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2010] Cheerans Auto Agencies v. State of Kerala (Ker.) 219
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ment. In other words, it was not known as to who made the profit or
suffered the loss in the resale of the old vehicles purchased from the
customers. However, there was no need to go into the question because the
transaction of purchase of old vehicle from the customer and the sale of
new vehicle to him was between the assessee and the customer. There was
no privity of contract between the broker and the customer because the
broker took over possession of the old vehicle only after sale of new vehicle
by the assessee to customer by adjusting consideration of old vehicle, that
was the value fixed by the broker, in the sale price of the new vehicle. In
other words, consideration for the purchase of the old vehicle passed from
the assessee to the customer by way of credit given against sale price of the
new vehicle. It was not known whether the broker took the profit or
suffered the loss on resale of the old vehicle, above or below the value for
which it was purchased. If the assessee allowed the broker to take profit or
loss, then the position was that after purchase, the assessee sold the old
vehicle at the same value of its purchase to the broker on credit sale basis
and broker later paid the value to the assessee whether before or after sale.
On the other hand, if the broker was only paid commission or share of profit
on resale of old vehicle then he only acted as an agent of the assessee. In
other words, the purchase and sale of the old vehicle were either by or on
behalf of the assessee. The Intelligence Officer, thus, rightly found that the
assessee evaded payment of tax on purchase and sale of old vehicles by not
disclosing the sales turnover in the return filed and, therefore, the penalty
was rightly levied under section 67(1). [Para 4]
The next question to be considered was with regard to the reduction of
penalty claimed by the assessee. It was found that the Tribunal had reduced
the penalty to equal amount of tax as against the double amount sustained
by the First Appellate Authority. The assessee could be granted further
reduction of penalty provided the tax on the sale of old vehicle was later paid
by it and it had remitted the tax along with interest. If the assessee had
remitted the tax on sale of old vehicles, either voluntarily by revising the
returns, or after the assessment, after detection of suppression by the
Intelligence Officer and paid the tax along with interest for the belated
period, which was also payable in terms of section 31(6) then the penalty
would stand reduced to 25 per cent of the tax payable on the sale of the old
vehicle. The assessee was to be directed to produce certificate from the
Assessing Officer about payment of tax and interest on the sale of old
vehicles for the above two years and if such certificate was produced, the
Intelligence Officer would after rechecking the correctness of the same,
reduce the penalty to 25 per cent of the tax liability and excess penalty, if any
paid, should be refunded to the assessee. However, if the assessee did not
produce proof of payment of tax and interest as above, then the penalty
fixed by the Tribunal at equal amount of tax would stand confirmed.
[Para 5]
Smt. S.K. Devi for the Appellant. Mohammed Raffiq for the Respondent.
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 95