RAY CONSTRUCTIONS LTD Vs. INTELLIGENCE OFFICER

JUDGEMENT

(1.) Petitioner is a Public Limited Company engaged in the business of execution of works contract. He is also an assessee under the Sales Tax Act coming within the jurisdiction of the third respondent. Towards the execution of the work under taken by the petitioner at Air Cargo Complex, Karipur, Kozhikode, he hired an excavator belonging to one of its sister concerns, M/s. Ray Constructions, a partnership firm having its head office at Bombay. The said sister concern is also a Sub Contractor for the construction of some road works for the Indian Institute of Management, Kozhikode. The excavator in question was brought from Bombay belonging to the sister concern. After using the excavator at Karipur by the petitioner who was in the process of transport from Karipur to Kunnamangalam. For Return of the said excavator to his sister concern that the said excavator was carried in a trailer lorry bearing Reg. No. KA.08/777. While the said trailer reached near Kozhikode, the Intelligence Inspector attached to the first respondent intercepted the lorry and issued a notice directing the remittance of entry tax on the value of the excavator, since according to the officer, entry tax is leviable on the goods, viz., the excavator in question. Ext.Pl is a copy of the notice. The sister concern of the petitioner who owns the excavator filed an objection Ext.P2. In Ext.P2, it was inter alia contended that the excavator which was transported to the work site detained by the officer is not a motor vehicle as defined under Section 2(26) of the Motor Vehicles Act, 1988 and that this excavator does not have tyre wheels and is mounted only on chain and invited the officer for physical examination of the detained excavator. It is contended that because of the chain mounting, it cannot be plied on road and further its moving speed on other working surface is only 1.5 km./ Hr. For the reasons, it does not require any registration under the Motor Vehicles Act for levy of entry tax on excavators. It is contended that it will not attract any tax under the Kerala Tax on Entry of Goods into Local Areas Act, 1994. Thereafter the first respondent issued notice under date 14.2.2000 under Section 15 of the Entry Tax Act proposing to impose a penalty of Rs. 13,32,000/- being double the amount of tax alleged to have been evaded. Ext.P4 is the copy of the said notice produced in the case. In this notice the authority came to the conclusion that he is satisfied that the excavator is imported into the State of Kerala clandestinely with wilful intention to evade payment of entry tax due to the State. He also did not accept the contention that the excavator is not a motor vehicle. He places reliance on the decision of this Court reported in Baiju Joseph v. State of Kerala, 1997 (1) KLT 671 - 1998 (6) KTR 1. Petitioner thereafter filed a writ petition before this Court as O.P.5592/2000 challenging the proceedings initiated under the Entry Tax Act. As per an interim direction, a bank guarantee was furnished by the petitioner for 6,66,000/- and got the excavator released on furnishing such guarantee. This Court disposed of the O.P. by Ext.P6 judgment. It took note of the contention of the petitioner that the excavator is moving on chain as in the case of a tank and is not fitted with wheels which is the essential distinguishing features of this excavator from other excavators and therefore the decision reported in Baiju Joseph v. State of Kerala, 1997 (1) KLT 671 = 1998 (6) KTR 1, as confirmed by the Apex Court and latter decision in Bose Abraham v. State of Kerala and Ors., 2001 (1) KLT 730 (SC) = 2000 (9) KTR Page 336 (SC) is not applicable to the facts of the case. This Court thought fit that the file will be transferred by the Intelligence Officer to the Sales Tax Officer for follow up action pursuant to Ext.P4 notice or for assessment and demand of tax, if entry tax is payable. Holding the view that the dispute is a bona fide dispute, this Court observed that the matter calls for an adjudication with regard to the liability for entry tax. The Sales Tax Officer was therefore directed to consider the contention of the petitioner and to decide the question as to whether the petitioner is liable for payment of entry tax and it was further directed that the Sales Tax Officer shall consider the imposition of penalty only after adjudication of the liability of the petitioner to pay entry tax. Therefore, by Ext.P8 order dated 24.10.2002, the Sales Tax Officer, the third respondent herein adjudicated the matter and held against the petitioner. Aggrieved thereby, the petitioner has preferred this Original Petition seeking to quash Ext.P8 order passed by the third respondent. Following Ext.P8 order, the petitioner was required by Ext.P10 notice to file return under Rule 4 of the Tax on Entry of Goods into the Local Areas Rules, 1994. The finding that he is liable to pay entry tax is challenged and the petitioner has impugned the notice Ext.P10 dated 25.10.2002 as well.

(2.) It is contended by the learned counsel appearing for the petitioner that the decision rendered by this Court in Baiju Joseph's case as confirmed by the Apex Court in Bose Abraham's case are distinguishable from the present case. According to the petitioner, the said decision has no application in the factual situation arising in this case having due regard to the nature of the vehicle in question.

(3.) The question that arises for consideration is as to whether the excavator said to have brought by the petitioner is a motor vehicle and whether the vehicle is liable to be assessed under the Kerala Tax on Entry of Goods into the Local Areas Act and as to whether the decision reported in Bose Abraham v. State of Kerala and Ors., 2001 (1) KLT 730 = 2001 (9) KTR 336, covers the case on hand.