G. Sivarajan, J. -
(1.) The matter arises under the Kerala General Sales Tax Act, 1963 (for short, "the Act") in relation to proceedings under S.29A of the Act for the assessment year 1991-92. The petitioner is a private limited company based in New Delhi. It is aggrieved by the order of the Sales Tax Appellate Tribunal, Additional Bench, Kozhikode in T.A. No.404 of 1997. The Sales Tax Inspector, Walayar inspected lorry bearing Registration No.MWR.6115 on January 16, 1992 which was carrying machinery and found that the goods under consignment were transported without proper documents required under S.29(2) of the Act. The goods under transport were consigned by Presswell Industries, Belgaum to Karun Carpets (P) Ltd., C/o. English India Clays Ltd., Thiruvananthapuram. The defect noticed was that "it is declared that the consignee has no sales tax registration number. Hence bona fides of the consignment and thereby attempt of evasion of tax is suspected". The petitioner got the goods released on furnishing security deposit for Rs. 5,31,912 at Walayar. The Sales Tax Inspector thereafter forwarded the files to the Sales Tax Officer (Enquiry) for adjudication. Subsequently, pursuant to the order of the Board of Revenue, the files were forwarded by the Sales Tax Officer (Enquiry), Palakkad to the Sales Tax Officer (Enquiry), Kozhikode, for adjudication as contemplated under S.29A(4) of the Act. The Sales Tax Officer (Enquiry) by his order dated August, 27, 1992 imposed a penalty of Rs. 5,31,912 on the petitioner and ordered recovery of the penalty by way of adjustment of the security. The petitioner took up the matter in appeal before the Appellate Assistant Commissioner. Agricultural Income Tax and Sales Tax, Kozhikode, who by his order dated November 1, 1997 dismissed the appeal. The further appeal filed before the Tribunal was also dismissed.
(2.) Sri Jayasankaran Nambiar, learned counsel for the revision petitioner submitted that the transport of the machinery was supported by all statutory documents prescribed and that there was no attempt to evade any tax due to the Kerala Government. The counsel submitted that the English India Clays Ltd., a public limited company engaged in mining and processing of clay having their factory at Thiruvananthapuram in Kerala State placed an order with Presswell Industries, Belgaum in Karnataka State for manufacture and supply of poly propylene filter press and accessories which is used for filtering clay slurry, that since the English India Clays Ltd., required finance for purchase of the said machinery, it approached the petitioner herein for financing the purchase, that accordingly an agreement was entered into between the petitioner and English India Clays Ltd., on August 19, 1991 whereunder the petitioner agreed to purchase the machinery and give licence to English India Clays Ltd., for use in their factory on payment of licence fee of Rs. 70,000 per month for a period of five years, that pursuant to the orders placed by English India Clays Ltd., and the payment made by the petitioner pursuant to agreement between the petitioner and the licence the machinery was transported from the factory of the manufacturer at Belgaum to the licensee's premises at Thiruvananthapuram, that the goods were transported by the licensee, i.e., English India Clays Ltd., in three lorry loads accompanied by common Bill No. 34 dated January 9, 1992, that the goods transported in three trucks were also accompanied by separate challans issued by the manufacturer and that the two trucks were detained by the sales tax check post at Feroke and the trailer which took the route National Highway through Coimbatore was detained by the Sales tax check post, Walayar. The counsel further submitted that in the enquiry conducted by the Sales Tax Officer (Enquiry), Kozhikode, the petitioner and the English India Clays Ltd., furnished all the documents which would show that the transaction is one of inter State purchase only. The counsel further submitted that the transport of the machinery was supported by proper documents, that the consignee, the English India Clays Ltd., are registered dealers under the Kerala General Sales Tax Act, that the said consignee had agreed to pay a sum of Rs.70,000/- per mensem as licence fee and since the agreement was entered outside the boundary of the State of Kerala the State has no right to levy sales tax on the transaction. He further submitted that all the authorities have erroneously held that the transaction in question is exigible to tax under the Act and since the transport of the machinery was not supported by proper documents, penalty was rightly imposed. The counsel also relied on the decision of the Supreme Court in 20th Century Finance Corporation Ltd. v. State of Maharashtra, 2000 (119) STC 182 , and submitted that since the transaction being one of inter State sale there is no question of any attempt of evasion of tax.
(3.) We have also heard the learned Government Pleader for the respondent. He sought to sustain the order of the Tribunal and the authorities below. As already noted, the three consignments of machineries sent by Presswell Industries, Belgaum to the petitioner, C/o. M/s. English India Clays Ltd., Thiruvananthapuram, were intercepted at the sales tax check posts at Feroke and Walayar and the consignments were released on their furnishing security as contemplated under S.29A(2) of the Act. Thereafter the files were forwarded to the Sales Tax Officer (Enquiry), Kozhikode. The contention taken by the petitioner is that the petitioner is a financier, that under the agreement between the petitioner and English India Clays Ltd., Thiruvananthapuram, for giving machinery on a monthly licence basis the petitioner had ordered the machineries under consignment. The stand of the department is that this is a case where the petitioner had purchased the machineries from M/s. Presswell Industries, Belgaum, by way of inter State transaction and the petitioner had subsequently delivered the same to English India Clays Ltd., Thiruvananthapuram, under licence arrangement and therefore there are two transactions, one between the petitioner and the consignor and the other between the petitioner and English India Clays Ltd., and the latter is a local sale falling within S.5(1)(iii) of the Act exigible to tax under the Act and, therefore, the attempt of the petitioner by creating the invoice annexure B was to evade the tax legitimately due to the State.;