Sale consideration under government scheme treated as real value, sustaining tax liability and penalty for under-billing.

Where a dealer supplied coir looms under a government scheme, the bank remittances were treated as the real consideration for the supply, because the transaction structure and surrounding materials showed that the amounts paid through the scheme corresponded to the actual sale. The Court found no evidentiary basis for the claim that only parts of the looms were sold at a reduced value, so tax could not be confined to the lesser invoiced amount. On that footing, the inference of under-billing and evasion was upheld, and the penalty under section 67 of the Kerala Value Added Tax Act was sustained.

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Issues: Whether the amounts received from the banks under the Central Government Scheme could be treated as the sale consideration for levy of tax and for sustaining penalty under section 67 of the Kerala Value Added Tax Act.

Analysis: The dealer was entrusted with supplying coir looms to beneficiaries under a government scheme, and the factual premise accepted by the Court was that the bank remittances represented the consideration for the actual supply intended under the scheme. On the materials before it, the Court found no basis to accept the plea that only parts of the looms were sold for a lesser value so as to confine tax liability to the reduced billing amount. In the backdrop of the scheme, the Court treated the receipt of bank amounts as the real consideration for the supply and held that the inference of under-billing and evasion drawn by the authorities below was justified.

Conclusion: The penalty and the revision order were upheld, and the challenge to the determination failed.

Final Conclusion: The revision was answered against the assessee and in favour of the revenue, with no interference called for in the penalty proceedings.

Ratio Decidendi: Where the surrounding scheme and transaction structure show that the amount remitted by the bank is the real consideration for the supply, a dealer cannot confine tax liability to a lesser invoiced amount by asserting partial supply without supporting evidence; penalty may be sustained on the basis of under-billing and evasion.

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