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2022 DIGILAW 818 (KER)

Joy Alukkas India (P) Ltd. v. State Of Kerala

2022-09-28

BASANT BALAJI, S.V.BHATTI

body2022
ORDER : Basant Balaji, J. The petitioner, a company registered under the Companies Act, is a trader in jewellery. The company, in the year 2013, purchased gold ornaments from various customers and transported to Kerala by an employee by Air. The gold was purchased by the branches of the petitioner at Haryana (Gurgaon) and new Delhi (Karol Bagh). 2. The Intelligence Squad No.III, Mattancherry on 29.11.2013, noticed transport of gold, scrap gold, and diamond ornaments without proper records as per Kerala Value Added Tax Act, 2003 (for short 'the Act'). The consignment originated from outside the state i.e., from Gurgaon and Karol Bagh was sent to 8 different centres, 2 in Kerala and the rest outside Kerala. The consignments addressed to the agency in Kerala and other states were not declared as mandated under the section 46(3)(e) of the Act read with Rule 66(6) of the Kerala Value Added Tax Rules, 2005. Moreover, the delivery notes were tampered with overwriting and the complete address of the consignee was not furnished. The goods were detained and later released on remittance of 25% of the security amount demanded. 3. Annex.L notice under section 47(2) of the Act was issued pointing out the reason for detention on 29.11.2013. The petitioner, to Annexure-L notice, filed detailed objection marked as Annex.M. Thereafter, enquiry was conducted by the intelligence officer and a penalty Rs.30,49,585/-was imposed under section 47(6) of the Act. 4. The petitioner, against the order of the Intelligence Officer dated 9.6.2014, filed appeal before the Deputy Commissioner (Appeals). The Deputy Commissioner, vide order dated 23.4.2015 in KVATA-2046/2014, allowed the appeal and the penalty was reduced to Rs.50,000/-and the balance was directed to be refunded to the petitioner. 5. The Revenue, thereafter, filed appeal before the Tribunal, as TA(Vat) No.220 of 2015. The Tribunal, on reviewing the facts and circumstances of the case, allowed the appeal filed by the State and the penalty order was restored, as per order dated 20.10.2018. The order of the appellate Tribunal is challenged in this revision by the petitioner on the following questions of law. The Tribunal, on reviewing the facts and circumstances of the case, allowed the appeal filed by the State and the penalty order was restored, as per order dated 20.10.2018. The order of the appellate Tribunal is challenged in this revision by the petitioner on the following questions of law. “A. Whether on the facts or in the circumstance of the case the Tribunal and the authority erred or not in finding that penalty under Section 47 is to be imposed in the movement of the goods forming the subject matter of the OR dated 29/11/2013 and forming the subject matter of proceedings under Section 47(5) of the KVAT Act. B. Whether on the facts and circumstances of the case the Tribunal having stated to have perused the records has considered at all the reply and the documents submitted by the petitioner and forming part of the record of the OR files. C. Whether the order of the Tribunal has considered the contentions of the petitioner with reference to the documents and has not the Tribunal erred in not considering the reply and the documents forming part of the record that could establish that the movement of goods was supported by proper documents. D. Whether the mere non filing of Form 8FA declaration itself is sufficient to hold and sustain a penalty under Section 47 and are not the authorities obliged to consider the entire transactions and the documentation available on record and on the movement of goods and the furnishing of further explanation and documents in the enquiry proceedings. E. Whether the Tribunal and the authority has erred or not in imposing and sustaining a penalty under Section 47 in the facts and circumstance of the case.” 6. The counsel for petitioner, Shri A Kumar argues that the goods were transported to the domestic Tariff Area of Kerala State for purification and making new gold ornaments. The relevant documents which are essential for movement of goods from one State to another were accompanied with the goods by the carrier, which includes the delivery note, a self-declaration and stock issue voucher duly signed. The purpose of transport is mentioned in the voucher and the delivery note gives the name of the person, who carries the consignment. The relevant documents which are essential for movement of goods from one State to another were accompanied with the goods by the carrier, which includes the delivery note, a self-declaration and stock issue voucher duly signed. The purpose of transport is mentioned in the voucher and the delivery note gives the name of the person, who carries the consignment. Though the goods were sent to Kerala as well as other states, it was done as a matter of security that a single person carry the goods by Air and it is usually transported firstly to a single place and from there to the different parts of the State. Thus, the goods were brought to Kerala to be sent to Chennai, Maharashtra and to Thrissur. Since the goods are accompanied by all the documents necessary, the question of evasion of tax does not arise. Moreover, there is no sale of the gold ornaments and it is only a stock transfer from one branch to another for repair and making of new gold ornaments. The goods are brought to Kerala to be transported back to the respective branches and hence, all the documents which are necessary for movement of goods were produced at the time of interception and there is no violation of section 47(2) of the Act. The counsel further contends that the main reason for the detention is that the consignment was not declared as per section 46(3)(e) of the Act. The declaration is as per Form 8FA which can only be filed electronically by a registered dealer and since the consignee is not the registered dealer, the petitioner cannot account these transactions and file form 8FA. Thus, there is no violation of Rule 46 of KVAT Rules and no attempt to evade payment of tax under the Act. Therefore, the Tribunal was not justified in reversing the finding of the Deputy Commissioner’s (Appeals) and restoring the penalty. In fact, the Deputy Commissioner has extensively gone through the records available and had found that the documents which are necessary for the transportation of goods were available at the time of transport and there cannot be any evasion of tax. 7. Regarding the tampering of delivery note and overwriting, he submits that it was done since the writing was not clear and overwriting was done to make the document clear. 7. Regarding the tampering of delivery note and overwriting, he submits that it was done since the writing was not clear and overwriting was done to make the document clear. The total quantity transported juxtaposed with the records reveal that the quantity tallies with the documents and there is no difference either in quantity or in value. Merely because Form 8FA has not been uploaded, cannot be a valid reason to suspect evasion of tax. 8. The senior Government Pleader, Shri Shamsudheen V.K. argues that the Act and the Rules prescribe carrying certain documents along with the goods while movement. The consignor has to comply fully these obligations and cannot escape from the liability by stating that a few of the documents are produced and even if one document is not produced, the omission will not amount to evasion of tax. Section 46(3)(e) of the Act is not complied with by the petitioner and hence, the Intelligence Officer was justified in intercepting and detaining the same after due enquiry, penalty was imposed. Though the Deputy Commissioner (Appeals) interfered with the findings and the order of the Intelligence Officer, the Tribunal was justified in reversing the same as it was mandatory requirement that Section 46(3)(e) of the Act has to be complied by the consignee when the goods are transported into the State through coastal Cargo through Air or through railways. He submits that there is no error either legal or factual in the order passed by the Tribunal and hence, no interference is warranted. 9. Section 46(3)(e) of the Act reads as follows: “46. Establishment of check post and documents to be carried with the goods:- (1) xxxxxx (2) xxxxxx (3) Subject to the provisions of sub-section (4), no person shall transport within the State across or beyond the notified area any consignment of goods exceeding such quantity or value, as may be prescribed, by any vehicle or vessel, unless he is in possession of, (a) xxxxxxxx (b) xxxxxxxx (c) xxxxxxxx (d) xxxxxxxx [(e) Where goods are imported into the State through coastal cargo, through air and through the Railways, the importer or clearing agents, by whatever name called, shall, on arrival of such goods, furnish a declaration before the Commercial Tax Officer having jurisdiction over the place of import, as may be prescribed. While transporting such goods within the State or across the State, the transporter/person in charge of the vehicle/vessel shall keep a copy of such declaration duly acknowledged by the concerned authority and shall be produced for verification by any authority under this Act.]” 10. The sub section (e) to Section 46(3) of the Act mandates that goods when are imported to the state, through coastal cargo, through air and through the Railways, a declaration has to be furnished before the Tax Commercial Officer having jurisdiction over the place of import. This measure has been incorporated in the Act to ensure that the department has knowledge of the import of the goods into the State, so that evasion of tax is averted. The petitioner does not have a case that it has declared the goods before the Commercial Tax department and filed form 8FA as provided in section 46(3)(e) of the Act. Rule 66(6)(ba) of the KVAT Rules prescribes that declaration referred to in clause (e) of sub section 3 of section 46 of the Act shall be in form 8FA, which shall be prepared in duplicate and separate declaration has to be prepared in respect of each consignee. In case there is more than one consignment, destined to more than one consignee, it shall be accompanied by bill of entries/goods consignment note or so, as the case may be along with the respective consignment. The Rule prescribes that the transporter shall carry with him while transporting such goods within the state or across the state, a copy of such declaration duly acknowledged by the concerned authority and shall be produced for verification on demand by any authority under the Act. 11. The mandatory documents which are to be accompanied with the consignment are not accompanied would give rise to suspicion regarding the genuineness of the transport and attempt of evasion of tax. Sub section (2) of section 47 of the Act gives power to the officer that if he has reason to suspect that the goods transported are not covered by proper and genuine documents (in cases where such documents are necessary), for reasons to be recorded in writing, detain the goods and allow further transport only on furnishing security for the double the amount of tax likely to be evaded as estimated by the officer. 12. 12. The Section and Rules when mandate that the documents should be in a particular form, the non compliance of requirements will render such documents as not proper or genuine. When proper documents are not accompanied by the goods, there is sufficient reason to believe that the transportation is done with an intention to evade tax and the officer is justified in invoking section 47 of the Act. The Tribunal had perused the entire records produced by the petitioner and found that there were defects in the delivery notes in respect of the name and full address of consignee. The invoices also did not contain the consignee’s full address. The Tribunal has intrinsically examined the circumstances read with documents, which have bearing on the issues in hand before recording and finding against the petitioner herein. It is this finding which is reviewed in our jurisdiction. Further the Tribunal, being the second fact-finding body, has entered into a finding that the proper documents which are necessary for transportation of goods were not available at the time of transport and hence, the contention of the petitioner that proper documents were accompanied by the goods is factually incorrect. The Tribunal also took note of the fact that the intelligence officer has noted in his order that the no books of accounts were produced before him and also of the fact that no declaration in form 8FA was produced along with the reply though the petitioner had a contention that in respect of goods brought to Kerala form 8FA was uploaded not at the time of interception but later. The Intelligence Officer also verified the declaration in KVAT Act and confirmed that the same was not declared. As per section 46(3)(e) of the Act, declaration should have been done on the arrival of goods into the state on 29.11.2013 itself. 13. Section 46(3)(e) of the Act is incorporated to put a check on import of goods to the state without disclosing in the books of accounts and later to be used in the manufacture or sale within the state. 13. Section 46(3)(e) of the Act is incorporated to put a check on import of goods to the state without disclosing in the books of accounts and later to be used in the manufacture or sale within the state. Though the respondent claims that the consignment which came to Kerala has been sent back to the original consignor at Gurgaon and Karol Bagh after the repair, melting and purification, the only evidence produced was GS 12 (IT) form, which could not be relied on, as there is no other supporting documents to prove re transport. 46(3)(e) of the Act is a mandatory provision when goods are brought in to state through coastal cargo air and Railways and the petitioner cannot contend that since the goods were not intended for Kerala operation and were transported back the Kerala branch cannot account for the same and for the said reason form 8FA was not filed. 14. The Tribunal is justified in reversing the order of the Deputy Commissioner (Appeals) as the mandatory provision under section 46(3) of the Act, specifically sub clause (e), declaration was not made by the petitioner to the commercial department to make them aware of such import to the state. The contention that the delivery note and self declaration were available with the consignment is not enough to show that all the documents necessary for the movement of goods from one state to another as per prescribed under section 46 of the Act is complied. The burden of proving that there was no evasion of tax is on the petitioner and he has not discharged the same before the enquiry officer and thus the Intelligence Officer was justified in imposing penalty. Though the Deputy Commissioner, by allowing the appeal of the petitioner, has not adverted to the mandatory requirement of section 46(3) (e) of the Act. The Tribunal was right in reversing the order of the Deputy Commissioner for valid reasons. On going through the order of the Tribunal, as well as that of Deputy Commissioner (Appeals) and the Intelligence Officer, we are of the firm opinion that the tribunal was right in reversing the order of the Deputy Commissioner and restoring the order of the intelligence officer. On going through the order of the Tribunal, as well as that of Deputy Commissioner (Appeals) and the Intelligence Officer, we are of the firm opinion that the tribunal was right in reversing the order of the Deputy Commissioner and restoring the order of the intelligence officer. There is no illegality or impropriety in the order passed by the Tribunal, and hence the questions of the law are answered against the petitioner and in favour of the State. The Revision does not warrant interference and the same is dismissed.