1985 (7) TMI 344 - HC - VAT and Sales Tax

Summary

Issues:
1. Imposition of penalty under section 16(1)(i) of the Rajasthan Sales Tax Act, 1954 for alleged tax evasion on sale of imported liquor.
2. Interpretation of tax liability on the turnover of imported foreign liquor.
3. Consideration of whether penalty under section 16(1)(i) was justifiable despite the tax not being paid at the correct point.
4. Assessment of tax liability on the turnover of liquor sold in packed bottles to consumers.

Analysis:
The case involved an application under section 15(2)(b) of the Rajasthan Sales Tax Act, treated as a revision under section 15(1) due to amendments. The assessee, a hotel, sold imported liquor and was accused of tax evasion. The assessing authority imposed a penalty under section 16(1)(i) for alleged fraudulent tax evasion. The assessee contended that tax was paid on imported liquor, albeit at the wrong point, through the seller, M/s. United General Stores. The Deputy Commissioner upheld the penalty, stating that the sales were in the course of import and not taxable in Rajasthan. However, the Board of Revenue overturned the penalty, emphasizing that the tax-paid goods could not be taxed again.

The Commercial Taxes Officer sought a reference to the High Court, questioning the imposition of penalty. The High Court considered three questions, focusing on tax liability, penalty justification, and tax on liquor sales to consumers. The court analyzed the requirement for fraudulent evasion to impose a penalty under section 16(1)(i), citing precedents emphasizing the need for deliberate concealment or fraudulent intent. The court referenced various cases to highlight that the absence of fraudulent intent or deliberate evasion is a question of fact, not law.

The court concluded that the Board of Revenue's decision was based on factual findings, indicating no deliberate evasion or concealment by the assessee. Since no question of law arose, the revision petition was dismissed, as revisions are maintainable only on legal questions. The court upheld the Board of Revenue's decision, emphasizing the factual nature of the case and the absence of legal issues warranting revision.

In summary, the judgment addressed the imposition of penalty for alleged tax evasion on imported liquor sales, interpreting tax liability, justifying penalties, and assessing tax on liquor sales to consumers. The court emphasized the factual nature of fraudulent intent in tax evasion cases, citing precedents to support the decision to dismiss the revision petition due to the absence of legal questions.