The petitioner is a person stated to be engaged in the business of second sale of duty paid goods. It is the specific case of the petitioner that insofar as he was engaged only in the second sale of goods within the State, he did not take out a sales tax registration under the Kerala General Sales Tax Act on the bona fide belief that the transactions entered into by him would not attract the levy of sales tax. The respondent Sales Tax Authority, however, initiated penalty proceedings against him for the assessment years 1999-2000 and 2000-2001 respectively. The proceedings culminated in Exts.P1 and P2 orders imposing a penalty on the petitioner for the aforesaid years. Although, the petitioner preferred a revision petition before the 2nd respondent against the said orders of penalty, the revision petition was dismissed by the 2nd respondent by Ext.P3 order dated 27.11.2004. A further revision preferred by the petitioner before the 3rd respondent also did not meet with any success and the same was dismissed by Ext.P6 order dated 17.03.2006. In the writ petition, the petitioner impugns Exts.P1, P2, P3 and P6 orders.
2. A counter affidavit has been filed on behalf of the 1st respondent wherein the orders impugned in the writ petition are sought to be justified on the ground that the petitioner who was a dealer in consumer electronic goods, cosmetics, perfumes, toys and fancy items had not taken registration and paid tax or filed returns in the manner contemplated by the Kerala General Sales Tax Act. Although, the case of the petitioner was that he was only engaged in the second sale of goods within the State, the list of unregistered dealers cited by the petitioner as the persons from whom he had purchased goods for subsequent sale, proved to be fictitious on enquiry conducted by the respondents. It is pointed out, in particular, that the said persons who were cited by the petitioner as his suppliers had shown themselves to be persons who had failed to take any sales tax registration despite having stated that they were doing business worth crores of rupees. The respondents would state that the claim of second sale set up by the petitioner was rejected solely on the ground that the evidence produced by the petitioner to prove the same was not reliable and acceptable. As regards the procedural formalities that were complied with by the respondents while confirming the penalty on the petitioner, it is pointed out that, based on the request of the petitioner, the persons from whom he had allegedly purchased goods for subsequent sale were examined and in the cross examination it was found that they had not transacted any business as claimed by the petitioner and that the said persons were either close relatives of the partner or employees of the firm through which the petitioner conducted his business.
3. I have heard Sri.N.Muraleedharan Nair, the learned counsel for the petitioner and Smt.K.T.Lilly the learned Government Pleader appearing on behalf of the petitioner.
4. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I am of the view that the writ petition in its challenge against the orders of penalty impugned in the writ petition must necessarily fail. Against Exts.P1 and P2 orders of penalty, the petitioner had preferred a revision before the 2nd respondent which was dismissed by Ext.P3 order. Thereafter, a further revision petition was filed before the 3rd respondent was also dismissed by Ext.P6 order. A perusal of Ext.P6 order would indicate that the 3rd respondent had while considering the revision petition preferred by the petitioner proceeded to enquire into the compliance by the lower authorities of the principles of natural justice and also the findings arrived at by them on merits. The 3rd respondent then arrived at the conclusion that there was proper procedural compliance in the matter of adjudication of the issue of penalty against the petitioner. On merits the 3rd respondent found as follows in Ext.P6 order:
“The various contentions advanced by the petitioner have been examined with reference to the connected records of the case. As per the direction of the Hon'ble High Court of Kerala the persons listed as witness have been examined by the Intelligence Officer and the petitioner has been given an opportunity for cross examination. After examination and cross examination the intelligence officer has conducted re-examination and came to a definite finding with cogent reasons. The petitioner's contention that their major suppliers Arjun, House No.11/51, Rajaputra Street, Sulthanpet, Palakkad and T.Sivakumar 11/102, Joahiba, Court Road, Palakkad have not been examined in detail is not seen to be true, the Intelligence Officer has conducted detailed enquiry; the Municipal records for issue of trade licence to dealers were verified for the years 1998-99 to 2000-2001, the records revealed that these buildings had not been given licence as business places as per Municipal records. Moreover, spot enquiry conducted by the Intelligence Officer revealed that the claim that all the purchasers of the petitioner stated to be from unregistered dealers with turnover above registrable minimum is false and fabricated and their claim of exemption on grounds of being second sales on the strength of the Hon'ble High courts Verdicts is found in admissible.
As far as the purchases from T.sivakumar, another unregistered dealer, are concerned it is ascertained that T.Sivakumar is the younger brother of T.Udayakumar, partner of the petitioners firm 1st customs duty paid shop. Despite the summons issued to him, he refused to appear before the Intelligence Officer. It is further noticed that the penalty notice on 1st customs duty paid shop was accepted by him on 28.09.2002 and at the time of service of notice he has in charge of the business; so it is proved that T.Sivakumar is an associate of the business of the petitioner, Moreover, on verification of the accounts with Syndicate Bank, Palakkad it was noticed that the cheque bearing Zno.658581/29.3.01 for Rs.1,50,000/- issued in the name of T.Sivakumar as aper Ledger of the Syndicate Bank OD Account for 2000-2001 of I Customs Duty Paid Shop, at page 34, is seen drawn by one Bava and not by Sivakumar, which is an unassailable evidence to show that the purchases stated to have been made by I Customs Duty Paid Shop from T.Sivakumar and the purchase documents themselves are false and fabricate documents.
Further, it is the statutory obligation of every dealer claiming exemption as second sales to comply with Rule 32(13) of the KGST Rules 1963 which reads:
“Every dealer in goods taxable at the point of first sales in the State shall if be is not liable to tax on such goods by reasons of his not being the first seller of the goods in the state obtained a certificate written and signed under neither on the other side of the bill or cash memorandum to the effect that the goods covered by the bill or cash memorandum had suffered tax at his (sellers) hands or at the hands of any other dealer mentioned in the certificate. The seller in such goods shall given such a certificate on every sale made by him”. In a taxing Statute where an assessee that his case came with exemption the burden is on him to prove that he comes with in the exemption. Further an exemption the documents which are termed as bill from local dealers stated supra are not sale bill of the seller but only estimates slip.
In the above circumstances, the penalty imposed by the Intelligence Officer for both the years is justified. Hence the revision petitions are dismissed.”
In view of the specific findings of the 3rd respondent in Ext.P6 order, and in the absence of any vitiating circumstances that would justify an interference with the said order in proceedings under Article 226 of the Constitution of India, I see no merit in the present writ petition and the same is accordingly dismissed.
A.K.JAYASANKARAN NAMBIAR JUDGE mns