JUDGMENT P. Puttaraju—This appeal is filed under Section 14(1) of the Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred as 'the Act') contesting the appeal order passed by the Joint Commissioner of Commercial Taxes (Appeals-I), Bangalore (for short, 'the FAA') in Case No. KTEG.AP. 60/2010-11, dated 25th January, 2012, wherein the FAA has upheld the order of the Assistant Commissioner of Commercial Taxes (Inv.), Enforcement, South Zone, VTK-2, Bangalore (for short, 'the AA') dated 25th October, 2010. The AA has levied tax and also hasimposed penalty and interest. The appellant had filed bearing W.P. No. 36933 of 2010 (T-Res) before the Hon'ble High Court of Karnataka challenging the orders of the AA and the Hon'ble High Court has with specific observation has directed the appellant to approach the FAA and FAA has been directed to pass appropriate orders within a time-limit. Accordingly, the impugned order has been passed by the FAA upholding the orders of the AA. The FAA has come to the conclusion that the appellant is liable for payment of entry tax and penalty has been reduced to Rs. 25,000/-. Aggrieved by this order, the present appeal has been filed before us. The relevant facts and grounds of the appeal in brief are stated as thus: (i) The appellant has established the company with the main object of constructing commercial complex on their land located at Marthahalli, Bangalore for own use and also for leasing out to IT Units. (ii) The appellant has registered himself as a Private Limited Company with TIN bearing No. 29240805271 under Karnataka Value Added Tax Act, 2003. Apart from the same, the appellant is also registered under the Act. (iii) For the purpose of commercial complex, the appellant has imported five lifts from outside the country vide invoice dated 22-4-2008. This fact is not disputed by the appellant. (iv) The appellant has transferred two lifts to another concern namely M/s. Silicon Builders Private Limited, Sadashivanagar, Bangalore which is stated to be sister concern of the appellant. But there is no documentary evidence being adduced for the same. (v) The appellant relying on State of Tamil Nadu and Another Vs. This fact is not disputed by the appellant. (iv) The appellant has transferred two lifts to another concern namely M/s. Silicon Builders Private Limited, Sadashivanagar, Bangalore which is stated to be sister concern of the appellant. But there is no documentary evidence being adduced for the same. (v) The appellant relying on State of Tamil Nadu and Another Vs. Board of Trustee of the Port of Madras, AIR 1999 SC 1647 decision rendered by the Constitution Bench challenges the levy of entry tax on two lifts on the ground that the appellant is not doing business and the activity of constructing commercial complex on their own land and leasing out for IT Units does not constitute business and therefore does not come under the ambit of statutory provision of defining dealer and business to warrant exigibility to tax under the Act as done by the respondent. (vi) The appellant submits that all these facts have been narrated and also has pressed the issue of non-applicability of statutory provisions to the AA at the time of inspection. Inspite of this, the AA has levied tax ignoring the issues raised by the appellant and the FAA also has upheld the orders of the AA on the ground that the appellant has registered himself as contractor at the time of transferring lifts to its own concern. This finding of the FAA is against the true facts of the case and submits that by floating the law declared by the Apex Court cited supra has affirmed the orders of the AA. (vii) The appellant heavily relies on the meaning of "carrying on business" as interpreted by the Apex Court and contends that the activity carried out by the appellant is not business and the appellant cannot be treated as dealer for the purpose of the Act. In addition to the Apex Court decision, the appellant relies on the decision of the Hon'ble High Court in the case of Kwality Biscuits (Private) Limited, Bangalore v. State of Karnataka 2011 (71) Kar. L.J. 16 (HC) (DB). As per the appellant, the mere registration without proper knowledge and under wrong advice would not create tax liability on lifts imported for own use nor would deter the appellant from availing the benefit envisaged under the Act and the law declared by the Hon'ble Apex Court with regard to the meaning of carrying on business. L.J. 16 (HC) (DB). As per the appellant, the mere registration without proper knowledge and under wrong advice would not create tax liability on lifts imported for own use nor would deter the appellant from availing the benefit envisaged under the Act and the law declared by the Hon'ble Apex Court with regard to the meaning of carrying on business. (viii) The appellant contests the levy of penalty relying on Hindustan Steel Ltd. Vs. State of Orissa, AIR 1970 SC 253 . The appellant also contests the levy of interest on the ground that since the very liability of entry tax on the lifts is not established by the AA as well as the FAA. (ix) In additional grounds, it has been urged that the levy of penalty is discretionary only and not mandatory and penalty cannot be levied as a matter of course without establishing fraudulent evasion of tax and willful non-disclosure. Further, the appellant submits that as there is no liability of VAT on the two lifts transferred to their subsidiary unit for use in their building, the question of levy of entry tax does not arise. When such being the case, the levy of penalty and interest is not correct as per the appellant. For this, the appellant has cited in The State of Madras Vs. S.G. Jayaraj Nadar and Sons, AIR 1971 SC 2405 . On the above grounds prayer is made to set aside the impugned order of the FAA and also to cancel the levy of penalty and interest also. 2. Heard the learned Counsel for the appellant and the SR. 3. Perused the lower Court records. The following points arise for our consideration: 1. Whether the appellant can be construed as doing business and is a dealer for the purpose of this Act? 2. Whether the appellant is liable to pay entry tax on the entry of lifts which are used by another concern within the local area? 3. Whether, the FAA is correct in fixing the penalty at Rs. 25,000/-? 4. Whether our interference in FAA's order is necessary? 5. What order? 4. Our answer to the above points are as under: Point No. 1: In the affirmative. Point No. 2: In the affirmative. Point No. 3: In the affirmative. Point No. 4: In the negative. Point No. 5: As per final order for the following: REASONS 5. 25,000/-? 4. Whether our interference in FAA's order is necessary? 5. What order? 4. Our answer to the above points are as under: Point No. 1: In the affirmative. Point No. 2: In the affirmative. Point No. 3: In the affirmative. Point No. 4: In the negative. Point No. 5: As per final order for the following: REASONS 5. Point No. 1.--The appellant has imported five Mitsubishi Elevators from M/s. ETA MELCO Elevators Company Limited, Dubai vide invoice NOS. 0262 and 0273/08A, dated 22nd April, 2008. The said import invoice is available on the AA records at page No. 132. The value of elevators as per the invoice is 2,10,000 dollars. This is covered by bill of entry for home consumption dated 28th April. 2008. The said documents are available on AA's records at page Nos. 80 to 88. It is also not in dispute that the appellant has applied for registration by submitting application in Form VAT 1 and appellant has been granted registration under KVAT Act vide TIN 29240805271 as contractor. The business status as per Form VAT 1 is Private Limited Company, but Form VAT 4 available on records reveals the details of three partners namely: (1) D. Prabhakar Reddy; (2) Y.S. Bharathi Reddy; (3) Harish C. Kamarthy. The learned Counsel for the appellant submitted that the appellant is a Private Limited Company engaged in construction of commercial complex for own use and also for leasing out for IT Units. The main contention of the Counsel is that the appellant is not carrying on business and the main activity is only construction for own use and also to let out. For this purpose only, the appellant has imported five lifts and for certain financial reasons like recession, as the appellant could not go with the full project has disposed off three lifts in the course of inter-State trade. The details of the same are as under: (1) Invoice No. BSEPL/SIPL/001, dated 3-1-2011 to M/s. Shalom Infrastructure Private Limited, Banjar Hills, Hyderabad, Andhra Pradesh for Rs. 48,01,377/-. (2) Invoice No. BSEPL/SIPL/002, dated 3-1-2011 to M/s. Capstone Infrastructure Private Limited, Banjar Hills, Hyderabad for Rs. 24,00,688/-. 6. On the said transactions, the appellant has charged CST at 13.5% which amounts to Rs. 48,01,377/-. (2) Invoice No. BSEPL/SIPL/002, dated 3-1-2011 to M/s. Capstone Infrastructure Private Limited, Banjar Hills, Hyderabad for Rs. 24,00,688/-. 6. On the said transactions, the appellant has charged CST at 13.5% which amounts to Rs. 9,72,279/- and the same has been remitted at local VAT Office which is admitted by the appellant also and also as per the FAA's order in KVAT AP/No. 2301/10-11, dated 25-1-2012. The said appeal order is available on AA's records at page Nos. 340 to 348. The appellant apart from selling the above mentioned three lifts in the course of inter-State trade, has transferred the remaining two lifts to its sister concern namely M/s. Silicon Builders Private Limited, wherein the Directors are: (1) Y.S. Bharathi Reddy; (2) Harish C. Kamarthy; and (3) D. Prabhakar Reddy. These details are available as per the registration granted by the LVO-130 to M/s. Silicon Builders Private Limited with TIN 29970759425. It is to be noted that in case of the appellant, the same three persons are also Directors which means both are floated by the same three persons but two different legal entities. The appellant during the hearing of the case on 14th March, 2013 was directed to produce the audited balance sheet of the both companies and also how the transaction has been accounted in the transferee and transferor companies. The learned Counsel accepted to adduce the same along with journal vouchers, ledger extracts of both the firms on 9th April, 2013 but failed to produce the same. The only defence on the part of the appellant is that he is not engaged in buying and selling of lifts/elevators and hence does not fall under the purview of definition of "business". The learned Counsel submits that since the transactions cannot be construed as business, the appellant cannot be considered as "dealer". For this reliance is placed on the decision of the Apex Court cited supra i.e., Board of Trustees of the Port of Madras and also the Kwality Biscuits case of the Hon'ble High Court. In order to appreciate how business and dealer are defined under KTEG Act, 1979 and the provisions of registration of dealers are to be analysed. Hence, the relevant provisions are reproduced hereunder: 2. Definitions.--(A) In this Act, unless the context otherwise, requires.-- (1) ....... In order to appreciate how business and dealer are defined under KTEG Act, 1979 and the provisions of registration of dealers are to be analysed. Hence, the relevant provisions are reproduced hereunder: 2. Definitions.--(A) In this Act, unless the context otherwise, requires.-- (1) ....... (2-b) "Business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern and any transaction is connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern; ........... (4) "Dealer" means any person who, in the course of business, whether on his own account or on account of a principal or any other person, brings or causes to be brought into a local area any goods or takes delivery or is entitled to take delivery of goods on its entry into a local area and includes an occasional dealer. .......... 4. Registration of dealers.--(1) Every dealer.-- (a) who buys or receives goods liable to tax under this Act and who is doing business in a local area and [is registered or is liable for registration under Section 10 of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) [or Section 22 of the Karnataka Value Added Tax Act, 2003 (Karnataka Act 32 of 2004)]]; or (b) who brings or causes to be brought such goods into a local area or takes delivery or is entitled to take delivery of such goods, the aggregate value of which is not less than [two lakhs] rupees in a year, shall get himself registered under this Act in such manner on payment of such fee and within such period as may be prescribed. The registration shall be renewed from year to year or payment of the prescribed fee until it is cancelled: Provided that every manufacturer who buys or causes to be brought any goods into a local area or every dealer who brings or causes to be brought any goods into the Sate shall get himself registered under this Act, if the aggregate value of such goods brought into a local area or into the State, as the case may be, is not less than one lakh rupees in a year: Provided further that the Commissioner may notify the website in which an application shall be made electronically. (2) Notwithstanding anything contained in sub-section (1).-- (i) every dealer undertaking execution of works contract involving the use or consumption of goods entering into a local area; (ii) every non-resident dealer; (iii) every occasional dealer; (iv) every manager or agent of a non-resident dealer; other than a dealer dealing exclusively in the goods specified in the schedule, shall get himself registered irrespective of the value of such goods. (3) .......... (4) ....... 7. The appellant has purchased five lifts by means of import and the value of five lifts is at Rs. 92,41,510/- and customs duty paid is at Rs. 26,18,056/-. Thus, the purchase value of five lifts amounts to Rs. 1,18,59,566/- (Rupees one crore eighteen lakhs fifty-nine thousand five hundred and sixty-six only). This value is apart from the inward expenses and if the same is considered, it would be more than Rs. 1.2 Crores. Out of the five elevators/lifts, the appellant has effected inter-State sale of three lifts on which CST burden is also accepted as per the following invoice details: (1) Invoice No. BSEPL/SIPL/001, dated 3-1-2011 to M/s. Shalom Infrastructure Private Limited, Banjar Hills, Hyderabad, Andhra Pradesh for Rs. 48,01,377/-. (2) Invoice No. BSEPL/SIPL/002, dated 3-1-2011 to M/s. Capstone Infrastructure Private Limited, Banjar Hills, Hyderabad for Rs. 24,00,688/-. On the said transactions, the appellant has charged CST at 13.5% which amounts to Rs. 9,72,279/- and the same has been remitted at local VAT office which is admitted by the appellant also and finding also as per the FAA's order in KVAT AP/No. 2301/10-11, dated 25-1-2012. The said appeal order is available on AA's records at page Nos. 340 to 348. 9,72,279/- and the same has been remitted at local VAT office which is admitted by the appellant also and finding also as per the FAA's order in KVAT AP/No. 2301/10-11, dated 25-1-2012. The said appeal order is available on AA's records at page Nos. 340 to 348. The appellant apart from selling the above mentioned three lifts in the course of inter-State trade, has transferred the remaining two lifts to its sister concern namely M/s. Silicon Builders Private Limited, wherein the Directors are: (1) Y.S. Bharathi Reddy; (2) Harish C. Kamarthy; and (3) D. Prabhakar Reddy. These details are available as per the registration granted by the LVO-130 to M/s. Silicon Builders Private Limited with TIN-29970759425. The activity of construction of building and letting out to IT Units is a commercial activity. There is no proof by way of audited annual financial statement to the effect that the appellant has not derived any income from such type of commercial activity. If it is simply, the construction of building in own land, there was no need first of all to promote a private limited company that too two companies having same Directors. This itself shows that the appellant is engaged in commercial activity and the definition of business includes even 'commerce'. For this commercial activity, the appellant has imported five (05) lifts/elevators. Out of this, three elevators have been sold and the turnover is also significant. The appellant has also discharged CST on the same. Having caused the entry of lifts/elevators for the purpose of commercial activity as a registered dealer, the appellant is liable for payment of entry tax. By analysing the nature of activity which is being commercial and transactions and volume of turnover it is clear during the year under consideration, the appellant has conducted business in elevators/lifts. Therefore, the appellant falls under the purview of "dealer" or at least under the definition as "occasional dealer". Further, the appellant being private limited company has not adduced any material evidence by way of audited balance sheet or IT assessment/return to prove that the concern has not done any business or at least to ascertain the nature of "income". Without furnishing such details simply citing. Hon'ble Apex Court verdict will not help the appellant. "Factual Matrix" is important in order to apply the ratio. Without furnishing such details simply citing. Hon'ble Apex Court verdict will not help the appellant. "Factual Matrix" is important in order to apply the ratio. In the absence of same we are constrained to come to conclusion that the appellant during the impugned year has conducted business and a dealer for the purposes of the Act. Hence, we answer Point No. 1 in the affirmative. 8. Point No. 2.--As narrated under facts and grounds, the appellant stated to have transferred two lifts to its sister concern namely M/s. Silicon Builders Private Limited. Even though Directors or partners are common in both companies/firms still in order to account for such transfer transaction, documentary evidence in the form of (i) journal voucher; (ii) ledger extracts i.e. goods account and party account; and (iii) audited balance sheet are necessary which have not been produced at any stage right from the AA/FAA and even before us. Since, these two entities are different and distinct, the plea of the learned Counsel to the effect that there cannot be a sale to oneself is not acceptable. There is no doubt that the appellant has caused the entry of five lifts/elevators into the local area. Out of this, the appellant has sold three lifts/elevators in the course of inter-State trade and has discharged tax under the Central Sales Tax Act, 1956. The remaining two elevators are for use or consumption or sale therein. The appellant being at least as occasional dealer is liable to pay entry tax on the two lifts which is supposed to have been transferred to its sister concern. Hence, the appellant is liable for entry tax for having caused entry of the said lifts/elevators for use or consumption within the local area. Therefore, the FAA is correct in upholding the levy of entry tax. Hence Point No. 2 is also answered in the affirmative. 9. Point No. 3.--As Point Nos. 1 and 2 are answered against the appellant and as the appellant is liable to pay entry tax by submitting the return disclosing taxable purchases which is not complied, the penalty is attracted. Hence, the FAA is reasonable in fixing the quantum of penalty at Rs. 25,000/- instead of equivalent to the tax payable. Hence, Point No. 3 is also answered in the affirmative. Point Nos. 4 and 5.--As Point Nos. Hence, the FAA is reasonable in fixing the quantum of penalty at Rs. 25,000/- instead of equivalent to the tax payable. Hence, Point No. 3 is also answered in the affirmative. Point Nos. 4 and 5.--As Point Nos. 1, 2 and 3 are answered in the affirmative, there is no need to interfere with the orders of the FAA. For the reasons stated above, the appeal is liable to be dismissed. Hence, we proceed to pass the following: ORDER (1) Appeal is dismissed. (2) The FAA order is upheld. Thereby penalty fixed by the FAA is also upheld and so also the direction to levy interest to the AA. (3) The Registrar of the Tribunal is directed to comply Regulation 53(b) of Chapter IX of the Karnataka Appellate Tribunal Regulations, 1979 by communicating this order to the persons mentioned therein. (4) The office is directed to send back the lower Court records immediately.