1997 (2) TMI 531 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the seized articles are notified goods under section 4A of the Bengal Finance (Sales Tax) Act, 1941.
2. Legality of the penalty imposed for importing the goods without a permit.
3. Whether the applicant was misled by an interpretation given by a Commercial Tax Officer.
4. Quantum of penalty to be imposed.

Issue-wise Detailed Analysis:

1. Whether the seized articles are notified goods under section 4A of the Bengal Finance (Sales Tax) Act, 1941:
The primary issue was whether the seized goods, specifically plastic-coated paper and board, were notified commodities under section 4A of the 1941 Act. The applicant argued that the goods were not notified and thus did not require a permit. However, the respondents contended that the goods fell under the category of "paper of all varieties and description" as per Notification No. 1785-F.T. dated June 1, 1987. The Tribunal concluded that the 40 reels of plastic-coated poster paper were indeed specially processed papers and fell under item No. (2) of the Notification, which includes all types of specially processed paper. Therefore, a permit was required for their importation, and the failure to obtain one justified the penalty under section 14A(2) of the 1941 Act.

2. Legality of the penalty imposed for importing the goods without a permit:
The Tribunal examined the legality of the penalty imposed on the applicant for importing the goods without the required permit. It was found that the 40 reels of plastic-coated poster paper were correctly classified as specially processed paper, necessitating a permit. However, the 8 reels of plastic-coated board were not notified under the 1941 Act but under the 1954 Act. Consequently, the seizure and penalty proceedings for the 8 reels of coated board were deemed unsustainable under the 1941 Act, and the impugned orders related to these reels were quashed.

3. Whether the applicant was misled by an interpretation given by a Commercial Tax Officer:
The applicant argued that they were misled by a clarification given by a Commercial Tax Officer in February 1985, which suggested that the goods were not covered under the 1941 Act. The Tribunal noted that there cannot be any estoppel against the statute and that the applicant should have been aware of the legal requirements when the entries were included in the 1987 Notification under the 1941 Act. The Tribunal found no substance in the applicant's contention that they were misled and held that the applicant's failure to obtain a permit was not bona fide.

4. Quantum of penalty to be imposed:
The Tribunal considered the appropriate quantum of penalty, noting that the value of the 8 reels of coated paper board should be excluded from consideration. The contravention involved 40 reels of coated poster worth Rs. 2,17,220.80. The Tribunal agreed with the applicant's representative that imposing the maximum penalty in every case is not in keeping with the spirit of the law. Consequently, the penalty was reduced to Rs. 40,000, which was deemed reasonable.

Conclusion:
The application was allowed in part. The Tribunal modified the impugned orders by reducing the penalty to Rs. 40,000 and quashed the penalty related to the 8 reels of coated board. No order as to costs was made.