The Supreme Court has struck down the order of Commissioner of Commercial Taxes directing the Assessee to pay fine of Rs. 86 lakhs.
The highlights of the judgment are as follows. The respondent M/S K.T.C Automobiles is a registered dealer, engaged in business of purchase and sale of Hyundai cars manufactured by Hyundai Motors Limited, Chennai under the Kerala General Sales Tax Act and Central Sales Tax Act.The appellant, Commissioner of Commercial Taxes, Thiruvananthapuram has imposed a fine of Rs. 86 Lakhs on the respondent alleging non-maintenance of complete and true accounts during the period 1.4.1999 to 31.3.2000.The respondent however denied the allegations. The said order was set aside by the Kerala High Court on an appeal filed by the respondent.
The contention of the appellant was that the respondent dealer had created colorable device to evade sales tax in Kerala by adopting questionable means such as providing incorrect addresses of buyers for the purpose of facilitating registration of the motor vehicles at Mahe. The respondents willfully forced the Kerala residents to register their motor vehicles in Pondicherry where the rate was lower and evaded payment of lawful tax under the KGST Act in Kerala.A legal issue was raised on behalf of the appellant that as per Explanation under Section 45 of the KGST Act, the burden is on the assessee to show that penalty is not liable to be imposed on him. But the respondent failed to prove this.
According to the respondent the fact that the vehicles in question were registered at Mahe, irrefutably leads to the conclusion of their being produced before the Registering Authority at Mahe prior to registration, as per requirement of Section 44 of the Motor Vehicles Act. It was pointed out that Chapter III of the Central Motor Vehicles Rules deals withregistration of motor vehicles and as per Rule 33, a dealer is exempted from the necessity of registration even though in possession of a motor vehicle, if it obtains a Trade Certificate from the Registering Authority of the area where he carries on his business. They also contended that the allegation by the Intelligence Officer that the assessee has not maintained proper accounts for justifying imposition of penalty is based upon a wrong assumption that sales of 263 cars leading to their registration at Mahe were actually sales in Kerala.According to respondent, when the entire facts, relevant documents and alleged evidence were before the authorities aswell as the High Court, the burden of proof under Section 45A of the KGST Act loses its significance.
According to the respondent, the Deputy Commissioner and the High Court have come to a concurrent finding that the materials do not lead to any conclusive proof that the vehicles in question had been sold at Kozhikode in Kerala. According to both the authorities, the materials, at best, raise only some suspicion which can never take the place of proof which is necessary for imposition of penalty upon the assessee.
The Supreme Court bench comprising of Justices Dipak Misra and Shiva Kirti Singh affirmed the judgment of the High Court and came to a conclusion that the registration of vehicles were done in accordance with Motor Vehicles Act and Rules. The contentions raised by the respondents were accepted as the allegations and facts made or noted by the Intelligence Officer no doubt create some doubts but they do not lead to a conclusive inference that the sales under controversy had takenplace at Kozhikode, Kerala.
Read the Judgment here.
