KULATHUNKAL MOTORS Vs. SALES TAX OFFICERS

JUDGEMENT

(1.) Whether the sale of motor vehicles effected to defence personnel would amount to a sale through Canteen Stores Department so as to claim concessional rate of tax vide entry 6 of the Schedule III to S.R.O. No. 1091/99 is the question that has come up for consideration in these cases.

(2.) The petitioner in W.P.C. No. 25373 of 2004 has submitted its annual return showing a total and taxable turnover of Rs. 21,36,95,585.67 and Rs. 19,82,95,785.91, respectively, for the year 2002-03. Scrutiny of the return revealed that the petitioner had, inter alia, claimed concessional rate of tax at the rate of six per cent on sale of motor vehicles vide entry 6 of Schedule III to S.R.O. No. 1091/99 on a turnover of Rs. 51,36,020.60 as against the Scheduled rate of 12 per cent. In support of the claim for concessional rate of tax, the assessee had filed photo copies of the certificates stated to have been issued from the Canteen Stores Department, in short, "CSD". Further the assessees also apprised the assessing authority that before making sales at concessional rate they had ascertained the procedures from the CSD and they were informed that CSD would be raising sales invoices in its name though registering the vehicles in the name of the defence personnel and that there is no provision in the sale letter to include the name of the canteen. Explanation given by the assessees was not satisfactory to the authorities. Hence the assessing authority issued notice under Section 45A of the Kerala General Sales Tax Act, 1963 to show cause why penalty be not imposed for filing untrue and incorrect return so as to evade payment of tax. The assessees filed reply to the show cause notice which was not acceptable to the assessing authority. Later order dated June 24, 2004 was passed by the first respondent imposing a penalty of Rs. 3,54,385 under Section 45A of the Kerala General Sales Tax Act. Similar order was also passed for the year 2003-04 demanding an amount of Rs. 11,16,810 being the amount of tax sought to be evaded. Aggrieved by those proceedings the assessee has approached this Court by filing O.P. No. 25373 of 2004. Identical is the issue raised in W.P.C. No. 28092 of 2004.

(3.) Learned single judge accepted the view of the Department that the assessee is not entitled to concessional rate of tax at six per cent on the sale of motor vehicles as per S.R.O. No. 1091/99 since motor vehicles were sold not to CSD but to defence personnel directly. Learned judge however found that it is not a fit case for imposition of penalty and the order imposing penalty was set aside. Aggrieved by that part of the order State has preferred W.A. Nos. 568 and 1141 of 2005. W.P.C. No. 27053 of 2005 wherein identical issue arises for consideration also stands referred to be heard along with the writ appeals.