2022 (11) TMI 92 - HC - VAT and Sales Tax

Tribunal upholds penalty for improper goods transport under Kerala VAT Act, High Court affirms decision

The Tribunal justified imposing a penalty under Section 47 of the Kerala Value Added Tax Act due to improper transport of goods without necessary ... Restoration of penalty - reversal of finding of the Deputy Commissioner’s (Appeals) - release of detained goods - main reason for the detention of goods is that the consignment was not declared as per section 46(3)(e) of the Act - HELD THAT:- 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. 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. 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. 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 - On going through the order of the Tribunal, as well as that of Deputy Commissioner (Appeals) and the Intelligence Officer, it is opined 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 - the revision is dismissed. Issues Involved:1. Imposition of penalty under Section 47 of the Kerala Value Added Tax Act, 2003.2. Consideration of petitioner's documents and replies by the Tribunal.3. Compliance with Section 46(3)(e) and Rule 66(6) of the Kerala Value Added Tax Rules, 2005.4. Validity of non-filing of Form 8FA declaration.5. Justification of the Tribunal's decision to impose and sustain the penalty.Issue-wise Detailed Analysis:1. Imposition of Penalty under Section 47:The Tribunal and the authority determined that the penalty under Section 47 of the Kerala Value Added Tax Act, 2003 (KVAT Act) was justified due to the improper transport of goods without necessary documentation. The Intelligence Squad intercepted the transport of gold and diamond ornaments without proper records, leading to a penalty of Rs. 30,49,585/- under Section 47(6) of the Act. The Deputy Commissioner (Appeals) reduced this penalty to Rs. 50,000/-, but the Tribunal later restored the original penalty, emphasizing the non-compliance with the mandatory documentation requirements.2. Consideration of Petitioner's Documents and Replies by the Tribunal:The petitioner argued that the Tribunal failed to consider the detailed objections and documents submitted, which allegedly supported the legitimacy of the transport. However, the Tribunal reviewed the entire records and found defects in the delivery notes and invoices, including the absence of the consignee's full address. The Tribunal concluded that the documents accompanying the goods were not proper or genuine, leading to the suspicion of tax evasion.3. Compliance with Section 46(3)(e) and Rule 66(6):Section 46(3)(e) mandates that goods imported into the state through air must be declared before the Commercial Tax Officer. The petitioner did not comply with this requirement, failing to file Form 8FA. Rule 66(6)(ba) specifies that such declarations must be prepared in duplicate and accompany the consignment. The Tribunal found that the petitioner did not furnish the necessary declaration, leading to the interception and penalty.4. Validity of Non-filing of Form 8FA Declaration:The petitioner contended that the consignee was not a registered dealer and thus could not file Form 8FA. The Tribunal rejected this argument, stating that the non-filing of Form 8FA indicated an attempt to evade tax. The Tribunal emphasized that compliance with Section 46(3)(e) is mandatory, and the failure to declare the goods upon arrival in the state was a significant violation.5. Justification of the Tribunal's Decision to Impose and Sustain the Penalty:The Tribunal reversed the Deputy Commissioner's decision, reinstating the original penalty imposed by the Intelligence Officer. The Tribunal noted that the mandatory provisions of Section 46(3)(e) were not adhered to, and the petitioner failed to prove that there was no tax evasion. The Tribunal's decision was based on the lack of proper documentation and the absence of a valid declaration, leading to the conclusion that the transport was intended to evade tax.The High Court upheld the Tribunal's decision, finding no illegality or impropriety in the order. The petitioner's revision was dismissed, and the questions of law were answered in favor of the State. The court emphasized that the burden of proving no tax evasion was on the petitioner, which was not adequately discharged.