2007 (12) TMI 437 - HC - VAT and Sales Tax

Summary

Issues:
1. Confirmation of penalty under section 4B(5) of the U.P. Trade Tax Act, 1948.
2. Legality of penalty amount of Rs. 67,608.36.
3. Justification of penalty imposition based on relevant considerations.

Analysis:
1. The assessee, a manufacturer of glass goods, held a recognition certificate under section 4B for purchasing raw materials at concessional rates. The issue arose when the assessee sold damaged soda ash, purchased at concessional rates, to parties for manufacturing sodium silicate due to moisture damage. The Tribunal sustained the penalty imposed under section 4B(5) for contravening the terms of the eligibility certificate. The key question was whether the penalty imposition was legally justified. The Tribunal found that there was no evidence to establish that the sold soda ash was indeed damaged, concluding that the penalty under section 4B(5) was justified.

2. The assessee argued that the soda ash sold was damaged and not in the same condition as when purchased, hence contending that there was no violation of section 4B. However, the Standing Counsel argued that the assessee failed to provide evidence to prove the soda ash was damaged. The court agreed with the Standing Counsel, noting the absence of evidence to support the claim of selling damaged soda ash. As a result, the Tribunal's decision to uphold the penalty under section 4B(5) was deemed legally correct.

3. The court concurred with the Tribunal's finding that there was no proof that the 299.200 metric tons of soda ash sold by the assessee were damaged. As the Tribunal's conclusion was based on this lack of evidence, the penalty imposition under section 4B(5) was deemed justified. Consequently, the court upheld the Tribunal's decision, ruling against the assessee and in favor of the Revenue. The revision was dismissed with no order as to costs.