1985 (10) TMI 268 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to authority of respondents to impose penalty on trucks for failing to clear check post within stipulated time; Interpretation of Sales Tax Act provisions regarding levy of tax and penalty; Validity of penalty under sections 15-A(1)(r) and 14(1)(e) of the Act; Vires of statutory provisions questioned; Arbitrary power of Sales Tax Officer to detain vehicle until penalty paid; Compliance with rules of natural justice in penalty imposition.

Analysis:
The writ petition contested the respondents' authority to impose penalties on trucks for not clearing the check post within the specified time, arguing that the Sales Tax Act did not apply to goods carried through Uttar Pradesh without sale or purchase within the state. The petitioner's trucks carried coal from Bihar and Bengal to Madhya Pradesh, passing through Uttar Pradesh, where penalties were imposed for delays in reaching the exit check post. The petitioner challenged the penalties under sections 15-A(1)(r) and 14(1)(e) of the Act, questioning their legality and vires.

The Court rejected the petitioner's argument, stating that the Act empowered authorities to prevent tax evasion. Goods entering Uttar Pradesh were presumed for sale within the state, subject to tax unless exempted with a transit pass. Rule 87 required compliance with transit pass conditions, failure of which constituted a contravention of the Act. Sections 14(1)(e) and 15-A(1)(r) authorized penalties for such contraventions to enforce tax compliance and prevent evasion.

The petitioner contended that the Act granted arbitrary power to Sales Tax Officers to detain vehicles until penalties were paid, affecting timely delivery of goods due to uncontrollable factors like accidents or road conditions. The Court clarified that penalties could only be imposed after an inquiry, affording the party an opportunity to explain, ensuring compliance with natural justice principles. Sales Tax Officers had discretion not to levy penalties if delays were justified, aligning with the Act's objective of tax enforcement and evasion prevention.

The Court emphasized that penalties were not mandatory for every delay, especially if goods' quality and quantity remained unchanged, indicating no tax evasion attempt. The petitioner was directed to present goods at the check post promptly, offering a reasonable explanation for delays. If goods were present and the explanation deemed satisfactory, the Sales Tax Officer should allow passage without penalties. The Court excluded the period of the writ petition's pendency from delay consideration, disposing of the case with these directions and no costs awarded.