BIRLA TYRES Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE revision petitions are at the instance of the assessee, M/s. Birla Tyres, Ernakulam. It is aggrieved by the common order passed by the Sales Tax Appellate Tribunal, Additional Bench, Palakkad dated November 3, 1995 in T. A. Nos. 44 and 45 of 1955. The questions of law raised in these revision petitions are similar and they are as follows : (i) Whether, on the facts and circumstances of the case and the evidence on record, the finding of the Tribunal that the appellants had attempted to evade the tax due under the KGST Act on the transactions in pursuance of which the stocks of rubbers were being transported is correct or sustainable ? (ii) Assuming without conceding that the relevant documents and records which constitute the material evidence to substantiate the genuineness of the transaction which occurs and the movement of the goods were not available at the time of checking the vehicles, has not the Tribunal committed a grave error in disregarding such documents when subsequently produced ? (iii) Admittedly when the records available at the time of checking clearly indicated that the stocks had been despatched from places outside the State to Ettumanoor is not the possibility of the stocks originating within the State or have been purchased within the State automatically precluded ? (iv) Has not the Tribunal completely overlooked the fundamental postulate necessary to support the finding of evasion, namely that the situs of the transaction or transactions in pursuance of which the goods moved should be within the State ? Rubber being a commodity liable to tax at the point of last purchase within the State, at the time, can any attempt at evasion of tax take place in this case on stocks brought from outside the State ? (v) When the vehicles were cleared at the border cheek posts of Tamil Nadu and Kerala without any objection how can a further checking at Chandranagar lead to any adverse inference ? (vi) Has not the Tribunal committed a grave error of law in putting the burden of proof in the matter of imposition of penalty on the appellant ? Unless the offence is strictly proved, will be tax payer be liable for the penalty as laid down by the apex Court in [1988] 71 STC 226 (Commissioner of Sales Tax v. Mool Chand Shyam Lal) ? (vii) In any view when the transport operators have owned the responsibility for the failure to produce the documents at the time of checking, is it just or proper to penalise the appellant ?

(2.) THE assessee is a unit run by Kersoram Industries Limited, a company registered under the Companies Act. Its registered office is at Calcutta and is having a number of branches at different places in India. It has an office at Ernakulam and is an assessee under the Kerala General Sales Tax Act, 1956 on the files of the Assistant Commissioner (Assessment), special Circle, Ernakulam. It is alleged that the company is manufacture of tyres and tubes. It used to purchase imported natural rubber from State Trading Corporation of India, Madras. It entered into an agreement with Midas Rubbers Private Limited, Ettumanoor, Kerala for processing of the natural rubber with the chemicals. THE rubber thus processed is used for manufacturing tyres and tubes at the unit at Balasore, Orissa. According to the assessee, as per its advice State Trading Corporation, Madras despatched two truck loads of RSS III imported rubber on June 24, 1992 to M/s. Midas Rubbers Private Limited, Ettumunoor. THE two trucks were intercepted by the Intelligence Squad No. II, Palakkad. Notices under section 29a read with rule 35a were issued. Security at the rate of Rs. 48,672 was demanded for release of each of the truck load. According to the assessee the documents which accompanied the goods would clearly show all the details of the consignor, consignee and the purpose for which it was being transported. It was accompanied by N2 forms issued by the Rubber Board and form No. XX provided under Tamil Nadu General Sales Tax Act. An enquiry was conducted by the Intelligence Officer, Squad No. II, Agricultural Income-tax and Sales Tax, Palakkad. According to the assessee, at the time of hearing on February 2, 1993 it had produced before the officer the following documents : 1. Copy of the mastication agreement entered between Midas and Birla Tyres. 2. Photo copies of the invoice of labour charges dated June 30, 1992, July 15, 1992 and July 31, 1992 from Midas with statement of transportation.

(3.) COPIES of the N2 forms.