitted that the petitioner had issued F forms to its branch at Calcutta and further there is evidence to show that the entire quantity of tea brought from Calcutta had been exported to foreign countries. The counsel submits that the cumulative effect of all these facts will show that there is no attempt at evasion of tax as alleged by the respondent. The counsel further submitted that the grounds on which the penalty was imposed are that the documents accompanying the transport were defective, that the petitioner had never conceded any transaction in Kerala prior to the detention of the goods in issue which are not correct. The counsel further submitted that the grounds on which the penalty was imposed are that the documents accompanying the transport were defective, that the petitioner had never conceded any transaction in Kerala prior to the detention of the goods in issue which are not correct. He points out that in annexure A document the registration number shown on the right hand top is the registration number of the assessee and that it shows that the weighment list of teas despatched to Tata Tetley Ltd., Kochi. According to the counsel this would clearly show that the petitioner had exported the goods which were transported from Calcutta. The counsel further submitted that the Tribunal for the first time has mentioned about these inadequacies. The counsel also submitted that the observations made in paragraph 8 of the appellate order are not fully correct as they do not reflect the correct legal position. The counsel also submitted that the assessment for the year in question is pending before the Tribunal where the assessee had produced all the documents and that if the impugned order stands it may create difficulties for the petitioner. We have also heard the learned Government Pleader appearing for the respondent. He submits that both the petitioner and the Tata Tea Ltd., are well-established concerns, who know about the requirements of the sales tax enactments to be satisfied for stock transfer of goods from one place to another, that neither the petitioner nor the Tata Tea Ltd., which transported the goods in question did not care to transport the goods accompanied by proper documents and that the only document accompanying the transaction was the weighment list and that even in the weighment list the name of the consignor is shown as Tata Tea Ltd., only. The Government Pleader further submitted that this is a clear case of attempt of evasion of tax legitimately due to the State. He also submitted that all the three authorities have considered the matter on the basis of the materials available on record and had entered a finding that the assessee had attempted to evade payment of tax legitimately due to the department. We have considered the rival submissions. We have also perused the impugned orders and other documents produced in this revision. We have considered the rival submissions. We have also perused the impugned orders and other documents produced in this revision. Admittedly the transport which led to the proceedings under section 29A(4) of the Act is the transfer of goods covered by annexure A documents which accompanied the transport also. The said document shows the name of Tata Tea Ltd., Calcutta, at the top. It also mentions that the weighment list of teas despatched to Tata Tetley Ltd., Kochi. The quantity is also noted as 8565.8 shown as total nett kgs., and 9062.3 as total gross kgs. Approximate value is also shown at Rs. 5,83,319.60 in 250 packages. However, it has to be noted that at the top right hand corner against Tata Tea Ltd., Calcutta, the Registration No. shown is KGST No. 24141403 and CST No. 24146403 which are the registration numbers of the petitioner and not that of Tata Tea Ltd. It must also be noted that though the noting of stock transfer advice and weighment list are struck off on the right hand top it is seen noted "S.T.A. COCHIN-1/96 dated August 16, 1996 from sale No. 22, 31, 32". According to the counsel for the petitioner the full form of "S.T.A." is stock transfer advice. Though the assessing authority has relied on annexure A documents to say that it does not relate to the transaction of the assessee we note that the assessing officer and the appellate authorities have failed to take note of the circumstances mentioned above. We find that the Intelligence Officer in annexure B order has stated that the consignee has not registered any branch within the State or in any other State as per the office records of the concerned assessing authority. Thus it would appear to be against the factual situation. The Intelligence Officer also states that the consignee had failed to produce the stock register showing the issue of goods from Calcutta to Kochi or the stock transfer invoice of M/s. Tata Tetley Ltd., or F forms issued, etc. The petitioner in the appeal before the first appellate authority had clearly stated that the petitioner - company is having computerised accounting system and the relative stock transfer receipt has been duly brought to accounts and relative evidences produced at enquiry stage. The petitioner in the appeal before the first appellate authority had clearly stated that the petitioner - company is having computerised accounting system and the relative stock transfer receipt has been duly brought to accounts and relative evidences produced at enquiry stage. All subsequent stock transfer of tea by the company and resultant sales under section 5(1) and (3) of the CST Act, 1956 have been duly accounted in the accounts of the company. It was further stated that the petitioner could not produce relative "F" form at enquiry stage due to reasons beyond their control and had stated that the photocopy of "F" form No. 35146K dated March 6, 1997 for Rs. 5,83,319.60 issued to Calcutta Branch will be produced at the time of hearing of the appeal. If the case of the respondent is that the owner of the goods is Tata Tea Ltd., even the officer should have proceeded only against Tata Tea Ltd., and not against the petitioner. Once the officers admit that the transaction is of the petitioner certainly the authorities are bound to consider the explanation offered by the assessee with reference to the business carried on by the assessee and as to how the assessee had dealt with the goods which are transported from Calcutta particularly in view of the contention of the petitioner that it is a 100 per cent export oriented concern. The counsel for the petitioner states that it is in possession of all the required documents to establish that the purchases made from Calcutta are accounted in Calcutta itself and that the goods under consignment received by the petitioner were exported after blending and packing and therefore there was no occasion for liability to pay tax on the said transaction. Considering all these circumstances, we are of the view that a fresh look at the issue in the context of imposition of penalty is required with reference to the existing documents particularly annexure A and on the basis of the documents to be produced by the petitioner along with an affidavit explaining the circumstances under which the petitioner could not produce the same before the authorities concerned. For the said purpose, we set aside the orders of the two appellate authorities and remit the matter to the Intelligence Officer for fresh consideration in accordance with law. For the said purpose, we set aside the orders of the two appellate authorities and remit the matter to the Intelligence Officer for fresh consideration in accordance with law. This exercise will be done by the Intelligence Officer within a period of three months from the date of receipt of a copy of this judgment. The petitioner will produce a certified copy of this judgment before the Intelligence Officer to enable him to comply with the directions issued in this judgment. We make it clear that we have not expressed any opinion on the merits of the matter in this judgment. T.R.C. is disposed of as above.