Commissioner of Commercial Taxes vs N.K. Poduval and Co.

A.M. Shaffique, J.—The writ appeal is filed by the respondents in the writ petition. The respondent herein is the petitioner in the writ petition. The writ petition came to be filed challenging Ext. P11 order passed by the Commissioner of Commercial Taxes, Thiruvananthapuram, the 1st appellant herein setting aside the order of the first revisional authority in R.P. No. 96/2001 dated 14.01.2002 and restoring the order passed by the Intelligence Officer, Kottayam. The facts as disclosed would show that the petitioner is a dealer in engineering goods and is a registered dealer under the Kerala General Sales Tax Act and Central Sales Tax Act. For the year 1997-98 he has filed annual return and the taxable turnover. The final assessment was completed. On 24.01.2001 the Intelligence Officer issued notice to the petitioner alleging inter-state sales of diesel generator sets sold by M/s. Jeevan Diesel and Electricals Limited, Pondicherry to 10 purchasers in the State of Kerala for which the petitioner has canvassed purchase orders for and on behalf of the manufacturers at Pondicherry. Proceedings were taken u/s 45A of the K.G.S.T. Act and the petitioner was imposed with a penalty of Rs. 4,11,000/-. Ext. P6 is the said order. Petitioner preferred a revision before the first revisional authority who relying upon the judgment of the Hon''ble Supreme Court and this Court set aside the penalty proceedings and allowed the revision petition. Ext. P8 is the said order. Suo motu revision was taken against the aforesaid order by the Commissioner which resulted in Ext. P11 order. The Commissioner restored the order passed by the Intelligence Officer.

The main contention urged by the petitioner was that the transactions in question are pure inter-state sale made between the Pondicherry dealer and the buyers in Kerala. Reliance was placed on the judgment of the Supreme Court in State of A.P. Vs. National Thermal Power Corporation Ltd. and Others, contending that as far as the field of taxation on sale or purchase taking place in the course of inter-state trade or commerce has been excluded from the competence of State legislature, the State cannot impose any tax on inter-state sales. Judgment of the Supreme Court in Union of India (UOI) and Another Vs. K.G. Khosla and Co. Ltd. and Others, was referred to contend that a sale would be an inter-State sale even if the contract does not itself provide for movement of goods from one State to another. Another judgment relied upon was Sahney Steel and Press Works Limited and Another Vs. Commercial Tax Officer and Others, The Supreme Court held that the place of receiving orders, raising invoices and receiving the value of goods are immaterial if the goods, as a result of the covenant in the contract of sale or as an incident of the sale, had moved from one State to another, which indicates an inter-State sale. The petitioner''s counsel also relied upon the judgment of the Supreme Court in Bharat Heavy Electrical Limited etc. Vs. Union of India and Others etc., Having considered the above matter, the learned Single Judge formed an opinion that transactions in question has got the characteristics of an inter-State sales. It is further found that there is no material to point out that any purchase was made by the petitioner from the Pondicherry dealer or any sale was effected by the petitioner to the buyers within the State of Kerala, whereas it is clear that the goods were dispatched by the Pondicherry dealer directly in the names of the buyers and the goods in question had reached the individual buyers and they have taken delivery of such goods. On this finding the learned Single Judge opined that for imposing a penalty u/s 45A of the K.G.S.T. Act there should be clear evidence of suppression of turnover and evasion of payment of legitimate tax amount due. It is found that the revenue was not successful in proving that petitioner had purchased the goods and thereafter-effected sale within the State. In that view of the matter Ext. P11 order was set aside and Ext. P8 order was restored.

The learned Special Government Pleader inter alia contends that the findings made by the learned Single Judge is not justifiable and the judgment of the Hon''ble Supreme Court in National Thermal Power Corpn. Ltd. (supra) was not properly appreciated. The short question to be considered in the above writ petition is whether the petitioner who was a commission agent for the purpose of sale of the aforesaid generators was liable to be imposed with a penalty for suppression of sales turnover. The minimum requirement to be shown is that the petitioner had in fact purchased the aforesaid generators and thereafter it is sold to the buyers in question. In Ext. P11 order, the Commissioner of Commercial Taxes found that the offer and acceptance of the deal in question was between the local purchasers and the revision petitioner. It is found that the dispatch of goods by the Pondicherry dealer and the consequential delivery as per the instructions given by the petitioner to local customers would make it a local sale between the local purchaser and the petitioner and therefore the transactions falls within the sale. This finding is absolutely baseless as "sale" is defined u/s 2(xxi) of the KGST Act and in Section 2(g) of the CST Act wherein it is clearly stated to mean, transfer of property in goods by one person to another, whether in pursuance of a contract or not, in the course of trade or business for cash or other valuable consideration. The material available in the case would show that the Pondicherry dealer had transferred the property in the goods to the buyers in Kerala directly. If that is the position, necessarily a person who had procured the orders for the Pondicherry seller for the buyers in Kerala would not become a purchaser of the goods and for that reason itself the petitioner will not become a purchaser. The contention of the learned Government Pleader that the learned Single Judge had not relied upon the judgment in National Thermal Power Corpn. Ltd. (supra) is not correct. The same has been considered and all the contentions had been met by the learned Single Judge. The appellant is not in a position to point out any illegality or perversity in the judgment of the learned Single Judge.

Hence we are of the opinion that the findings made by the learned Single Judge are justifiable and there is no reason to interfere with the same. Accordingly this appeal is dismissed.