AI Structured Summary
Not yet generated for this judgment
Judgment
Mrs. Manjula Chellur, J.—On our direction, the learned Government Advocate placed before us the original file pertaining to the assessment of sales tax for the years 2001-02, 2002-03 of M/s. Vivek Petro Co. Pvt. Ltd. (for short, "M/s. Vivek Petro") and the same is perused. The questions of law raised are as under :
(i) Whether, on the facts and circumstances of the case, the proceedings initiated against the appellant u/s 18B of the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 are void ab initio in view of the fact that the goods had become part of local stock of the consignor, who is also a registered dealer under the said Act, before they were transported outside the State ?
(ii) Whether, on the facts and circumstances of the case, the respondent has committed an error in ignoring the submission of the appellant that the provisions of section 18B of the Karnataka Tax on Entry of Goods Act, 1979 are not applicable to the facts of the present case ?
(iii) Whether, on the facts and circumstances of the case, the respondent is right in rejecting the contention of the appellant that the proceedings initiated against the appellant u/s 18B of the Karnataka Tax on Entry of Goods Act, 1979 is void ab initio in view of Explanation to the said section according to which hirer of the goods vehicle is presumed to be its owner and not the registered owner of the vehicle ?
(iv) Whether, on the facts and circumstances of the case, the respondent is erred in not appreciating the fact that for the purpose of Explanation to section 18B of the Karnataka Tax on Entry of Goods Act, 1979, consignor of the goods cannot be considered as the ''hirer'' of the goods vehicle and the said word, ''hirer'' is applicable to only a transporter who obtains goods vehicle on hire in case he does not own a goods vehicle ?
(v) Whether, on the facts and circumstances of the case, the respondent is justified in drawing a presumption that the goods in question have been sold inside the State for the only reason that the transit pass has not been surrendered at the exit check-post inspite of the fact that the assessing authority of the consignor has in his assessment order passed under the provision of the Karnataka Sales Tax Act, 1957 given a finding that the very same goods as that involved in the present case have been transported out of the State of Karnataka ?
The admitted facts in the present case are that the appellant is a transporter engaged in the business of transportation of goods; in the month of June, 2002, the consignment belonging to a company by name M/s. Vivek Petro--a registered dealer under the Karnataka Tax on Entry of Goods Act, 1979 transported consignment of a product called "naptha" from Mangalore; the contention of the Department was that the transit pass which was required to be taken by the driver or the person incharge of the vehicle at the check-post of entry after commencement of the transit was not handed over at exit check-post; therefore, a presumption under sub-section (4) of section 18B is available to hold that the consignment did not move out of the State but was sold within the State.
In the present case, the transit pass was issued by Kannur check-post, Kannur and the exit check-post was Attibele near Hosur. Admittedly, the goods were to reach the destination outside the State of Karnataka, i.e., Pondicherry. On the basis of non-receipt of transit pass (TP) at Attibele exit within the prescribed time under the abovesaid provision, they not only imposed tax but also levied penalty on the goods transported. The contention of the appellant/assessee was apart from the driver there was authorised representative of the consignor, i.e., Vivek Petro, Mangalore, who was incharge of the goods from the commencement of the journey till it reached the destination and he was the one who took not only the transit pass but was entrusted with the duty of handing over the same at exit check-post. Therefore, the owner of the transit vehicle was not liable to pay either the tax or the penalty imposed. However, the order dated November 30, 2003 by the assessing officer goes to show that the said defence was not accepted and they proceeded to impose tax of Rs. 6,553 and imposed another Rs. 6,553 as penalty. This was challenged before the appellate authority in KST Appeal No. 171/03-04.
The appellate authority in the present case after taking into consideration that the assessment on the return submitted by the owner of the goods, i.e., Vivek Petro, Mangalore, concluded that there was no evasion of any tax. Therefore, on assumptions taxes cannot be levied when the asses-see was able to establish that there was ample evidence to prove the movement of goods outside the State and not sold within the State. He also refers to the release of goods of naptha in favour of the consignor and also letters issued by the Deputy Commercial Tax Officer of Pondicherry. The assessing authority had come to conclusion that all the entries effected by the consignor did move out of the State. Based on this finding, the appellate authority allowed the appeal in favour of the appellant, setting aside the orders of the check-post officer dated November 30, 2003.
The revisional authority took up the matter by way of suo motu revision and issued a show-cause notice to the assessee calling upon him to explain the contents of the notice. The assessee appeared before the revisional authority and submitted the explanation. However, the revisional authority found the order of the appellate authority as improper and prejudicial to the interest of the State revenue. Ultimately the orders of the appellate authority were revised and set-aside. The orders of assessment and penalty of the check-post authority were restored.
Section 18B of the Karnataka Tax on Entry of Goods Act, 1979 reads as under :
18B. Transit of goods by road through the State and issue of transit pass.--(1) Where a vehicle is carrying goods taxable under this Act,
(a) from any place outside the State and bound for any place outside the State and passes through this State; or (b) and which goods reimported into the State from any place outside the country and such goods are being carried to any place outside the State, the driver or any other person-in-charge of such vehicle shall furnish the necessary information and obtain a transit pass in duplicate containing such particulars as may be prescribed, from the officer-in-charge of the first check-post or barrier after his entry into the State or after movement has commenced from the State, as the case may be, or from the officer empowered for the purposes of sub-section (3) of section 28A, upon interception of the goods vehicle after its entry into the State or after movement has commenced, as the case may be.
(2) The driver or the person in-charge of the vehicle shall deliver within the stipulated time a copy of transit pass obtained under sub-section (1) to the officer-in-charge at last check-post or barrier before his exit from the State.
(3) If for any reason, the goods carried in a goods vehicle are, after entry into the State (or after commencement of movement, as the case may be) not moved out of the State within the time stipulated in the transit pass, the owner of the goods vehicle shall furnish to the officer empowered in this behalf the reasons for such delay and other particulars if any thereof and such officer shall after due enquiry extend the time of exit by suitably amending the transit pass :
Provided that where the goods carried by a vehicle are, after their entry into the State, (or after commencement of movement, as the case may be) transported outside the State by any other vehicle or conveyances, the onus of proving that the goods have actually moved out of the State shall be on the owner of the vehicle who originally brought the goods into the State.
(4) If the driver or any other person in-charge of the vehicle does not comply with sub-section (2), it shall be presumed that the goods carried thereby have been sold within the State by the owner of the vehicle and shall, notwithstanding anything contained in this Act, be assessed to tax by the officer empowered in this behalf in the prescribed manner.
(5) If the owner of the vehicle fails to obtain the transit pass as provided under sub-section (1), or fails to deliver the same as provided under sub-section (2), he shall be liable to pay by way of penalty a sum not exceeding double the amount of tax leviable on the goods transported.
(6) The amount of tax and the penalty levied under this section shall be recovered in the prescribed manner.
Explanation.--In case where a vehicle owned by a person is hired for transportation of goods by some other person, the hirer of the vehicle shall for the purposes of this section be deemed to be the owner of the vehicle.
Presumption under sub-section (3) of section 18B of the Act undisputedly is a rebuttable presumption. Rebuttable presumption would mean the person against whom the impugned order came to be passed by the check-post officer must be able to satisfy the authorities that there was no evasion of payment of tax. If the intention of the Legislature were to be that irrespective of payment of tax on the goods in question, rebuttable presumption was available to the assessee, then whether those goods were subjected to payment of tax or not would be irrelevant. In view of the fact that rebuttable evidence was allowed to be brought on record by the party in question, it would be open for him to establish that in fact TP was handed over at exit check-post or that the goods in question did move out of the State. Therefore, presumption of sale within the State would not be available to the Revenue.
In the present case, the contention of the appellant consistently was to the effect that along with the driver of the vehicle, the owner of the goods also travelled because the consignor and the consignee were one and the same. Therefore, the entire formalities at the check-post were looked after by the representative of the goods. Hence, the driver who normally would be illiterate would not know the details. Apparently in this case, the goods had to move from Mangalore to Pondicherry, outside the State. Sub-section (b) of section 18B contemplates that if the goods imported by the owner moved out of the State, he has to obtain transit pass, i.e., the driver or the person in charge of the vehicle. The presumption under sub-section (3) as already stated is a rebuttable presumption and the appellant relies upon the order of the assessment of the consignor or the consignee of the goods.
It is also not disputed by the Revenue that in view of the notice sent by the check-post officer pertaining to M/s. Vivek Petro, investigation was made with regard to the accounts of M/s. Vivek Petro and even intelligence wing of the Revenue also made a thorough investigation both at Mangalore and Pondicherry, so far as the business of M/s. Vivek Petro. The material that was placed before the assessing officer at the time of final order of assessment indicates whatever goods that were imported, i.e., a product called (naptha) was in fact sent to Pondicherry and was accounted at Pondicherry. It was even certified by the Central Excise Department at Pondicherry. Whatever duty that was payable to the Central Excise Department was also paid as per the findings of the assessing authority. When once the assessing authority who took up the assessment proceedings as a part of the investigation into the missing of/or non-accounting of TPs. at exit check-post, so far as M/s. Vivek Petro is concerned, it was satisfied that all the goods that were imported which were meant to be sent to Pondicherry did reach Pondicherry and not even a single incident the Revenue was able to establish that it was sold within the State. He was justified in saying that the assessee, i.e., M/s. Vivek Petro had accounted all the goods that were imported by them and nothing escaped from the tax. In that view of the matter, when once by way of rebuttable evidence, the appellant relies upon the assessment order pertaining to M/s. Vivek Petro, in the absence of the Department establishing that the consignment in question did not move outside the State, revisional authority was not justified in setting aside the orders of the appellate authority. As a matter of fact, the revisional authority did not even discuss what was the rebuttable evidence relied upon by the owner of the vehicle and whether the order of the assessing authority had reached finality or not.
On the other hand, the learned Government Advocate is fair enough to bring to our notice that the order of assessment pertaining to M/s. Vivek Petro was the subject-matter of suo motu revision u/s 21, but the revisional authority confirmed the said order of assessment of the assessing officer. When once the order of assessment of M/s. Vivek Petro has reached finality, it would not be open to the Department to say that the presumption under sub-section (3) of section 18B is still available and the same is not rebutted. In view of the above discussion and reasoning, we are of the opinion, the appeal deserves to be allowed. Accordingly, the appeal is allowed setting aside the order of the revisional authority dated October 23, 2008. If any amount has been recovered from the appellant either towards tax or penalty, the same shall be refunded within three months from the date of receipt of a copy of the order.