1998 (4) TMI 519 - HC - VAT and Sales Tax

Summary

Issues:
Penalty proceedings under section 15-A(1)(o) of the U.P. Sales Tax Act for importing raw material without necessary documents.

Analysis:
The revision arose from penalty proceedings under section 15-A(1)(o) of the U.P. Sales Tax Act concerning the import of raw material without proper documentation. The respondent-assessee, engaged in manufacturing polythene bags, imported raw material H.D.P. granules from Bombay, which were seized at a check-post due to missing form 31. Subsequently, penalty proceedings were initiated, and the security amount paid by the assessee was converted into a penalty. The Sales Tax Tribunal, in a second appeal, reduced the penalty from Rs. 24,194 to Rs. 1,000, leading the Revenue to challenge this decision in revision.

Section 15-A(1)(o) empowers the assessing authority to impose penalties for contravening section 28-A of the Act. The penalty can amount to 40% of the goods' value or three times the tax leviable, whichever is higher. The Revenue contended that the Tribunal erred in reducing the penalty, arguing that the facts of the case did not justify such a reduction. However, the Court noted that previous judgments clarified that penalties under this section require proof of intent to evade tax, not just a technical violation.

The Tribunal found that the assessee, holding an eligibility certificate exempting it from tax, had no intention to evade tax by importing the raw material. The goods were duly recorded, and the mistake in documentation was attributed to the clearing agent. The Tribunal concluded that it was a bona fide mistake, and the penalty was reduced due to technical non-compliance with section 28-A. The Court emphasized that penalties for statutory breaches should be imposed judiciously, considering all relevant circumstances.

Referring to Supreme Court precedent, the Court highlighted that penalties should not be imposed for technical or venial breaches if the offender believed they were not liable to act as prescribed by the statute. Given the Tribunal's findings of a bona fide mistake and no intent to evade tax, the Court upheld the reduced penalty of Rs. 1,000. The revision was deemed meritless and dismissed, affirming the Tribunal's decision.