2000 (8) TMI 1067 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of penalty proceedings under section 4-B(6) of the U.P. Trade Tax Act, 1948 after its omission.
2. Validity of penalty notices issued under section 4-B(6) when it was not on the statute book.
3. Whether rice was a notified commodity for penalty under section 4-B(6).
4. Impact of non-issuance of form III-B on penalty imposition.
5. Effect of exemption under section 4-A on penalty under section 4-B(6).
6. Requirement of mens rea for penalty under section 4-B(6).
7. Determination of exact quantity for penalty assessment.

Detailed Analysis:

1. Jurisdiction of Penalty Proceedings under Section 4-B(6):
The applicant argued that the penalty proceedings initiated under section 4-B(6) were without jurisdiction as the section was deleted by U.P. Sales Tax (Amendment) Act, 1995, effective from May 14, 1994. The respondent countered that the provisions of section 4-B(6) were incorporated in the newly substituted sub-section (5) of section 4-B, thus maintaining the jurisdiction. The court held that section 6(c) and (d) of the U.P. General Clauses Act saved liabilities and penalties incurred under the repealed provisions, and the penalty proceedings were valid.

2. Validity of Penalty Notices Issued Under Section 4-B(6):
The applicant contended that the notices issued under section 4-B(6) were invalid since the section was not on the statute book. The court determined that section 4-B(5), substituted by the same Amending Act, contained similar provisions. Thus, the notices were valid despite quoting the wrong section, as the applicant was aware of the alleged offense.

3. Whether Rice was a Notified Commodity:
The applicant claimed that rice was not a notified commodity under section 4-B(2) before August 29, 1987. The court found that notifications dated August 31, 1977, and March 19, 1979, issued under section 4-B, had already notified rice. Therefore, rice was a notified commodity during the relevant period.

4. Impact of Non-Issuance of Form III-B:
The applicant argued that no penalty could be imposed as it did not issue form III-B while purchasing paddy. The court noted that the applicant, holding a recognition certificate, was exempt from tax at the point of purchase. The liability for tax was attracted at the time of purchase, and exemption was granted during assessment. Thus, the penalty under section 4-B(6) was justified.

5. Effect of Exemption under Section 4-A:
The applicant contended that it believed its exemption under section 4-A would be extended, affecting its sales on consignment basis outside U.P. The court clarified that the revisions related to periods after the exemption had ended, and no further exemption was granted beyond March 31, 1986.

6. Requirement of Mens Rea for Penalty:
The applicant argued that mens rea was required for penalty under section 4-B(6). The court held that section 4-B(6) did not mention "without reasonable cause," unlike other penal provisions. Therefore, mens rea was not required for imposing the penalty.

7. Determination of Exact Quantity for Penalty Assessment:
The applicant suggested that the Tribunal should have determined the exact quantity of paddy purchased without tax and the rice sold on consignment basis. The court noted that this argument was not raised before the Tribunal and could not be introduced for the first time in revision under section 11.

Conclusion:
All three revision petitions were dismissed, and the penalty proceedings under section 4-B(6) were upheld as valid. The court found no merit in the arguments presented by the applicant, and the penalty imposition was justified based on the existing legal provisions and the facts of the case.

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