1984 (12) TMI 270 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the order requiring the petitioners to furnish security in the sum representing forty per cent of the value of the seized goods.
2. Interpretation of penalty provisions under section 15-A(1) of the Uttar Pradesh Sales Tax Act.
3. Applicability of clauses under section 15-A(1) to the breach committed by the petitioners.
4. Determination of the maximum penalty imposable on the petitioners.
5. Quashing and direction for fresh determination of security by the Assistant Commissioner.

Analysis:
The judgment of the Court addressed the issue of the validity of an order requiring petitioners to furnish security in the sum representing forty per cent of the value of goods seized during transportation. The petitioners had applied for release of the goods under section 13-A(6) of the Act. The Court noted that the breach involved the petitioners not correctly entering goods details in their books of account. The Assistant Commissioner imposed a penalty of forty per cent of the value of the goods seized, citing section 15-A(1) of the Act. However, the Court found that the penalty was erroneously imposed as the breach fell under clause (d) of section 15-A(1), not clause (o) or (q) as contended by the Standing Counsel.

Regarding the interpretation of penalty provisions, the Court highlighted that the penalty for the breach of not maintaining proper accounts, as in this case, should be determined under clause (ii) of section 15-A(1). The penalty should range from not less than fifty per cent to a maximum of one and a half times the amount of tax avoided. The purpose of security under section 13-A(6) is to safeguard the recovery of the potential penalty. The Court emphasized that the maximum penalty imposable on the petitioners, if the breach is proven, should be one and a half times the amount of tax, to be determined by the Assistant Commissioner.

The Court ultimately allowed the writ petition, quashing the order of the Assistant Commissioner requiring the petitioners to furnish security in the sum representing forty per cent of the seized goods' value. The Court directed the Assistant Commissioner to determine afresh the amount of security to be furnished by the petitioners for the release of the remaining seized goods. The judgment highlighted the importance of correctly applying penalty provisions and determining the appropriate penalty based on the specific breach committed by the petitioners, as per the provisions of the Act.