JUDGMENT : (Harisankar V. Menon, J.) : These two writ petitions are filed by the same petitioner challenging the proceedings finalised under the provisions of Section 70B and 25(1) of the Kerala Value Added Tax Act, 2003 (hereinafter referred to as the ‘KVAT Act’). 2. The short facts necessary for the disposal of these writ petitions, as culled out from WP(C) No.7094 of 2017 are as under: The petitioner is a Private Limited Company registered under the provisions of the Companies Act, 1956. The petitioner with reference to the Memorandum of Association of the Company, points out that the main object of the Company is to manage and facilitate the running of Educational Institutions, Technical and non-technical through trusts or otherwise undertake to develop, build, construct, adopt, implement, operate, take on lease or lease, run, maintain, manage, education institutions of all types like nursery, pre-primary, primary, etc. The petitioner further points out that the Tolins World School Foundation is a Trust constituted by the Director of the petitioner company as the settlor, managed by a Board of Trustees consisting of not more than 11 members nominated by the settlor. A copy of the Trust Deed is produced along with the reply affidavit filed by the petitioner, as Ext.P14. 3. The petitioner further points out that it had imported various materials like roofing sheets, electrical items including fancy lamps, windows, UPVC doors, furniture, toys, artificial grass etc. from abroad as evidenced by Ext.P1 series invoices. It is further brought to the notice of this Court that the said imported items have been used in the construction of a School building and therefore, had formed part of an immovable property. As regards the materials like furniture, toys etc., they are used for furnishing the School building. On account of the above, the petitioner contends that the building/furniture remains the property of the petitioner even as of now, with reference to Ext.P2 balance sheet for the year 2013-14, and the balance sheet for the years 2015-16 to 2018-19 as evidenced by Exts.P15(a) to P15(d). With reference to such balance sheets, it is further pointed out that the items so imported from abroad have been capitalised and there have been no deletion of any portion of the items so imported from the assets, except the claim of depreciation permissible under law. With reference to such balance sheets, it is further pointed out that the items so imported from abroad have been capitalised and there have been no deletion of any portion of the items so imported from the assets, except the claim of depreciation permissible under law. It is further pointed out in these writ petitions that the building constructed as above, using the materials imported from abroad and the furniture used in the furnishing of the School have been leased out to the afore Trust for a period of 30 years as evidenced by Ext.P3. However, the 1st respondent proposed to impose penalty on the petitioner under Section 70B of the KVAT Act amounting to Rs.1,34,89,993/-, essentially alleging that the petitioner diverted the items imported as above, against the certificate of ownership furnished in Form No.16, to the Trust referred to above. The gravamen of the allegations contained in Ext.P4 show cause notice issued by the 1st respondent is in the following lines: “M/s.Tolins World School Pvt.Ltd. and M/s.Tolins World School Foundation are different legal persons having separate legal entity. Hence it is clear that you have brought the consignment into the State under the guise of for own use and transferred the same to another institution for use under an agreement of lease for a period of 30 years. Most of the items so imported including toys and furnitures will not have a life of thirty years. Hence it is clear from the transaction that you have effected sale by receiving the consideration of the items so transferred.” After making the above allegations, the 1st respondent has sought to impose a penalty of Rs.1,34,89,993/- on the petitioner and also to demand Rs.44,96,664/- towards tax by the said notice. 4. Though the petitioner has submitted Ext.P5 detailed reply pointing out that there was no sale involved of the items in question and that there was only a lease involved, not attracting the provisions under Section 70B, by Ext.P6 order, the 1st respondent concluded the issue against the petitioner, finding as under: “The nature of lease agreement that, it was stated to be executed on 31.05.2015 by cancelling the earlier one is not convincing. Photocopy of the deed agreement is made available for verification. The genuineness of the documents is suspicious. It seems to be fabricated and produced for the purpose of evading tax and to outwit the department. Photocopy of the deed agreement is made available for verification. The genuineness of the documents is suspicious. It seems to be fabricated and produced for the purpose of evading tax and to outwit the department. The Managing Director of the said company had contended that mistake was committed on executing the lease agreement with the trust initially. So, it was cancelled and another one have been executed later to solve defect. This contention seems to be a mere excuse for escaping from the tax liability of the illegal transactions made with them to the trust authorities. Actually, the company had effected the sale of all furniture and imported items to the trust on accepting monitory benefits, for which the above documents have been fabricated and produced by this time. Hence, the contentions of the company that the facility given to the trust is only to utilize the building along with the furniture, forming part of the building to run the school is against fact and is unacceptable for deviating from the proposal.” Finding thus, the penalty and tax are sought to be demanded from the petitioner pursuant to the said order. Though the petitioner submitted Ext.P8 application for rectification under Section 66 of the Act, relying on Ext.P7 judgment of a Division Bench of this Court, ultimately by Ext.P12 order, the 1st respondent concluded that the facts and circumstances of the case considered by this Court in Ext.P7 were different, that the petitioner was not a party to Ext.P7 judgment and hence the said judgment has no bearing to the case at hand. Finding thus, the application for rectification stood rejected. 5. It is in the said situation that the petitioner has filed WP(C) No.7094 of 2017. 6. During the pendency of the afore writ petition, the 2nd respondent herein has issued another notice dated 08.08.2016 under Section 25(1) of the KVAT Act, proposing to finalise the assessment for 2014-15 with reference to the penalty proceedings concluded as above. Though the petitioner submitted Ext.P2 reply, by Ext.P13 order, the 2nd respondent has finalised the assessment and sought to demand the tax dues on the items covered by the penalty orders at Ext.P6. The said order at Ext.P13 is the subject matter of challenge in the connected WP(C) No.13308 of 2017. 7. Though the petitioner submitted Ext.P2 reply, by Ext.P13 order, the 2nd respondent has finalised the assessment and sought to demand the tax dues on the items covered by the penalty orders at Ext.P6. The said order at Ext.P13 is the subject matter of challenge in the connected WP(C) No.13308 of 2017. 7. A detailed counter affidavit has been filed in these writ petitions by respondents 1 and 2 herein to which, the petitioner has also filed a detailed reply affidavit. 8. The 1st respondent in WP(C) No.13308 of 2017 has also filed a rejoinder, supporting the impugned orders. 9. I have heard the learned senior counsel, Sri.Joseph Kodianthara and Sri.Sayed M. Thangal, the learned Government Pleader appearing for the respondents. 10. The learned senior counsel Sri.Joseph Kodianthara would contend that: i. What was imported by the petitioner were building materials and furniture. They have never been sold by the petitioner to anyone even as on date. ii. It is only that the building and the fixtures including the furniture have been leased out pursuant to Ext.P3. In the order issued at Ext.P6, the 1st respondent only says that the “document is suspicious” with reference to Ext.P3 lease deed produced by the petitioner. This would not attract the provisions under Section 70B, even if the assessing authority entertains such a belief. iii. The assessing authority is not justified in doubting the lease deed at Ext.P3, on the face of the balance sheets and other records produced by the petitioner. iv. The assessing authority has not pointed out any valid reasons for doubting the genuinity of Ext.P3 lease deed. v. He relied on Ext.P7 order of a Division Bench of this Court, to contend that the penalty cannot be imposed on the petitioner. vi. He also relied on the judgment of this Court in Flipkart Internet Private Limited v. State of Kerala [ 2015 (5) KHC 522 ], to contend that no penalty is attracted to the facts and circumstances of the case at hand. 11. Per contra, Sri.Sayed M. Thangal, the learned Government Pleader would contend that: i. Insofar as there was a transfer of the materials imported by the petitioner in favour of the Trust, provisions under Section 70B are attracted. ii. The judgment relied on by the petitioner at Ext.P7, is not apposite to the facts and circumstances of the case at hand. iii. ii. The judgment relied on by the petitioner at Ext.P7, is not apposite to the facts and circumstances of the case at hand. iii. There is no requirement for any finalisation of the assessment, so as to invoke the penal provisions under the statute. iv. In any event, the assessment proceedings have already been finalised, which is the subject matter of challenge in WP(C) No.13308 of 2017. v. He would also rely on the judgment of the Division Bench of this Court in WA No.2288 of 2018, Tata Engineering and Locomotive Co. Limited and others v. State of Bihar and others[1964 SCC Online SC 111], Supreme Food Industries v. State of Kerala [(2012) 47 VST 487 (ker)] and T.K.Balan v. State of Kerala and others [(1997) 7 KTR 437 (Ker)]. 12. I have considered the rival submissions as well as the connected records. 13. The following questions arise for consideration in these writ petitions: i. Under what circumstances, the provisions under Section 70B of the KVAT Act are attracted? ii. On the facts and circumstances of the case at hand, is the assessing authority justified in invoking the provisions under Section 70B? iii. Is the completion of assessment under Section 25(1) of the Act, justified in the case at hand? 14. The consideration of the first question as above, would depend on various provisions under the Act and the history behind the introduction of Section 70B. The KVAT Act provides for the levy of tax on the sale or purchase of goods within the State of Kerala. The charging Section 6, provides for imposition of tax with respect to the sale or purchase of goods under the KVAT Act, on the taxable turnover of a dealer. However, the State noticed that several unregistered dealers have been bringing various commodities from outside the State, as if the same is required for their “own use” and thereafter, such commodities were being subsequently resold by such persons. In such a situation, the State was losing its share of taxes on the sale/purchase of the goods in question, since the person effecting the import from outside the State and effecting the subsequent sale within the State was remaining unregistered under the Act. In such a situation, the State was losing its share of taxes on the sale/purchase of the goods in question, since the person effecting the import from outside the State and effecting the subsequent sale within the State was remaining unregistered under the Act. Rule 58(18) of the Kerala Value Added Tax Rules, 2005 (for short, the ‘KVAT Rules’), in such circumstances, prescribed as follows: “58(18) - Every person, other than a registered dealer, who consigns goods by any vehicle or vessel, where the transport is not in pursuance of a sale, shall issue a certificate of ownership in Form No.16.” (Underlining supplied) The Commissioner of Commercial Taxes, Thiruvananthapuram, issued Circular No.51 of 2006 dated 19.12.2006, noticing as under: “It is brought to notice that a substantial volume of goods is being transported into the State by persons other than registered dealers on the pretext of 'own use' and such goods are subsequently re-sold in the State. This leads to loss of revenue to the State Exchequer. While protecting the right of persons to bring in goods for genuine personal use, misuse of the facility has to be curbed forthwith. So in exercise of the powers conferred under clause (c) of sub- section (2) of section 3 of the KVAT Act, 2003, the undersigned, having considered it necessary to prevent unauthorized sale and the consequent tax evasion, order that transport of taxable goods, the value of which exceeds Rs.5,000/-, shall be accompanied by a certificate of ownership in addition to invoices or sales bills as prescribed under the Act. The certificate of ownership shall be in Form No 16 prescribed under the KVAT Rules and shall also give additional information such as bill number with date and value in respect of the goods transported.” (Underlining supplied) It is thus, the department prescribed the use of Form No.16, certificate of ownership, by unregistered dealers on import of various items from outside the State for “own use”. 15. Later, Section 70B of the KVAT Act is introduced by the Kerala Finance Act, 2009, with effect from 01.04.2009. The said provision reads as follows: “70B. 15. Later, Section 70B of the KVAT Act is introduced by the Kerala Finance Act, 2009, with effect from 01.04.2009. The said provision reads as follows: “70B. Penalty for commercial use of goods brought from outside the State declaring it as for own use:- Any person bringing goods from outside the State declaring it as for own use and has used the goods so brought otherwise than for own use, shall, without prejudice to any other provisions in this Act, be liable to pay by way of penalty, an amount not exceeding thrice the amount of tax due on such goods.” Thus, a reading of Section 70B, which has been introduced by the Finance Act, 2009 and the reason behind its introduction as borne out from the above Circular would show that penalty under Section 70B is attracted when: i. a person brings goods from outside the State by declaring the same as for own use. ii. and uses the said goods otherwise than for own use. The quantum of penalty, when the above two conditions are satisfied, is prescribed as thrice the amount of tax due on such goods. 16. However, it is to be noticed that unless and until both the above conditions are satisfied, penalty under Section 70B of the KVAT Act is not attracted. The Department has to prove that apart from bringing the goods from outside the State, the person concerned has used the said goods “otherwise than for own use”. The term “otherwise than for own use” has to be interpreted with reference to the history behind the introduction of the above Section as well as the other provisions of the statute. As noticed earlier, the Act provides for levy of tax on the sale/purchase of goods. The State had noticed that several unregistered dealers had been bringing goods from outside the State claiming that the said goods were for their own use and thereafter reselling the said goods within the State, without remitting the tax payable under the statute. In other words, it is only in a situation where the goods brought against Form No.16 certificate of ownership are “resold” within the State, the question of invoking the provisions under Section 70B arises. The very same intention is borne out from the Budget Speech 2009-2010, wherein it is noticed in paragraph 246 that: “246. In other words, it is only in a situation where the goods brought against Form No.16 certificate of ownership are “resold” within the State, the question of invoking the provisions under Section 70B arises. The very same intention is borne out from the Budget Speech 2009-2010, wherein it is noticed in paragraph 246 that: “246. It is understood that certain individuals are bringing goods from outside the State under the guise of own use and utilize the same for commercial purpose. I intend to introduce necessary provisions to prevent abuse of process of law. Necessary amendments will be made in the statute.” Therefore, before invoking the provisions under Section 70B of the KVAT Act, the assessing authority has to prove that the goods brought from outside the State against Form No.16 Certificate of ownership, have been “resold” or “utilized for some commercial purpose”. The term “commercial purpose” has to be interpreted as a transaction which attracts tax under the provisions of the Act, insofar as it is only such transactions that can be brought to tax under the statute. The Apex Court in K.P. Varghese v. Income Tax Officer, Ernakulam and Another [ (1981) 4 SCC 173 ], has also held that reference to Budget Speech may be made, while interpreting the provisions of the statute. 17. On the basis of the above interpretation of the provisions under Section 70B of the KVAT Act, the next question arising for consideration in the case at hand is as to whether the assessing authority has succeeded in establishing that the provisions under Section 70B are attracted. 18. As noticed earlier, the show cause notice at Ext.P4, proposing penalty was issued to the petitioner herein, finding that the petitioner imported various items like roofing sheets, electrical items, windows, doors, furnitures, toys, etc. from abroad against Form No.16 and thereafter, the petitioner transferred the School building constructed using the above items as also the furniture, toys, etc. to the Trust. According to the assessing authority, the petitioner and Trust are two different legal persons having separate legal entities and therefore, there is a violation of the declaration in Form No.16, so as to attract the penalty under Section 70B of the KVAT Act. to the Trust. According to the assessing authority, the petitioner and Trust are two different legal persons having separate legal entities and therefore, there is a violation of the declaration in Form No.16, so as to attract the penalty under Section 70B of the KVAT Act. Though the petitioner produced the trust deed as also the lease agreement in support of his stand, the assessing authority in Ext.P6 order has stated that “genuineness of the document is suspicious”. Therefore, it is concluded that the petitioner has effected the “sale of all furniture and imported items” to the Trust and hence, Section 70B is attracted. 19. I have considered the above findings in Ext.P6 order on the basis of the interpretation to Section 70B of the KVAT Act as above. 20. The petitioner has produced the trust deed as well as the lease agreement before the assessing authority. A perusal of the lease agreement at Ext.P3 shows that only possession of the property, including the furnitures/toys is given to the lessee - Trust. Ownership of the imported items continues to remain with the petitioner. The findings in the assessment order that the documents produced as above are “suspicious” have been recorded without any basis. A reading of the order would show that the assessing authority has proceeded with the preconceived notion as if the petitioner has sold the items imported, as above. 21. The fallacy in the above findings is clear from the fact that in Ext.P4 show cause notice and Ext.P6 order, the assessing authority has sought to demand tax, only with respect to the furniture imported by the petitioner against Form No.16 Certificate of Ownership. However, the show cause notice also mentioned about the import of other construction equipments like roofing sheets, electrical items, windows, doors, etc. The assessing authority has not proceeded against the petitioner on the basis of the value of such items and has finalized the proceedings, only on the basis of the value of furniture in the show cause notice and the assessment order. In other words, the assessing authority admits that the construction materials imported as above, are still in the possession of the petitioner, after its incorporation in the building concerned. When that be so, the assessing authority cannot proceed against the petitioner only as against the value of the furniture. In other words, the assessing authority admits that the construction materials imported as above, are still in the possession of the petitioner, after its incorporation in the building concerned. When that be so, the assessing authority cannot proceed against the petitioner only as against the value of the furniture. If the assessing authority accepts that the construction materials imported as above, do not attract Section 70B of the KVAT Act, for the same reason, the furniture, toys, etc., imported also do not attract the provisions under Section 70B. 22. In this connection, the petitioner has relied on the judgment of a Division Bench of this Court in O.T.Rev.No.20 of 2014, produced as Ext.P7. That was a case, where a hospital imported various items against Form No.16. Suspecting the genuineness of the transaction, enquiry commenced, leading to the finding that the commodities purchased were being used for “commercial purposes”, and hence penalty under Section 70B of the KVAT Act was also levied. Considering the above situation, this Court found as under: “According to the learned Government Pleader, goods were procured and it has been transported on the strength of Form 16 declaring that the goods which were transported were purchased for own use. When the respondent-assesse which is a hospital uses the goods brought from outside the state, declaring it as for own use, for commercial purposes and makes profit, it attracts section 70b because the word 'commercial' is mentioned in the heading. 3. We are not impressed by the said argument of the Government Pleader. What Section 70B contemplates is that any person bringing goods from outside the State projecting the purchase as one for its own use and utilising the goods so brought otherwise than for own use shall, without prejudice to any other provisions in the Act, be liable to pay by way of penalty. In this case it is noteworthy that the assessee is admittedly a hospital. The assessee has procured goods, no doubt, giving declaration under Form 16. The fact that the declaration given under Form 16, in our view, would not have any bearing on the decision rendered in this case. It is not a case as if the respondent assessee after giving such declaration and after bringing goods in the State has not used them for its own use. The fact that the declaration given under Form 16, in our view, would not have any bearing on the decision rendered in this case. It is not a case as if the respondent assessee after giving such declaration and after bringing goods in the State has not used them for its own use. The fact, that when the person make use of the goods it may generate profit, will not detract from the use being its own use though the word 'commercial' figures in the heading of Section 70B. What is required for attracting Section 70B is bringing goods from outside the State declaring it for own use, but not using it for own use. It means that when the person brings the goods declaring it for own use, but he sells or otherwise alienates/transfers the goods, it could be said that the goods are not being used for its own use. But, in this case the assessee hospital is using the purchased goods for its own purposes.” (underlining supplied) The above findings apply to the facts and circumstances of the case at hand also. The petitioner, admittedly, has leased out the school building along with the furniture, etc., to the Trust. The fact that the imported items have been capitalized as revealed from the balance sheets is also not in dispute. As noticed earlier, the assessing authority has only proceeded against the petitioner as regards the furniture involved and not as regards the construction materials imported as above. Therefore, the provisions under Section 70B of the KVAT Act are not attracted to the case at hand. 23. The judgments relied on by the learned Government Pleader, are now to be considered. The learned Government Pleader, as noticed above, has relied on five judgments. However, those judgments pertained to the levy of penalty under Section 67 of the KVAT Act, when the assessment proceedings were pending. However, these writ petitions have been decided on the basis of the interpretation of the provisions under Section 70B of the KVAT Act. 24. The assessing authority by Ext.P6 order has also sought to demand tax due on the furniture imported as above amounting to Rs.44,96,664/-. Assuming for a moment that the provisions under Section 70B of the KVAT Act are attracted, the demand of tax as above was quiet unwarranted, since the statute never visualized the collection of tax under Section 70B. 24. The assessing authority by Ext.P6 order has also sought to demand tax due on the furniture imported as above amounting to Rs.44,96,664/-. Assuming for a moment that the provisions under Section 70B of the KVAT Act are attracted, the demand of tax as above was quiet unwarranted, since the statute never visualized the collection of tax under Section 70B. Therefore, the said demand of tax under Section 70B by Ext.P6 order, is also without justification. 25. The further challenge in WP(C) No.13308 of 2017 to Ext.P13 assessment order is also to be considered. In the said order, the assessing authority has sought to demand tax on the value of furniture as fixed in the penalty order issued under Section 70B of the KVAT Act. But as found earlier, the petitioner has effected no outright sale as above and therefore, the completion of assessment by Ext.P13, without proving such outright sale is also illegal and arbitrary. 26. However, this Court notices that the petitioner admits through the averments in the petition as also the lease agreement that the immovable property of the school, furniture/toys, has been leased out to the Trust as per the lease agreement. The term ‘sale’ under the Act has been defined under Section 2(xliii) of the KVAT Act also covering such “transfer of right to use” as under: “2(xliii) “Sale” with all its grammatical variations and cognate expressions means any transfer whether in pursuance of a contract or not of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or for other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge. …………. Explanation V - A transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration shall be deemed to be a sale.” Thus, a transfer of right to use any goods for any purpose for cash, deferred payment or other valuable consideration shall be deemed to be a sale. Here there cannot be any dispute that furniture covered by the lease agreement is “goods”. When that be so, the petitioner is liable to satisfy the tax payable under the Statute as against the furniture which have been leased out by way of “transfer of right to use goods”. Here there cannot be any dispute that furniture covered by the lease agreement is “goods”. When that be so, the petitioner is liable to satisfy the tax payable under the Statute as against the furniture which have been leased out by way of “transfer of right to use goods”. The assessing authority has not approached the issue in the above angle. Resultantly, I allow these writ petitions as under: i. Ext.P6 order issued by the 1st respondent in WP(C) No.7094 of 2019 and Ext.P13 order issued by the 2nd respondent in WP(C) No.13308 of 2019 are set aside. ii. The 2nd respondent in WP(C) No.13308 of 2017 is permitted to reassess the petitioner for 2014 -2015, on the basis of the findings contained in paragraph 26 above.