AVR OVERSEAS PVT. LTD. Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) This revision petition is filed against the order passed by the Karnataka Appellate Tribunal affirming the orders passed by the lower appellate authorities. The petitioner is a dealer registered under the provisions of the Karnataka Sales Tax Act, 1957 (for short, hereinafter referred to as, "the KST Act"). He is trading in resale of kerosene and other oils. He is also registered under the provisions of the Central Sales Tax Act, 1956 (for short, hereinafter referred to as, "the CST Act"). The petitioner has been trading in kerosene within the State as well as outside the State of Karnataka. He has been riling returns regularly and remitting taxes due upon the returns. The petitioner has effected inter-State sales of kerosene against form C declarations issued by the registered dealers situated outside the State under rule 12(1) of CST Rules. In the course of his business, the petitioner is required to transport kerosene to the place of the purchasers. Since kerosene is flammable liquid/oil, the same requires to be transported in the specified tankers. On November 4, 2003, the petitioner raised sale invoices bearing Nos. 626, 627 and 628 in favour of M/s. Jai Bherunath Traders, C/o. K.F. Jain, Shop No. 5, Khanwell Road, Rakholi Village Silvasa (hereinafter referred to as the purchaser) and the kerosene was consigned along with the respective delivery notes bearing Nos. 6261404, 8261405 and 8261406 dated November 4, 2003. The case of the petitioner is that he had complied with section 28A(2) read with rule 23B of the KST Rules. The kerosene was transported in the tankers bearing No. MH 04 P 6395, MH 04 F 4698 and MH 04 BG 8296 on the same day. The drivers of the respective vehicles had tendered the aforesaid documents at the Mukka check-post on arrival. The Commercial Tax Officer in-charge of the check-post Mukka, issued an endorsement on the basis of suspicion that the consignee/purchaser is not in existence. The endorsements even dated November 5, 2003 issued under section 28A(3B) of the KST Act were served on the drivers and the vehicles were parked until the investigation completed. The check-post officer levied penalty under section 28A(4) of the KST Act amounting to Rs. 1,84,340 Rs. 1,53,600 and Rs. 1,07,520, respectively, for the goods vehicles. The Commercial Tax officer had acted upon the intelligence report while imposing the said penalty. The report which he had furnished is that the consignee/purchaser is not in existence at the declared address, he has failed to report the turnover and to pay the taxes to their Sales Tax Department. The said opinion was confirmed on the basis of a letter given by the Assistant Commissioner of Commercial Taxes (Intelligence) who stated that the purchaser is not a functioning unit and the business premises of the dealer was found closed. Therefore, he proceeded to pass the orders even dated November 20, 2003. In the said orders, he recorded a finding that the purchaser is not in existence in his declared address and that he is not engaged in business officially at present. No material is placed to prove their existence. The purchaser has not reported any business and therefore, a finding was recorded that the purchaser was not a genuine dealer. The transaction in question is not a genuine transaction but a bogus transaction, therefore he levied penalty.

(2.) Aggrieved by the said orders of the Commercial Tax Officer imposing penalty of Rs. 1,53,600, Rs. 1,84,340 and Rs. 1,07,520 the petitioner/asses-see preferred appeals before the Joint Commissioner of Commercial Taxes (Appeals), Mangalore. The Appellate Authority went into the matter in detail and on re-examination of the entire material on record and on verification of the documents held that the check-post authority noticed that the purchaser was not in existence and the address given in the documents were found to be bogus based on the report of the Assistant Commissioner Commercial Taxes (Intelligence) I, (for short, "ACCT (Int)-1") based on the investigation conducted by him. The said report discloses that the sale transactions of superior kerosene oil (for short, "S.K.O.") made by the assessee to the extent of Rs. 4,67,34,353 paid from June 1, 2003 to September 30, 2003 were found not carried out as per the records verified at respective sales tax authorities. In the said premises, no name board, no storing facility and no person carrying any transactions were found. On the basis of the said material, he recorded a finding that the dealer is not in existence, no actual business was carried out, and the consignment mentioned by the selling dealers was found to be bogus. He also recorded at page No. 35 that the ACCT of Sales Tax of Dadra and Nagar-Haveli Unit in their letter No. 5-11-2003 has reported that the location of the purchaser has been inspected and found closed. To rebut this material on record, the assessee/petitioner produced the copy of the registration certificate. It was also contended on behalf of the appellant that the investigation conducted by the intelligence wing was not in relation to particular dealer on specific point. Repelling the said contention, it was held that on verification of the records and spot inspection of the business premises, it is noticed that the purchaser has obtained registration certificate but he has not filed any returns and failed to pay any taxes from the date of obtaining the registration certificate till the date of their visit. Further it discloses that he personally visited the premises at the address given of the purchaser and found nobody is carrying out S.K.O. dealings and not even a name board is in existence. It is on the said material that the appellate authority recorded a categorical finding that the purchaser is not actually carrying out any S.K.O. transaction at the given address. The appellant also produced a copy of the endorsement issued by the ACCT (Sales Tax), Silvasa, wherein the sales tax authority certified that the purchaser is registered with the Department as a trader for kerosene and all types of oil. The appellate authority held that this was not the answer for the observation made by the investigating officer stating that "found nobody is carrying out S.K.O. dealings and not even a name board is in existence". On the basis of the aforesaid material, he recorded a categorical finding of fact that the purchaser has obtained registration but they have not carried on the business in the address given. The finding recorded by the check-post officer is based on legal evidence and no case for interference is made out.

(3.) Aggrieved by the said order, the assessee/petitioner preferred appeals before the Karnataka Appellate Tribunal. The Appellate Tribunal on reconsideration of the entire material on record and also taking into consideration the various judgments relied on held that the material on record clearly establishes that before the check-post officer, the driver of the truck admitted the offence. The material shows that the purchaser is not carrying on any business, they have not paid any tax. To rebut the same, the appellant has not produced any evidence though certificate of registration is produced, no material is produced to show that the purchaser is carrying on the business in S.K.O. All these documents are created for the purpose of deceiving the authorities and to evade payment of sales tax and therefore, the Tribunal dismissed the said appeals. Aggrieved by the said common order, the present revision petitions are filed.