2006 (11) TMI 565 - HC - VAT and Sales Tax

Summary

Issues involved:
The issues involved in this case are:
1. Justification of penalty amount by the Appellate Tribunal without evidence of false declaration.
2. Appellate Tribunal's disturbance of the first appellate authority's finding on penalty without new circumstances.
3. Imposition of penalty by the Appellate Tribunal in absence of relevant evidence.
4. Tribunal's decision on not setting aside the penalty due to failure in proving knowingly false declaration.
5. Tribunal's justification for not fully deleting the penalty.

Details of the Judgment:

Issue 1:
The Appellate Tribunal justified the penalty at one time the tax payable without evidence of a false declaration. The petitioner, a dealer in iron, steel, and cement, was assessed for the year 2001-02, with a turnover treated as a second sale. The assessing officer proposed reassessment and penalty under section 6A(3) of the Act for a bogus declaration. The Tribunal reduced the penalty from Rs. 18,76,689 to Rs. 6,26,563, which the petitioner challenged.

Issue 2:
The Appellate Tribunal disturbed the first appellate authority's finding on the penalty without new circumstances. The Tribunal noted that the petitioner produced a bogus document, form 32B, for exemption, which was rightly disallowed. The Tribunal reduced the penalty considering the petitioner's case as a special one, despite the creation of a bogus document.

Issue 3:
The Appellate Tribunal imposed a penalty in the absence of relevant evidence. The Tribunal found that the petitioner filed a bogus form 32B for exemption, which was created to show a non-existent entity as the first dealer in the State. Despite this, the Tribunal reduced the penalty, which was deemed improper in law.

Issue 4:
The Tribunal's decision on not setting aside the penalty was based on the failure to prove knowingly false declaration. The Tribunal concluded that the petitioner knowingly produced a bogus document for exemption, and while acknowledging the petitioner's representative's involvement, held the petitioner responsible as well due to inaction against the representative.

Issue 5:
The Tribunal's justification for not fully deleting the penalty was questioned. The Court emphasized discouraging and condemning bogus transactions and documents for tax adjudication purity. It highlighted the importance of tax revenue for the State and upheld the penalty, rejecting the petitioner's plea of ignorance regarding the bogus document.

The Court concluded that the Tribunal should not have reduced the minimum penalty, emphasizing the need to enforce the law strictly in tax matters. It expressed concern over tax evasion in the area and urged the department to take stringent action to recover rightful revenue and punish those involved in creating or filing bogus documents. The appeal filed by the State was accepted, and the appeal by the assessee was rejected, with the question of law answered in favor of the Revenue.