2007 (2) TMI 600 - HC - VAT and Sales Tax

Summary

Issues:
1. Penalty levied under section 10A of the U.P. Trade Tax Act for default under section 10(d) of the Central Sales Tax Act, 1956 for assessment years 1987-88 and 1988-89.
2. Interpretation of registration granted for the manufacturing of ice and usage of goods purchased against form "C" in the construction of cold storage.

Analysis:
Issue 1:
For the assessment year 1987-88, the dealer purchased goods against form "C" at a concessional rate of tax for the construction of cold storage, leading to penalty proceedings under section 10A of the Act. The Tribunal set aside the penalty order, citing reasons beyond the dealer's control for not manufacturing ice due to water quality issues. The Tribunal reasoned that since machines for ice factory and cold storage are common, using imported goods in cold storage construction was justified. However, the Deputy Commissioner initiated penalty proceedings under section 10B, which was later set aside by the Tribunal. The High Court held that the dealer's explanation did not constitute a reasonable excuse, finding a violation of section 10(d) of the Central Act. The Court directed the Tribunal to levy a minimum penalty.

Issue 2:
The High Court analyzed the registration granted for the manufacturing of ice and the usage of goods in the construction of cold storage. The Court noted that the dealer used imported goods for purposes other than those specified in the registration, as the ice factory was never established. Despite the dealer's claim of water quality issues affecting ice manufacturing, the Court found no reasonable excuse for the violation of section 10(d) of the Central Act. The Court differentiated the present case from previous judgments where reasonable cause was established. Ultimately, the Court directed the Tribunal to levy a minimum penalty and pass appropriate orders.

In conclusion, the High Court allowed both revisions, setting aside the Tribunal's order and instructing the Tribunal to levy a minimum penalty based on the violations identified.