2007 (7) TMI 583 - HC - VAT and Sales Tax

Whether penalty under section 51(7) of the Punjab Value Added Tax Act, 2005 was rightly imposed on facts and in the circumstances of the case? Held that - No interference of this court would be warranted as no question of law much less a substantial question of law would arise within the meaning of section 68(3) and (4) of the Act. A perusal of the order passed by the Tribunal shows that opportunity of hearing was granted to the appellant and one Shri Inder Dev Verma belonging to appellant had appeared. The penalty under section 51(7) of the Act has been imposed after due procedure. Against assessee.

Summary

Issues:
1. Imposition of penalty under section 51(7) of the Punjab Value Added Tax Act, 2005 for transportation of goods without proper documents.
2. Validity of subsequent production of documents by the appellant.
3. Consideration of entries in the books of account as evidence.

Analysis:

1. Imposition of Penalty under Section 51(7):
The appellant, a registered dealer under the Punjab Value Added Tax Act, was transporting goods without proper documents, leading to a penalty imposed by the Assistant Excise and Taxation Commissioner. The Tribunal upheld this penalty, emphasizing the necessity of genuine documents during transportation. The subsequent production of documents was deemed suspicious, indicating a potential attempt to evade tax. The Tribunal concluded that the appellant's actions, including camouflaging inter-State sales as stock transfers, lacked credibility. The court held that the penalty under section 51(7) was rightly imposed, as the appellant failed to provide a valid explanation for the absence of necessary documents.

2. Validity of Subsequent Production of Documents:
The appellant argued that the documents produced later were genuine and should have been accepted. However, the court dismissed this argument, stating that the subsequent production of documents raised doubts about their authenticity. The Tribunal highlighted discrepancies in the appellant's actions, such as unnecessary stock transfers and lack of evidence regarding orders from dealers. Consequently, the court considered the entries in the appellant's books of account as self-serving and lacking evidential value. The appellant's attempt to validate the transactions through later documentation was not deemed credible by the court.

3. Consideration of Entries in Books of Account:
The court emphasized the importance of following due procedure and granting the appellant an opportunity of hearing before imposing the penalty under section 51(7) of the Act. The Tribunal's findings of fact, including the absence of relevant documents during transportation and suspicious subsequent document production, were considered substantial. The court concluded that no substantial question of law arose, as the appellant failed to provide a satisfactory explanation for the irregularities in the transportation of goods. Additionally, the court reiterated the mandatory requirement for vehicles transporting goods to be accompanied by sale bills or delivery challans to avoid suspicions of tax evasion.

In summary, the court dismissed the appeal, upholding the penalty imposed under section 51(7) of the Punjab Value Added Tax Act, 2005, due to the appellant's failure to provide genuine documents during the transportation of goods and questionable subsequent document production, which raised doubts about the authenticity of the transactions. The court emphasized the importance of following due procedure and the necessity of valid documentation to prevent tax evasion.