2003 (5) TMI 493 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of penalty under section 15-A(1) of the U.P. Trade Tax Act, 1948.
2. Alleged violation of section 28-A of the U.P. Trade Tax Act, 1948.
3. Validity and use of form XXXI.
4. Responsibility for failure to produce documents at the check-post.
5. Intention to evade tax.

Detailed Analysis:

1. Imposition of Penalty under Section 15-A(1) of the U.P. Trade Tax Act, 1948:
The revisionist was penalized Rs. 22,59,684 under section 15-A(1)(o) for allegedly violating section 28-A of the Act. The penalty was initially reduced by Rs. 2,59,684 by the Deputy Commissioner (Appeals) but was upheld by the Trade Tax Tribunal.

2. Alleged Violation of Section 28-A of the U.P. Trade Tax Act, 1948:
The revisionist, a manufacturer of soft drinks, had placed a purchase order for soft drink concentrates from Pepsi Foods Limited. The third consignment was detained by the check-post officer on February 2, 1998, because the driver did not mention the goods in the trip sheet and used an obsolete form XXXI. The authorities concluded that the revisionist intended to evade tax.

3. Validity and Use of Form XXXI:
The Deputy Commissioner (Appeals) and the Trade Tax Tribunal found that the revisionist used an expired form XXXI despite having the new series, suggesting an intention to evade tax. However, the revisionist argued that the validity of form XXXI was extended by a circular from the Commissioner of Trade Tax, making the form valid until March 31, 1998. The court noted that this circular was binding on the authorities and should have been considered.

4. Responsibility for Failure to Produce Documents at the Check-Post:
The revisionist contended that all necessary documents, including form XXXI, were submitted before the seizure order was passed. The court acknowledged that the driver's failure to produce the documents at the check-post should not result in a penalty for the revisionist, especially since the documents were eventually provided.

5. Intention to Evade Tax:
The court examined whether there was an intention to evade tax. It was concluded that the non-production of form XXXI at the time of checking did not indicate an unauthorized import of goods. The court found no evidence of collusion between the transporter and the revisionist to evade tax. The Trade Tax Tribunal and Deputy Commissioner (Appeals) were found to have wrongly upheld the penalty, ignoring the circular that extended the validity of form XXXI.

Conclusion:
The court allowed the revision, set aside the impugned orders of the Tribunal and the penalty order, and directed the trade tax authorities to refund the amount deposited by the revisionist with 12% interest from the date of deposit within three months. The court emphasized that penalties should not be imposed when there is no intention to evade tax, highlighting the over-zealous attitude of the authorities leading to a miscarriage of justice. The petition was allowed with no order as to costs.