2003 (10) TMI 617 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to order reducing penalty by Sales Tax Tribunal under section 37(6) of the Act.

Analysis:
The petitioner challenged the order of the Sales Tax Tribunal reducing the penalty imposed under section 37(6) of the Haryana General Sales Tax Act, 1973. The petitioner, a 100% export-oriented unit, contended that since it only imported goods from foreign countries and did not make local sales or purchases, the penalty was unjustified as there was no attempt to evade tax under the Act. On the other hand, the respondents argued that transporting goods without proper documents implied an attempt to evade tax. The Sales Tax Tribunal found that the purchases and sales by the petitioner were not taxable under the Act and that the petitioner had requested verification of documents before the release of goods.

The Court agreed with the petitioner, emphasizing that if sales and purchases were not taxable under the Act, there could be no attempt to evade tax. The Court noted that under section 37(6) of the Act, a penalty could only be imposed if there was an attempt to evade tax. Since the Sales Tax Tribunal found that the petitioner's transactions were not taxable and the petitioner had requested document verification, there was no basis for imposing a penalty. The Court highlighted that non-production of a filled-in challan might imply tax evasion only if tax was leviable, which was not the case here.

The Court distinguished the case cited by the respondents, stating that the presumption of tax evasion could be rebutted by producing evidence to the contrary. In this instance, the law laid down in the cited case did not apply as the transactions were not taxable. The Court allowed the writ petition, setting aside the Sales Tax Tribunal's order imposing the penalty on the petitioner. No other points were raised during the proceedings.

In conclusion, the Court ruled in favor of the petitioner, quashing the penalty order. The judgment highlighted that in cases where transactions were not taxable under the Act, there could be no attempt to evade tax, and hence, no penalty should be imposed.