Concessional declaration breach can attract penalty where the purchaser knowingly causes revenue loss and violates statutory purpose conditions.

A purchasing dealer who knowingly obtained a concessional declaration in form No. 18 but failed to use the goods for the declared purpose could be penalised under section 45A of the Kerala General Sales Tax Act, because the wrongful declaration caused revenue loss and fell within the statutory concept of evasion. The provision was not limited to a dealer directly liable to remit tax. The absence of direct tax liability, absence of mens rea, or the short duration of the breach did not bar penalty where the breach was conscious and deliberate. The quantum of penalty was also upheld, as the authority had exercised a plausible discretion and writ interference was unwarranted.

---

---

Issues: (i) Whether penalty under section 45A of the Kerala General Sales Tax Act, 1963 could be imposed on a purchasing dealer who, after obtaining the concessional declaration in form No. 18, failed to use the goods for the declared purpose and thereby caused loss of revenue. (ii) Whether absence of direct liability to pay tax to the Government and absence of mens rea or short duration of the violation barred penalty or justified interference with the quantum of penalty.

Issue (i): Whether penalty under section 45A of the Kerala General Sales Tax Act, 1963 could be imposed on a purchasing dealer who, after obtaining the concessional declaration in form No. 18, failed to use the goods for the declared purpose and thereby caused loss of revenue.

Analysis: The concessional purchase scheme was subject to the statutory condition that the goods purchased on the strength of the declaration had to be used for the declared purpose. Where the purchaser knew that the declaration could not be honoured and nevertheless acted on it, the case fell within section 45A(1)(f) as well as section 45A(1)(g). The provision was not confined to a dealer directly liable to remit tax to the Government. A wrongful declaration that results in lesser tax being collected and consequent revenue loss constitutes evasion within the meaning of the section.

Conclusion: The penalty was legally sustainable against the appellant on this ground and the contention that a purchasing dealer was outside the scope of section 45A was rejected.

Issue (ii): Whether absence of direct liability to pay tax to the Government and absence of mens rea or short duration of the violation barred penalty or justified interference with the quantum of penalty.

Analysis: Penalty proceedings under the Act are quasi-criminal, and culpable conduct is relevant; however, the facts showed a conscious and knowing breach of the declaration, not a mere accidental lapse. The extent of the period of violation was not decisive where the conduct was deliberate and revenue loss was substantial. On quantum, the authority's decision was a plausible exercise of discretion, and supervisory jurisdiction under article 226 could not be used to substitute a different view merely because another view was possible.

Conclusion: Neither absence of direct tax liability nor lack of mens rea nor the challenge to quantum warranted interference, and the maximum penalty was upheld.

Final Conclusion: The appeal failed and the penalty order was sustained in full, with no ground made out for interference in writ appellate jurisdiction.

Ratio Decidendi: A purchaser who knowingly breaches a concessional declaration and thereby causes tax loss can be penalised under section 45A even if the tax is formally payable by the selling dealer, and the quantum of penalty will not be interfered with in writ jurisdiction where the authority has exercised a plausible discretion on the facts.

---