Capital goods import and technical transport breach do not bar presumptive tax or justify VAT penalty absent evasion.

Inter-State purchase of cylinders used repeatedly as capital goods for packing medical oxygen did not, by itself, make the dealer an "importer" for denying presumptive tax under section 6(5) of the Kerala Value Added Tax Act, because the term was read as covering goods brought in for trading, not for business use as capital assets. The Court also held that transport of those cylinders under form 16, though not strictly authorised under the rules, amounted only to a technical irregularity and not tax evasion; penalty under section 47(6) was therefore unsustainable. The penalty order was set aside and the levy cancelled.

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Issues: (i) whether inter-State purchase of cylinders used as capital goods for packing medical oxygen made the dealer an "importer" so as to deny presumptive tax under section 6(5) of the Kerala Value Added Tax Act, 2003; (ii) whether transport of the cylinders under form 16 attracted penalty under section 47(6) of the Kerala Value Added Tax Act, 2003.

Issue (i): whether inter-State purchase of cylinders used as capital goods for packing medical oxygen made the dealer an "importer" so as to deny presumptive tax under section 6(5) of the Kerala Value Added Tax Act, 2003.

Analysis: Section 6(5) denies presumptive tax to an importer. The expression "importer" in section 2(xxii) covers a person who brings taxable goods from outside the State or country for the purpose of business. Reading that definition with the scheme of section 6(5), the relevant business contemplated is trading in the goods imported. Cylinders purchased by the dealer were not bought for resale; they were used repeatedly for packing and sale of medical oxygen and therefore constituted capital goods under section 2(x). On that basis, the dealer was not importing cylinders as trading stock and the purchase did not, by itself, take him outside section 6(5).

Conclusion: The dealer was not an importer merely because he purchased cylinders as capital goods, and the transaction did not by itself disentitle him to presumptive tax under section 6(5).

Issue (ii): whether transport of the cylinders under form 16 attracted penalty under section 47(6) of the Kerala Value Added Tax Act, 2003.

Analysis: Although rule 58(18) of the Kerala Value Added Tax Rules, 2005 did not strictly authorise a registered dealer to use form 16 for transport of such capital goods, the violation was only technical. The purchase and movement of cylinders did not show an attempt to evade tax, and any possible tax issues relating to rental or use of the cylinders were left to assessment proceedings. In the absence of tax evasion, the penal provision could not be invoked.

Conclusion: Penalty under section 47(6) was not sustainable, as the alleged irregularity in use of form 16 did not amount to evasion of tax.

Final Conclusion: The revision succeeded, the penalty order was set aside, and the penalty levied on the dealer was cancelled.

Ratio Decidendi: For the purpose of denying presumptive tax and imposing penalty, an "importer" under the Act is a person who brings goods from outside the State for trading in those goods, not a dealer who imports capital goods for use in the course of business; a mere technical breach in transport documentation without tax evasion does not attract penalty.

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