ERNAKULAM CHAMBER OF COMMERCE Vs. STATE OF KERALA

JUDGEMENT

(1.) TWO transporting agencies and the Ernakulam Chamber of Commerce representing transporting agencies generally are the petitioners challenging the constitutional validity of S.45B of the Kerala General Sales Tax Act hereinafter called the "Act". While sub-s.(1) of the impugned Section provides for levy of penalty at double the amount of sales tax for transport of goods in Kerala without the documents prescribed under S.29(2) of the Act, for repeated offence, sub-s.(2) in addition to penalty provides for detention of the vehicle involved for a period of thirty days. The impugned section introduced to the Act with effect from 1.4.2000 is extracted hereunder for easy reference:

(2.) I do not think this Court should go in detail on all points argued by the petitioners because the issue is essentially covered by at least three decisions of the Supreme Court. Those are State of Rajasthan v. M/s. D.P. Metals (2002 (10) KTR 1 (SC), Tripura Goods Transport Association v. Commissioner of Taxes (1999 (112) STC 609 (SC)) and State of West Bengal v. Road Transport Association, Siliguri (2003 (131) STC 1). In the Rajasthan's case, the Supreme Court held that the provisions for penalty on transport were only provisions to check evasion of tax which was held to be within the legislative competence of the State under Entry 54 of List II of the 7th Schedule to the Constitution of India. The Supreme Court upheld the provision for levy of penalty equal to 30% of the value of goods on the transporter who does not carry the prescribed documents, or who carriers documents which are bogus, false or forged. In the Tripura's case also the Supreme Court upheld the constitutional validity of provisions of Tripura Sales Tax Act which cast an obligation on transporters and carriers to get themselves registered, maintain accounts of goods transported and to furnish declaration forms relating to consignments. The Supreme Court held that the objective of these provisions is to seal loopholes of avoidance of sales tax and are within the legislative competence of the State Legislature. It is to be noted that similar provisions as in Tripura Act are in Kerala whereunder transporting agencies are liable to file return in terms of S.32 of the Act read with Rr.57 and 58 of the KGST Rules which prescribe Form No. 44 and 45 to be submitted by the owners of vehicles and transporting agencies periodically. Strangely petitioners have no challenge against these provisions which are in the statute for long or even S.29(2) which prescribes documents required for transport, the absence of which only entails penalty under S.45B of the Act. I do not think the petitioners who are willing to comply with statutory obligations can challenge the provisions which provides penalty or punishment for breach of such duty. Therefore the challenge against the penal provision alone is not even maintainable. Petitioners' contention based on Art.251 of the Constitution of India also has no relevance as there is nothing inconsistent between the provisions of the Contract Act and that of the Carriers Act on the one side and that of S.45B of the Kerala General Sales Tax Act. It is pertinent to note that Law on Contracts and Carriage of Goods being subjects coming under entry 7 of the Concurrent List on which the State Legislature is also competent to make law not inconsistent with any parliamentary legislation. Since I have already found based on the decision of the Supreme Court above referred that S.45B is only a deterrent provision to check evasion of sales tax, it does not go against any of the provisions of the Contract Act or Carriers Act as pointed out by the petitioners. Even though the petitioners have relied on the decisions of the Supreme Court and that of the High Courts particularly the decision of the Supreme Court in State of Haryana v. Sant Lal (1993 (91) STC 321), the decision of the Gauhati High Court in ABC India Ltd. v. State of Assam (1996 (101) STC 401), the decision of this Court in Sunitha Diesel Sales & Service v. State of Kerala (1996 (2) KLT 571), I do not think S.45B can be declared unconstitutional or beyond the powers of the State Legislature based on these decisions. Therefore the challenge against the constitutional validity of the Section is only to be rejected and I do so.

(3.) THE next contention raised by the petitioners is against sub-s.(2) of S.45B for detention of vehicle for 30 days in additional of penalty in case of repeated offence. The provision itself shows the legislative intention is to prevent evasion of tax and unless deterrent punishment is provided, the objective cannot be achieved. In every statute higher penalty is provided for repeated offence and I do not think the provision for higher penalty for repeated offence of transporting goods without documents can be termed as arbitrary or illegal. In the circumstances O.Ps. and W.P. are devoid of any merit and they are dismissed. Petitioners are given three week's time from now to challenge penalty order on merits in appeal or revision before statutory authority if not already done.