APOLLO TYRES LIMITED Vs. ASSISTANT COMMISSIONER

JUDGEMENT

(1.) The point that arises for decision in this Appeal is the validity of the penalty imposed on the appellant Company for the alleged violation of S.5(3) and (7) of the Kerala General Sales Tax Act. The brief facts necessary for the disposal of the case are the following:

(2.) The transactions in question took place in the year 1982-83. The appellant, a manufacturer of automobile tyres and tubes, was purchasing raw - materials like carbon black and other chemicals from outside the State paying 4% tax under the Central Sales Tax Act on the strength of declarations furnished in Form C. While so, S.5 of the KGST Act was amended introducing sub-s. (3A) with effect from 14.10.1982. The said amendment enabled the appellant to purchase the aforementioned raw - materials locally on payment of 4% tax subject to certain conditions. The appellant was to give a declaration under Form No. 18 of the KGST Rules and it has to sell the products manufactured using the said raw materials, so as to attract sales tax under the KGST Act or the CST Act. In other words, the products manufactured using raw - materials purchased paying 4% tax on the strength of Form 18 declaration shall not be transferred on consignment or branch transfer basis outside the State. Such transfer not being a sale will not be exigible to tax. The appellant Company has several branches outside the State and, therefore, was transferring finished products to those Branches according to the market trend without paying sales tax. The Company chose to give declarations under Form 18 and purchased raw - materials paying only 4% tax between December, 1982 and March, 1983. During the relevant accounting year, the appellant effected the following transactions:

(3.) From the above figures, it can be seen that substantial part of the products was transferred out of the State to the appellants Branches without paying any tax. Thus, the appellant violated the conditions contained in S.5(3) and (7) and also the solemn declaration given by it in Form No. 18. Therefore, proceedings for imposition of penalty under S.45A were initiated against the appellant. The original authority passed