State of Kerala v Oppo Mobiles India Private Limited

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **&** **THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN THURSDAY, THE 25[TH] DAY OF MAY 2023 / 4TH JYAISHTA, 1945 OT.REV NO. 82 OF 2019** **AGAINST THE KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM IN TA(VAT) NO.477/2018 DATED 08.04.2019** ## **REVISION PETITIONER/APPELLANT/RESPONDENT/REVENUE:** STATE OF KERALA, REP. BY DEPUTY COMMISSIONER OF STATE TAX (LAW), STATE GOODS AND SERVICE TAX DEPARTMENT, ERNAKULAM BY ADV GOVERNMENT PLEADER ## **RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE:** M/S. OPPO MOBILES INDIA PRIVATE LIMITED, CHANGANPUZHA NAGAR.P.O., UNICHIRA, KOCHI - 682033 THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 25.05.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OT.REV NO. 82 OF 2019 **==> picture [31 x 8] intentionally omitted <==** ## **JUDGMENT** ## SHOBA ANNAMMA EAPEN, J. The revision petitioner, the State, challenges the order of the Kerala Value Added Tax Appellate Tribunal, Ernakulam (for short, “the Tribunal”) in TA (VAT) No.477/2018 dated 08.04.2019, whereby the appeal preferred by the State was dismissed. 2. The respondent/assessee, a dealer engaged in the business of mobile phones, transported goods from M/s. Oppo Mobiles India Pvt. Ltd., Changampuzha Nagar P.O., Unichira, Kochi-682 033, by way of stock transfer. On 09.01.2017, two vehicles bearing Reg.Nos.KL-05-Z/2691 and KL63/7634 were intercepted by the Intelligence Inspector, Squad No.III, Mattanchery at Aluva and a notice under Section 47(2) of the KVAT Act was issued to the assessee alleging the following OT.REV NO. 82 OF 2019 ..3.. defects; _“.....The vehicle with goods were intercepted and checked at Nedumbasseri while plying towards Athani direction. On verification of the documents accompanied the following defects are found. 1. The identity of the consignee is not declared anywhere in the online 8FA. 2. The identity of the transporting agency is not declared anywhere in the online filed 8FA. 3. The 8FA is two days pre-dated. The goods entered the State by air way and not declared in any of the border Check Post. It is a willful attempt from the consignee and transporter by not declaring their TIN in 8FA to evade payment of tax. The transaction is effected as stock transfer where no tax is seen deducted. But the non-declaration of TIN is with a view to evade payment of tax. The vehicle Number is not declared in 8FA. The goods were however allowed to be transported on the consignee furnishing a Bank Guarantee of 45,39,097/- (Rupees forty five lakh Thirty nine thousand and ninety seven only) as per BG No 003GT01170250007 dated 25.01.2017 of the The Intelligence Inspector, Squad No.III, Dept.of Commercial Taxes, Govt. of Kerala, Mini Civil station, Aluva".”_ Thereafter, goods were allowed to be transported on furnishing bank guarantee of Rs.45,39,097/-. Subsequently, penalty proceedings under Section 47(6) of the KVAT Act was completed by converting the above amount into penalty. The assessee preferred appeal against the penalty order and the appellate authority set aside the penalty OT.REV NO. 82 OF 2019 **==> picture [31 x 8] intentionally omitted <==** under Section 47(6) of the KVAT Act for Rs.45,39,097/- and reduced the penalty to Rs.10,000/- under Section 67(1) of the KVAT Act. Aggrieved by this, the State filed appeal before the Tribunal and the Tribunal also upheld the order of the appellate authority. Hence, the State has come up in revision under Section 63 of the KVAT Act r/w Rule 8 of the KVAT Rules on the following questions of law; _“1. Is not the order of the Tribunal perverse and erroneous?_ _2. Is the finding of the Tribunal that the non-mentioning of TIN Number in Form 8FA is only technical defect and punishable under Section 67(1) of the KVAT Act by Rs.10,000/- is correct and sustainable?_ _3. Is not the respondent/assessee is duty bound to mention the TIN Number in the declaration in Form 8FA?_ _4. Whether the subsequent accounting of the transaction, after the detention, will absolve the assessee from the proceeding under Section 47(6) of the KVAT Act?_ _5. Is not it mandatory that the recording of TIN Numbers of the Consignee or Transporter in Form 8 FA declarations?”_ 3. We have heard Smt.Reshmita R. Chandran, OT.REV NO. 82 OF 2019 **==> picture [31 x 8] intentionally omitted <==** learned Government Pleader. Though notice was served, there was no appearance for the respondent. 4. The Intelligence Officer, Squad No.III, detained the vehicles and issued notice under Section 47(6) of the KVAT Act, stating that, _“1. The identity of the consignee is not declared anywhere in the online 8FA._ _2. The identity of the transporting agency is not declared anywhere in the online filed 8FA._ _3. The 8FA is two days pre-dated._ _4. The goods entered the State by air way and not declared in any of the border Check Post.”_ The officer demanded security deposit of Rs.45,39,097/-. The goods were released on the assessee furnishing bank guarantee. Thereafter, the file was forwarded to the Intelligence Officer, Squad No.III, Commercial Taxes, Mattancherry for completing Section 47(6) adjudication proceedings. The security deposit demanded was converted as penalty by the officer, OT.REV NO. 82 OF 2019 **==> picture [31 x 8] intentionally omitted <==** stating thus; “I have gone through the reply in detail. The offence is still existing. As the security amount is huge and it cannot be treated as by a mere clerical mistake. So I am fully convinced with the findings of the Intelligence Inspector who intercepted and checked the vehicle that there has been a willful or deliberate attempt to evade payment of tax due under transaction in pursuance to which the goods were transported. Hence the following orders are passed.” **==> picture [381 x 13] intentionally omitted <==** appellate authority, after detailed consideration **==> picture [416 x 12] intentionally omitted <==** declaration contained details of the consignee as well as the transporter and on verification of the 8FA declaration, the appellate authority found that the identity of the consignee with name and address has been very clearly stated. It was also found that since the goods are entering the State by air way, no further declaration at any border check post is required. The operative portion of the order of the appellate authority reads thus: _“Since the 8FA declarations contains all_ OT.REV NO. 82 OF 2019 **==> picture [31 x 8] intentionally omitted <==** _other details except TIN and also considering the fact that the appellant had properly accounted in the impugned transactions in their books of accounts and returned the same it cannot be treated as the appellant had any mens rea or intention to evade payment of tax. Therefore imposition of penalty being double the tax sought to be evaded u/s.47(6) is unwarranted in the instant case and I therefore, set aside the impugned order imposing penalty. But considering the fact that the appellant had committed the mistake in taking form No.8FA declarations and the same is a technical defect and an offence punishable u/s.67(1) the Intelligence Officer is directed to impose a penalty of Rs.10,000/- only for the technical lapse occurred on the part of the appellant and accordingly modify the order imposing penalty. Order accordingly._ Aggrieved by the said order of the appellate authority, the State filed second appeal before the Tribunal and the Tribunal justified the order of the appellate authority in setting aside the finding as to attempt to evade the tax. It is after verification of the documents and the records that both the fact finding authorities have come to the conclusion that the defects are only technical in nature and the penalty of Rs.10,000/- imposed by the appellate authority need not be interfered with. OT.REV NO. 82 OF 2019 **==> picture [31 x 8] intentionally omitted <==** 6. The learned Government Pleader, on the other hand, submitted that but for the detention by the Intelligence Officer, Squad No.III, the consignment would have been left unnoticed and unaccounted and thus, huge tax would have been evaded by the assessee. 7. It is to be noted that 8FA is a declaration given by the consignor or consignee by entering all the details required online. The aforesaid transaction, admittedly, is a stock transfer. The authorities concerned have verified the records and found that the assessee has properly accounted the impugned transaction in the books of accounts and returned the same. 8. The learned Government Pleader relied on the judgments of this Court in **Polymer Designs And Mouldings** v. **State of Kerala** [Laws (KER) 2019 9 115] and **Mil Control Limited** v. **State of Kerala** [Laws (KER) 2018 6 210]. The facts of those cases are not applicable to the case in question. In OT.REV NO. 82 OF 2019 **==> picture [31 x 8] intentionally omitted <==** both the above referred judgments, the assessee did not file 8FA declaration. This is a case, where online 8FA declaration was filed by the assessee and only certain technical defects were there in the 8FA. 9. 46(3)(e) of the KVAT Act mandates a declaration of goods transported through by air and it reads thus: ## _“46._ _**Establishment of check post and documents to be carried with the goods** .–_ ## _xxxxxx_ _(3) Subject to the provisions of subsection (4) no person shall transport within the State across or beyond the notified area any consignment of goods exceeding such quantityor value, as may be prescribed, by any vehicle or vessel, unless he is in possession of-_ ## _xxxxxx_ _(e) Where goods are imported into the State through coastal cargo, through air and through the Railways, the importer or clearing agents, bywhatever name called, shall, on arrival of such goods, furnish a declaration before the Commercial Tax Officer having jurisdiction over the place of import, as maybe prescribed. While transporting such goods within the State or across the State, the transporter / person in charge of the vehicle / vessel shall keep_ OT.REV NO. 82 OF 2019 ..10.. _a copy of such declaration duly acknowledged by the concerned authority and shall be produced for verification by any authority under this Act._ _Provided that in the case of notified goods, the consignment shall be accompanied by a delivery note notwithstanding that is accompanied by any of the other documents specified in this sub-section._ _Provided also that notwithstanding anything contained in this sub section, in case of transport of notified goods for which advance tax has been paid under sub section (16A) of section 47, to the shop, branches or godowns of the dealer mentioned in his certificate for registration, delivery note shall not be insisted, if the transport is accompanied by the proof of remittance of advance tax along with any of the other documents specified in this sub-section.”_ Rule 66(6) of the KVAT Rules reads thus: _“(6)(a) the declaration referred in clause(d) of sub-section(3)of section 46 shall be in Form No.8F._ _(b) The delivery note and the certificate of ownership referred to in sub-section(3) of section 46 shall in in Form No.15 and Form No.16 respectively;”_ The form prescribed for declaration of goods brought through coastal cargo/railway/airports is Form 8FA and it has to accompany the goods. **==> picture [381 x 12] intentionally omitted <==** form 8FA, is concerned, it is mandatory and if OT.REV NO. 82 OF 2019 **==> picture [37 x 8] intentionally omitted <==** any transportation is not accompanied by the said form, it is reasonable to conclude that there is an attempt to evade tax. In the present case, the assessee had already downloaded 8FA and it accompanied the goods at the time of interception. The learned Government Pleader contended that there was a deliberate attempt to conceal TIN. But, it is relevant to consider the findings of the adjudicating officer. The officer did not consider any of the aspects raised by the assessee. The only reason given by the intelligence officer was that the security amount is huge and it cannot be treated as a mere clerical mistake. No other reasoning is given by the officer while imposing penalty. Both the fact finding authority found that the said defect was only technical in nature and was properly explained by the assessee and was found in favour of the assessee. Though the TIN was not mentioned in the 8FA declaration, the details and address OT.REV NO. 82 OF 2019 **==> picture [37 x 8] intentionally omitted <==** of the consignor and consignee was given. Hence, there was no possibility of any evasion of tax. Interception happened while the goods entered the State by air and accounting of the transaction is possible only subsequently. The subsequent accounting of the transaction will not absolve the assessee from proceeding under Section 47(6) of the KVAT Act, but the imposition of the penalty depends on the facts of each case and whether the defects noted are technical in nature or not. 11. We have thoroughly gone through the order of the Tribunal and do not find any illegality or impropriety in the order passed by the Tribunal. Under such circumstances, the Tribunal is justified in arriving at a conclusion that the appellate authority being the fact finding authority, has considered the issue and found in favour of the assessee. Hence, we are not inclined to interfere with the finding entered OT.REV NO. 82 OF 2019 ..13.. into by the tribunal. Accordingly, the revision petition is dismissed. **Sd/SHAJI P. CHALY JUDGE Sd/SHOBA ANNAMMA EAPEN JUDGE** bka/- OT.REV NO. 82 OF 2019 ..14.. ## **APPENDIX OF OT.REV 82/2019** PETITIONER ANNEXURES ANNEXURE A A TRUE COPY OF THE ORDER NO. OR 698/16-17 DATED 05-04-2017 UNDER SECTION 47(6) OF THE KVAT ACT ANNEXURE A SUBSTITUTED BY TRUE COPY OF THE ORDER NO. OR698/2016-17 DATED 05.04.2017 AS PER VIDE ORDER DATED 19/09/2019 IN IA 1/19. ANNEXURE B A TRUE COPY OF THE ORDER DATED 30-112017 IN KVATA NO. 2328 OF 2017 ANNEXURE C CERTIFIED COPY OF THE ORDER OF THE TRIBUNAL IN T.A. (VAT) NO. 477 OF 2018 DATED 08-04-2019