2001 (1) TMI 925 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Non-production of requisite documents at the check-post.
2. Imposition of penalties by the department.
3. Appellate authority's decision and subsequent reversal by the revisional authority.
4. Interpretation and application of Section 28-A.
5. Justification of penalties imposed.
6. Compliance with procedural requirements.
7. Quantum of penalty.

Issue-wise Detailed Analysis:

1. Non-production of requisite documents at the check-post:
The appellants, Larsen & Toubro Limited, were transporting consignments of MS plates without the necessary sale bills or delivery notes, which were stopped at the Ballary Road check-post on multiple dates in April 1995. The appellants contended that the documents were inadvertently not produced by the transporter and later submitted the required documents.

2. Imposition of penalties by the department:
Despite the submission of documents, the department imposed penalties on the appellants for each consignment, arguing that the initial non-production of documents justified the penalties.

3. Appellate authority's decision and subsequent reversal by the revisional authority:
The Deputy Commissioner of Commercial Taxes (Appeals) initially set aside the penalties, but this decision was reversed by the revisional authority, leading to the present appeals.

4. Interpretation and application of Section 28-A:
The appellants' counsel argued that Section 28-A is intended for preventive measures and not for revenue generation. They cited various case laws, including the Supreme Court's decision in Hindustan Steel Ltd. v. State of Orissa, to support the argument that penalties require mens rea and should not be imposed for technical errors without intent to evade tax.

5. Justification of penalties imposed:
The Government Advocate contended that the non-production of documents at the check-post is a strict requirement, and the subsequent production of documents does not absolve the initial breach. The court acknowledged that Section 28-A aims to ensure compliance and that penalties act as a deterrent.

6. Compliance with procedural requirements:
The court emphasized that procedural requirements must be strictly followed and that subsequent production of documents does not entirely mitigate the initial lapse. The court highlighted the importance of compliance to prevent tax evasion.

7. Quantum of penalty:
The appellants argued that the penalties were excessive and should be reasonable. The court agreed that the penalties should be scaled down, considering that there was no actual evasion of tax. The penalties were reduced to Rs. 10,000 for each case.

Conclusion:
The appeals were partially allowed, with the penalties being reduced to Rs. 10,000 per case. The court emphasized the need for compliance with procedural requirements and the role of penalties as a deterrent. The appellants were entitled to a consequential refund or adjustment, with no order as to costs.