2007 (8) TMI 678 - HC - VAT and Sales Tax

Penalty proceedings under section 15A(1)(q) of the U.P. Trade Tax Act, 1948 - Held that - In the present case, firstly, the Joint Commissioner (Appeals) did not discharge its burden by getting the documents verified and similarly the Tribunal admitted and relied upon the report without confronting the dealer with the same and without giving an opportunity to rebut. This court cannot consider the material and record a finding as to whether the trip sheet was got discharged or not, or that the affidavits were filed by the parties outside the State of U.P. claiming to have taken delivery of goods as this would be appreciation of evidence and moreso where there are conflicting reports on such evidence. In view of the above discussion it would be appropriate that the matter be remitted to the Joint Commissioner (Appeals) to examine the matter afresh after getting the evidence led by the dealer as also the various reports placed by the department and after due verification and affording due opportunity to the parties to reconsider the evidence led by the either party and pass appropriate orders afresh. Further if the assessment order goes, the penalty order cannot be sustained and will automatically go. Revision allowed.

Summary

Issues Involved:
Assessment and penalty proceedings under section 15A(1)(q) of the U.P. Trade Tax Act, 1948, denial of opportunity by the Tribunal.

Assessment and Penalty Proceedings:
The revisions arose from assessment and penalty proceedings under section 15A(1)(q) of the U.P. Trade Tax Act, 1948. The assessing officer imposed tax liability and a penalty on the owners of the vehicle, presuming that goods entering U.P. were not discharged at the exit check-post, indicating a sale within the state. The Joint Commissioner (Appeals) found evidence that the goods were transported outside U.P., leading to the appeal being allowed with regard to assessment and penalty. However, the Tribunal overturned this decision, restoring the assessing officer's orders. The revisions focused on different transit passes used by the vehicles. The Tribunal's decision was challenged based on the denial of opportunity during the proceedings.

Denial of Opportunity by the Tribunal:
The Tribunal's decision was primarily contested on the grounds of denial of opportunity. The applicant argued that a report from the Economic Offences Wing, which questioned the authenticity of certain documents, was not provided to them for rebuttal. The Tribunal relied on this report without affording the applicant a chance to defend against it. The Tribunal justified its decision by highlighting discrepancies between the material relied upon by the Joint Commissioner (Appeals) and the report of the Economic Offences Wing. However, the court found that natural justice principles dictate that parties should be given a fair opportunity to respond before adverse inferences are drawn. The court emphasized the importance of verifying evidence and providing opportunities for parties to rebut any conflicting reports.

Judgment and Remittance:
The court concluded that the matter should be remitted to the Joint Commissioner (Appeals) for a fresh examination after verifying the evidence presented by both parties and considering various reports. Due opportunity should be given to all parties for reconsideration of the evidence before passing new orders. The court noted that if the assessment order is set aside, the penalty order would automatically be invalidated. The revisions related to assessment and penalty were allowed, setting aside the orders of the Joint Commissioner (Appeals) and the Tribunal. The parties were given the opportunity to raise other questions before the Joint Commissioner (Appeals). The court made no order as to costs in this matter.