1993 (8) TMI 287 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the assessment order for the assessment year 1985-86.
2. Levy of penalty under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948.

Detailed Analysis:

1. Validity of the assessment order for the assessment year 1985-86:
The case involved two revisions challenging a common order passed by the Sales Tax Tribunal. The Tribunal had dismissed the assessee's appeal against an order setting aside the revisionist's assessment for the assessment year 1985-86 and confirming the levy of penalty under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948. The revisionist contended that there was no material to justify the proceedings against them and that the order of remand to collect evidence was unjustified. The revisionist dealt in machinery and machinery parts, and the assessment was based on a raid by the Excise Department where foreign liquor was recovered from a property allegedly connected to the revisionist. The Tribunal found no evidence linking the revisionist to the recovered liquor and noted the lack of a thorough investigation. The Tribunal remanded the matter to the assessing officer for further inquiry. The High Court held that there was no evidence to support the levy of penalty or the assumption that the revisionist was involved in dealing with liquor. The assessing officer had not collected relevant evidence before making the ex parte assessment, and the remand order was deemed unjustified and legally unsustainable. The High Court quashed the assessment order for the assessment year 1985-86.

2. Levy of penalty under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948:
The Sales Tax Officer had levied a penalty under section 15-A(1)(o) on the revisionist, which was confirmed by the Assistant Commissioner (Judicial). However, the Tribunal set aside the penalty order as it found no substantial evidence linking the revisionist to the recovered liquor. The Tribunal emphasized the lack of proper investigation and the failure to scrutinize the material seized during the surveys. The High Court agreed with the Tribunal's findings, stating that mere possession of goods cannot automatically lead to the imposition of penalties under section 15-A(1)(o). The High Court held that the penalty order was not legally sustainable due to the lack of evidence and the mechanical approach taken by the assessing officer. Consequently, the High Court quashed the penalty order under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948.

In conclusion, the High Court allowed the petitions, quashing both the assessment order for the assessment year 1985-86 and the penalty order under section 15-A(1)(o) of the U.P. Sales Tax Act, 1948.