DANESH KUMAR GUPTA Vs. INSPG ASST COMMISSIONER

JUDGEMENT

(1.) The petitioners were partners of a firm by name Jaya Medicals which was a registered dealer under the KGST Act. However, according to the petitioners, common petitioner in O.P.Nos. 18423/1997 and 29631/2002 retired in 1990 and the petitioner in O.P.18391/1997 retired in March 1991. Consequent upon the retirement of the other two partners, petitioner in O.P 18411/1997 continued as proprietor of the business is the case of petitioners. According to the petitioners, the transaction which led to penalty levied under Section 45A of the KGST Act which is impugned in all the O.Ps. happened during 1993-94 when the business was run as proprietorship by Mr.Danesh Kumar Gupta. The Assessing Officer levied penalty for alleged evasion of tax on the Firm consisting of all the partners. Though the penalty levied was contested in two levels of revision, it was confirmed though in a modified form by the Commissioner of Commercial Taxes by order dated 11.9.1997, produced As Ext.P16 in O.P.Nos. 18411, 18423 and 18391 of 1997.

(2.) I heard counsel for the petitioners and the Special Government Pleader appearing for the respondents. Common counsel appearing for petitioners in all the O.Ps contended that on account of retirement of the other two partners, liability if at all is only on Mr.Danesh Kumar Gupta who carried on business as proprietorship concern during 1993-94. So far as O.P. 18411/1997 filed by the said Gupta is concerned, challenge is against levy of penalty on merits. The Special Government Pleader opposed the first contention by referring to the statutory provision particularly, Section 21 of the KGST Act and Rule 5(8)(b) and (d) of the KGST Rules and he contended that since the retired partners did not give notice to the department, department was entitled to assume continuation of the firm making all the partners liable for the penalty levied. Rule 5(8) with sub-clauses are extracted hereunder for easy reference.

(3.) The next question to be considered is challenge against Ext.P16 order in O.P.No.18411/1997. Counsel for the petitioner contended that transactions with reference to which penalty is levied are consignment sales effected by the petitioner through agents at Kanpur and U.P. However, Special Government Pleader contended that various consignments of Sandalwood oil transported were without documents with bogus registration numbers which itself prove that the assessee never intended to account the transactions. Since the goods were transported under cover of bogus registration numbers, the inference of evasion of tax drawn by the department cannot be said to be arbitrary or incorrect. Moreover, it is pertinent to note that Section 6A of the CST Act casts burden on the dealer who transfers the goods outside the State other than under contract of sale to prove the same. Rule 5A of the CST (Kerala) Rules prescribes conditions and documents for proving consignment sales. It is seen from Ext.P16 order that petitioners have not ventured to prove that sales were effected in U.P after transfer of goods from Kerala to Knapur on consignment basis. The petitioners could have produced consignment agency agreements, sale particulars, details of commission paid and even details of tax paid in U.P for establishing their case. However, it is seen that not even an attempt is made to prove the transaction as consignment transfers as claimed by them before the lower authorities. In the circumstances, levy of penalty under Section 45A of the KGST Act for evasion of tax is perfectly justified. So far as quantum of penalty is concerned, penalty originally levied was Rs.59, 68,240/- which was reduced by the Commissioner to around Rs.18 lakhs after partially accepting petitioner's claim. Therefore, petitioner is not entitled to any quantum relief also. Thus O.P. 18411/1997 also fails and is dismissed. It is stated that one item of property is sold by the Government to itself for want of purchasers. Since the property purchased in Revenue sale is not utilized by the Government for any other purpose, the property can be restored to the owner if entire penalty is paid with interest within a reasonable time. Having regard to the amount involved and since business is closed, I grant time till 28.2.2008 to the owner of the property to retrieve the same by clearing the arrears. If payment is made on or before 28.2.2008, sale will stand set aside.