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250 Goods & Services Tax Cases - Reports [Vol. 1 consignee, namely M/s. Sree Mukambika Trades and Agencies, Mangalore. The said ‘inter-State sale’ was to the tune of Rs. 39, 84,469 and the goods were supported with all the necessary documents including the import details. The lorry containing the goods had crossed the State, and obtained necessary endorsement on the documents from the Check Post at Mangalore, which conclusively proved that the goods were never sold within the State. Subsequently, based on the return submitted by the petitioner, a letter was written by the departmental authorities to the consignee in Mangalore, which however was returned stating that, there was no such consignee. In the said circumstances, the respondents initiated the proceedings to impose penalty upon the petitioner under section 45A of the Act. 4. In the course of the above proceedings, the petitioner was directed to produce ‘C’ forms as well as the other documents. Even though the petitioner produced the books of account, the ‘C’ forms were not produced and requested to extend the time, which was granted enabling the petitioner to obtain the same from the alleged consignee. On 15-7-2002, the petitioner produced photocopies of the ‘C’ forms and subsequently, the originals were also produced. While so, the Deputy Commissioner of Sales Tax, Mangalore, vide his letter dated 22-8-2002 informed the department that, the alleged consignee was not a registered dealer at all and that the department had not issued any ‘C’ forms to the said party. This clearly showed that the ‘C’ forms produced by the petitioner were quite bogus and fabricated, with intent to avail the concessional rate of tax. In the abovesaid circumstances, the departmental authorities issued Ext. P1 notice imposing penalty upon the petitioner under section 45A of the Act, which was replied as per Ext. P2 statement of objections. After considering the points raised by the petitioner, the 3rd respondent passed Ext. P3 order holding that, there was a conscious attempt to evade the payment of tax due to the Government, by producing bogus ‘C’ forms; that too, stated as obtained from the consignee at Mangalore, who was never in existence. Considering the magnitude of the default committed and the offence involved, the third respondent chose to impose the maximum penalty, which is equal to double the amount of tax payable and accordingly, issued Ext. P3 order. 5. Met with the said circumstances, the petitioner filed a revision petition before the second respondent pointing out that, the petitioner is only an innocent seller and that he was not at all in a position to ascertain the status, extent and such other particulars of the consignee in Mangalore. It was also pointed out that, the consignee had come over to Ernakulam, stayed in a hotel, entered into an agreement with the petitioner, there was no reason for the petitioner to doubt the credibility of the consignee and hence that there was absolutely no attempt to defraud the revenue under any circumstances. It was also contended that, the petitioner having effected the differential tax (since ‘C’ forms submitted were stated as not GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 126 A B C D E F G
2010] Krilax Impex Private Ltd. v. CCT (Ker.) 251 A B C D E F G acceptable), the petitioner might be spared with respect to the imposition of penalty. 6. After considering the pleadings and the materials on record, the second respondent found that there was absolutely no merit in the contentions raised by the petitioner and that the conscious role played by the petitioner in causing the bogus ‘C’ forms to be filed for claiming the tax benefit, is very much discernible from the materials on record. In the said circumstance, interference was declined as per Ext. P4; which in turn was subjected to challenge by filing second revision before the first respondent. The second revisional authority considered the entire facts and circumstances and found that absolutely no ground was made out to have a deviation to the course pursued by the authorities below. Accordingly, the impugned order was confirmed as per Ext. P5, imposing the maximum penalty, which in turn has been subjected to challenge in this writ petition. 7. The learned counsel for the petitioner, referring to the various decisions rendered by the Apex Court as well as different High Courts in State of Madras v. Radio & Electricals Ltd. [1966] 18 STC 222, Chunni Lal Parshadi Lal v. Commissioner of Sales Tax [1986] 62 STC 112, Agfa Gavert India Ltd. v. State of Tamil Nadu [2001] 123 STC 108, Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211, Paisons v. Intelligence Officer [1992] 1 KTR 143 (Ker.) and Karthik Electric Control v. CTO [2008] 15 VST 450 (Mad.), submits that, the departmental authorities have not approached the issue in the proper perspective while considering the question of penalty. The learned counsel submits that, penalty is not automatic and that, it will be attracted only if there is a conscious attempt on the part of the defaulter to have defrauded the revenue. It is further pointed out that, the imposition of penalty will not be justified unless and until the offence in this regard is established beyond reasonable doubt. 8. The learned Government Pleader appearing on behalf of the respondents submits that, there is no dispute with regard to the law declared by the Courts as above and that in almost all the above cases, the issue involved was, whether the seller was liable for the subsequent course and conduct pursued by the buyer; which was answered in the negative. Unlike this, in the instant case, the question involved is, whether the petitioner had pursued any act to defeat or defraud the revenue by submitting bogus ‘C’ forms. This question has been considered by the original authority i.e., 3rd respondent while passing Ext. P3 order, particularly at running pages 5 to 9, wherein the ‘statement of objection’ submitted by the petitioner has been extracted. In sub-paragraph 4 of the above extract, the petitioner has virtually conceded that, the Assistant Commissioner of Commercial Taxes, Check Post, Mangalore by his letter dated 26-12-2001 had informed the petitioner that the concerned consignee was not available at Mangalore and that the Sales Tax registration number in the invoices was fictitious. GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 127
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