2003 (9) TMI 724 - HC - VAT and Sales Tax

Summary

Issues:
1. Penalty proceedings under section 15-A(1)(o) of the U.P. Trade Tax Act for assessment years 1992-93 and 1993-94.
2. Imposition of penalty for technical violation of section 28-A due to the absence of form XXXI.
3. Appeal against penalty orders before the Deputy Commissioner (Appeals) and Trade Tax Tribunal.
4. Reduction of penalty amount by the Trade Tax Tribunal based on findings of fact.
5. Challenge to the confirmation of penalty through revisions.

Analysis:
The case involved penalty proceedings under section 15-A(1)(o) of the U.P. Trade Tax Act for the assessment years 1992-93 and 1993-94 arising from the absence of form XXXI during the import of goods by a company engaged in the manufacture and sale of polyester films. The company had recorded the imports in its account books and paid the necessary taxes but failed to furnish form XXXI, leading to penalty imposition by the assessing authority. Appeals were filed against the penalty orders before the Deputy Commissioner (Appeals) and subsequently before the Trade Tax Tribunal, which partially allowed the appeals by reducing the penalty amounts after finding that there was no loss of revenue to the Trade Tax Department. The company challenged the confirmation of penalty through revisions, arguing that the penalty imposition was unjustified due to the goods being duly recorded and taxes paid, citing legal precedents where penalties were quashed in similar circumstances.

The company's counsel relied on case law to support their argument that penalties should not be imposed for technical violations without intent to evade tax or cause revenue loss. They emphasized that the goods were properly recorded and supported by customs documents, and there was no intention to evade tax. The Tribunal's findings indicated no loss of revenue, leading to the conclusion that the penalty imposition was not justified. The counsel further cited judgments where penalties were cancelled in cases of technical breaches without malicious intent, reinforcing the argument against sustaining the penalty under section 15-A(1)(o). The High Court allowed the revisions, setting aside the Tribunal's order and cancelling the penalties imposed, based on the absence of intent to cause revenue loss and the proper recording of transactions, thereby concluding the case in favor of the company.