Mandatory transport declaration for imported goods justified penalty, but the High Court reduced the amount as disproportionate.

Failure to carry the mandatory Form 8FA declaration while transporting imported goods in intra-State movement under the Kerala Value Added Tax Act and Rules justified penalty, because the omission created scope for suppression and proof of actual suppression was not required for section 47(6). The High Court upheld the penalty liability on that basis, but held that the quantum had to reflect the technical nature of the default and the surrounding circumstances, including the assessee's business and import records. The penalty was therefore reduced to a minimal amount of Rs. 15,000.

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Issues: (i) Whether penalty under section 47(6) of the Kerala Value Added Tax Act, 2003 was justified for transporting imported goods without Form 8FA declaration; (ii) whether the quantum of penalty required reduction in the facts of the case.

Issue (i): Whether penalty under section 47(6) of the Kerala Value Added Tax Act, 2003 was justified for transporting imported goods without Form 8FA declaration.

Analysis: Rule 66(6)(ba) of the Kerala Value Added Tax Rules, 2005 read with section 46(3)(e) of the Kerala Value Added Tax Act, 2003 requires carriage of Form 8FA with imported goods during intra-State transport. The absence of the declaration creates scope for suppression of the transaction, and for the purpose of section 47(6), proof of actual suppression is not necessary. The prescribed declaration being mandatory, failure to carry it supports an inference of attempt to evade tax.

Conclusion: The imposition of penalty was justified and was upheld.

Issue (ii): Whether the quantum of penalty required reduction in the facts of the case.

Analysis: The nature of the assessee's business and the presence of import records were relevant mitigating circumstances. Although the omission attracted penalty, the facts did not justify the full amount imposed by the Intelligence Officer. A minimal penalty was considered appropriate having regard to the technical nature of the default and the circumstances of the transaction.

Conclusion: The penalty amount was reduced to Rs. 15,000/-.

Final Conclusion: The revision succeeded only to the extent of reduction in penalty, while the finding sustaining liability to penalty remained undisturbed.

Ratio Decidendi: Failure to carry a mandatory transport declaration for imported goods can justify penalty for attempt to evade tax, but the amount of penalty must be proportionate to the circumstances of the case.

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