MIL CONTROL LIMITED Vs. STATE OF KERALA

JUDGEMENT

(1.) The revision by the assesee, is against the order of the Assessing Officer as affirmed by the First Appellate Authority and the Tribunal. The issue revolves around an import of three packets of "Metso Positioners" with a value declared and estimated at Rs.20, 63, 324/-. The assessee imported the goods and was transporting it to its factory. The assessee is engaged in the manufacture of machinery and Mesto Positioner is one of the components of a machine so manufactured and then sold by the assessee. The assessee did not file Form 8F(A) under the Kerala Value Added Tax Act 2003 (for short KVAT Act only) as provided under Section 46(3)(e) of the Act. The goods were detained and assessee produced the invoice as also the Bill of Entry. The goods were released on execution of bank guarantee which later was enforced after the penalty order was affirmed by the Tribunal. The questions of law are re-framed as follows: Whether the Tribunal was right in affirming the penalty especially when there was no tax evaded in the import of the goods and the import was evidenced by the bill of entry as also the other documents executed before the Customs Authority?

(2.) Admittedly the assessee had not declared the goods before the Commercial Taxes Department under Form 8F(A) as has been provided in Section 46(3) (e) which has been extracted in the orders of the authority. The provision mandates that where goods are imported into the State, on arrival of such goods the assessee has to file a declaration before the Commercial Tax Officer having jurisdiction over the place of import. The further transport of the goods within or across the State has also to be accompanied by the declaration so submitted before the CTO and endorsed by the said officer. The measure has been introduced in the Act to ensure that there is no import made which is not disclosed in the books of account and later used; as in the present case in the manufacture and/or sale within the State.

(3.) We are of the opinion that the argument that there is no tax effect in the import transaction is not at all relevant to consider whether there is an attempt to evade tax; which is necessary for imposition of a penalty under Section 47(3) (e). The learned Government Pleader also brought our attention to Sub section (6) of Section 47 which speaks of an attempt to evade tax due under the Act. Though the import may not be taxable by the State; the further sale of the machinery, in which the imported goods are embedded, the value of which is added to the total sale price, definitely will be taxable and on suppression of the goods so imported, the attempt to evade tax on the further sale is very glaring.