2007 (10) TMI 588 - HC - VAT and Sales Tax

Use of Form C - Penalty imposed - Held that - Having regard to the fact that the applicant from time to time informed the assessing authority about the use of form C for the coal and still the form C have been issued to the applicant the amount of penalty is reduced to minimum. It will be equal to the tax which is four per cent on the amount of ₹ 25,50,111 in the assessment year 1997-98 which comes to ₹ 1,02,004.44 and four per cent on the amount of ₹ 16,98,286 in the assessment year 1996-97 which comes to ₹ 67,931.44. In the result, both the revisions are allowed in part. The amount of penalty is reduced to ₹ 1,02,004.44 and ₹ 67,931.44 for the assessment years 1996-97 and 1997-98 respectively.

Summary

Issues: Violation of clause (b) of section 10 of the Central Sales Tax Act for coal purchases, issuance of form C without registration, penalty under section 10A, appeal against penalty, justification for penalty imposition, reduction of penalty amount.

Analysis:

The case involved two revisions against the Tribunal's order for the assessment years 1996-97 and 1997-98. The applicant, a corporation of the State Government, was not registered under the Central Sales Tax Act for coal purchases but issued form C for such transactions. The assessing authority initiated penalty under section 10A for violating clause (b) of section 10. The Deputy Commissioner (Appeals) set aside the penalty, leading to appeals by the Commissioner of Trade Tax before the Tribunal. The Tribunal upheld the penalty, citing a violation of section 10(b) of the Central Sales Tax Act. The penalty was imposed at one and a half times the tax amount.

The applicant argued that they acted in good faith while using form C for coal purchases, supported by details furnished to the assessing authority. The applicant claimed that the issuance of form C was based on a letter stating the requirement for importing slack coal. However, the Standing Counsel contended that the applicant falsely represented being registered for coal purchases by issuing form C without actual registration.

Upon review, the Court found that the applicant was not registered for coal purchases under the Central Sales Tax Act and had no justification for issuing form C for such transactions. The Court emphasized that the applicant should have verified their entitlement to issue form C and could not benefit from the assessing authority's mistake. While considering the applicant's periodic information to the authority, the Court reduced the penalty to the minimum amount, equivalent to four percent of the transaction value for both assessment years.

In conclusion, the revisions were partially allowed, reducing the penalty amount to Rs. 1,02,004.44 and Rs. 67,931.44 for the assessment years 1996-97 and 1997-98, respectively.