B.M.STEEL AGENCIES vs. STATE OF KERALA,

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI THURSDAY, THE 18TH DAY OF JULY 2019 / 27TH ASHADHA, 1941 OT.Rev.No.61 of 2019 AGAINST THE ORDER DATED 18-09-2018 IN TAVAT NO.179/2016 of S.T.A.TRIBUNAL,ADDITIONAL BENCH,KOZHIKODE REVISION PETITIONER/APPELLANT/APPELLANT: B.M.STEEL AGENCIES, KALLAI ROAD, KOZHIKODE, REPRESENTED BY ITS PARTNER, MOIDEEN KOYA. BY ADVS.SRI.R.JAIKRISHNA SRI.C.S.ARUN SHANKAR SRI.T.G.MADHAVANUNNI RESPONDENT/RESPONDENT/RESPONDENT: STATE OF KERALA, REPRESENTED BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. OTHER PRESENT: SR G.P. SRI MOHAMMED RAFEEQ THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 18.07.2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

O.T.(Rev) No.61/2019 -:2:- C.K.ABDUL REHIM & R.NARAYANA PISHARADI,JJ. = = = = = = = = = = = = = = = = = = O.T.Rev. No.61 of 2019 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 18th day of July,2019 J U D G M E N T C.K.ABDUL REHIM

, J. The above revision petition is filed against an order of the Kerala Value Added Tax/Agricultural Income Tax & Sales Tax Appellate Tribunal, Additional Bench, Kozhikode, in T.A. (VAT) No.179 of 2016, dated 18th September,2018. 2. The revision petitioner, who is an assessee under the Kerala Value Added Tax Act,2003('KVAT Act' for short] has effected intra state transport of steel products on 20.01.2014, which was intercepted by the Intelligence Inspector, Squad No.IV, Commercial Taxes, Kozhikode at Koyilandy, at about 17.00 hours. A notice under Rule 67 of the Kerala Value Added Tax Rules,2005 was issued demanding payment of security to the tune of Rs.40,370/- raising suspicion of attempt at evasion of payment of tax due on the transport, based on the irregularity noticed that the 'Delivery Note' accompanying the transport was written without using double sided carbon, as required under the relevant Rules. It is stated that goods

O.T.(Rev) No.61/2019 -:3:- were released on furnishing Bank Guarantee for the amount demanded. Subsequently, an enquiry was conducted by the Intelligence Officer, Rapid Action, Commercial Taxes, Kozhikode, as required under Section 47(5) of the KVAT Act. The said officer had imposed penalty upon the revision petitioner to the tune of the security furnished and the Bank Guarantee furnished was ordered to be realised. Aggrieved by the said order, the revision petitioner approached the Assistant Commissioner (Appeals), Commercial Taxes, Kozhikode. On repelling the contentions raised, the Appellate Authority had confirmed the order imposing penalty. The matter was taken up in second appeal before Tribunal at the instance of the revision petitioner. The Tribunal had also dismissed the appeal and confirmed the order imposing penalty. It is against the said order, the above revision petition is filed. 3. The suspicion regarding attempt at evasion of payment of tax was on the basis that the Delivery Note used, which accompanied the transport, was not written by using double sided carbon paper. In the enquiry conducted, the Officer found that, the carbon impression of the Delivery Note was not that of a double sided carbon paper. It is stated in the

O.T.(Rev) No.61/2019 -:4:- order that the revision petitioner was specifically given direction to produce the 'Delivery Note Book' concerned. Despite giving several chances the revision petitioner failed to produce the same. Hence the penalty was imposed, presumably based on the conclusion that there existed attempt at evasion of payment of tax. Before the first Appellate Authority the contention raised by the revision petitioner was that, the Enquiry Officer has not arrived at any specific finding that the failure to use the double sided carbon paper was for any purpose of evading the payment of tax. Hence the imposition of penalty was assailed. The Appellate Authority found that the above contention cannot be accepted because there occurred violation of the mandatory provisions in drawing the Delivery Note, which creates suspicion that there was attempt at evasion of payment of tax. Therefore the appeal was rejected finding as meritless. 4. The Tribunal, while appreciating the contentions, had repelled the argument that the defect was only because of usage of inferior quality of carbon paper. It was observed that the revision petitioner has not succeeded in establishing the same by producing the Delivery Note Book. Hence the orders passed by the authorities below were confirmed.

O.T.(Rev) No.61/2019 -:5:- 5. Learned counsel for the revision petitioner contended that, the consignment was also accompanied by an invoice and the genuineness of the transport was proved by production of the books of account, which contained relevant entries with respect to the transaction in question. Therefore the imposition of penalty was baseless on account of the fact that attempt at evasion of payment of tax was not proved, is the contention. 6. Heard learned Government Pleader appearing for the respondents. 7. The interception suspecting attempt at evasion of payment of tax was based on the defect noted in the Delivery Note. It is the burden of the revision petitioner to discharge such suspicion at the time of enquiry. The suspicion could have been repelled by producing the Delivery Note Book, which the petitioner failed despite opportunity given. Contention that the transport was also accompanied by an invoice and the subsequent production of the books of account, does not by itself can be considered as sufficient discharge of the burden, because any entries contained in the books of account, which could have made after the interception cannot be accepted as a clear proof to arrive at a

O.T.(Rev) No.61/2019 -:6:- conclusion that there existed no attempt at evasion of payment of tax. The best evidence which could have produced before the authorities was the Delivery Note Book, which would indicate that it was drawn in triplicate, even though double sided carbon was not used. Since the best evidence was suppressed by the revision petitioner, it cannot be held that the inference drawn by the authorities is in any manner illegal, erroneous or improper. Hence, we do not find any merit to interfere with the order of the authority, which were confirmed in two stages of appeals. Further, we do no find that there exists any substantial question to be decided in this revision petition Consequently, the revision petition fails and the same is hereby dismissed. Sd/- C.K.ABDUL REHIM JUDGE Sd/- R. NARAYANA PISHARADI JUDGE DST

O.T.(Rev) No.61/2019 -:7:- APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE A TRUE COPY OF THE INVOICE DATED 20.1.2014. ANNEXURE B TRUE COPY OF THE Delivery Note DATED 20.1.2014. ANNEXURE C TRUE COPY OF THE DETENTION NOTICE DATED 20.1.2014. ANNEXURE D TRUE COPY OF THE PENALTY ORDER ISSUED BY THE INTELLIGENCE OFFICER DATED 6.5.2014. ANNEXURE E TRUE COPY OF THE ORDER PASSED BY THE ASSISTANT COMMISSIONER (APPEALS), KOZHIKODE DATED 22.3.2016. ANNEXURE F TRUE COPY OF THE ORDER OF THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL IN T.A. (VAT)NO.179/2016. ANNEXURE G TRUE COPY OF THE RELEVANT EXTRACT OF THE LEDGER ACCOUNT DATED NIL. ANNEXURE H TRUE COPY OF THE RELEVANT EXTRACT OF SALES LIST DATED NIL. RESPONDENTS' EXHIBITS : NIL //True copy// P.A.To Judge