The Kerala High Court has held that the Goods and Service Tax (GST) department has failed to prove tax evasion intent citing delivery note.
The bench of Justice A.K.Jayasankaran Nambiar and Easwaran S. has observed that the finding of the Appellate Tribunal is entirely on facts and was entered after the tribunal was convinced that there was no attempt at evasion of tax. The tribunal held that the enquiry authority itself has satisfied that the respondent has accounted the transaction in the books of accounts and in such circumstances there cannot be any attempt for evasion of payment of tax on part of the respondent. The alleged attempt for evasion of tax can only be in respect of value addition, that too on part of the A.H.Iqbal (in whose favour invoice was issued) and not on part of the respondent-assessee.
The Intelligence Officer, Squad No.III, Department of Commercial Taxes, Palakkad had intercepted a vehicle that was transporting scrap rubber from Kootanad to Palakkad on the basis of a Delivery Note. It was found that the invoice accompanying the goods was issued in favour of Sri.A.H.Iqbal, rubber dealer, Chelakkara, Thrissur and the place of delivery was shown as Palakkad Rubber (Private) Limited, Kanjikode, Palakkad, which was a third party to the transaction.
The Intelligence Officer found that as there was no Delivery Note prepared by Sri.A.H.Iqbal in favour of Palakkad Rubber (Private) Limited, there was an attempt at evasion of tax. He therefore proceeded to impose a penalty to the tune of Rs.44,550/- on the respondent-assessee being double the amount of tax allegedly attempted to be evaded.
The respondent-assessee challenged the order of penalty before the First Appellate Authority, who allowed the Appeal and set aside the impugned order of the Intelligence Officer. The department filed a Second Appeal before the Appellate Tribunal.
The Appellate Tribunal held that Sri.A.H.Iqbal has not taken the goods to Thrissur for the purpose of delivery at Palakkad in favour of Palakkad Rubber (P) Ltd. Instead, he has requested the respondent to transport the goods directly to Palakkad. In such circumstances, there is no need to prepare another delivery note by A.H.Iqbal in favour of Palakkad Rubber (P) Ltd.
The court dismissed the revision filed by the GST department.
Case Details
Case Title: STATE OF KERALA Versus M/S.PROGRESS AGENCIES
Case No.: OT.REV NO. 89 OF 2020
Date: 14/01/2025
Counsel For Petitioner: V.K.Shamsudheen
Counsel For Respondent: N.Muraleedharan Nair
