2009 (4) TMI 859 - HC - VAT and Sales Tax

Penalty proceedings initiated against the assessee under section 15A(1)(o) - Held that - As the transactions between the assessee and the U.P. State Sugar Corporation Ltd., were in the nature of inter-State sale and was also recognized as such by way of the order dated July 15, 2002, such being the case, it cannot be said that the provisions of section 28A of the Act were violated or that any penalty could be imposed for violation of the said provision. Revision allowed. The penalty imposed upon the assessee by the impugned order dated December 23, 1997 is hereby set aside

Summary

Issues involved:
1. Interpretation of provisions under the U.P. Trade Tax Act, 1948 regarding penalty imposition.
2. Determination of the nature of transactions between the assessee and U.P. State Sugar Corporation Ltd.
3. Examination of the validity of penalty imposition under section 15A(1)(o) of the Act.
4. Assessment of the Tribunal's decision regarding the imposition of penalty.
5. Consideration of inter-State sales under section 6(2) of the Central Sales Tax Act.

Issue 1: Interpretation of provisions under the U.P. Trade Tax Act, 1948 regarding penalty imposition:
The case involved penalty proceedings initiated against the assessee under section 15A(1)(o) of the U.P. Trade Tax Act for the assessment year 1989-90. The controversy centered around the imposition of a penalty amounting to Rs. 1,04,000 on the assessee by the assessing authority. The first appellate authority quashed the penalty imposition, relying on previous court decisions. However, the Tribunal, in a second appeal, upheld the penalty, leading to the present revision.

Issue 2: Determination of the nature of transactions between the assessee and U.P. State Sugar Corporation Ltd.:
The transactions between the assessee and the U.P. State Sugar Corporation Ltd. involved the supply of machinery and equipment for a project at Saharanpur. The goods were transported with relevant forms, and there were subsequent sales during inter-State movement. The Tribunal's decision to uphold the penalty was based on the movement of goods within U.P. and the endorsement of documents in favor of the U.P. State Sugar Corporation.

Issue 3: Examination of the validity of penalty imposition under section 15A(1)(o) of the Act:
The Tribunal's decision to impose the penalty was challenged on the grounds that the transactions were in the nature of inter-State sales, as recognized by the assessing authority in a previous assessment order. The learned counsel argued that there was no violation of the provisions of section 28A of the U.P. Trade Tax Act, and hence, the penalty imposition was unjustified.

Issue 4: Assessment of the Tribunal's decision regarding the imposition of penalty:
The Tribunal's decision to uphold the penalty was deemed unjustified by the High Court. The Court found that the Tribunal erred in not considering previous court decisions and the nature of the transactions between the parties. It was established that the transactions were indeed inter-State sales, as recognized in a previous assessment order, leading to the setting aside of the penalty imposed by the Tribunal.

Issue 5: Consideration of inter-State sales under section 6(2) of the Central Sales Tax Act:
The learned counsel argued that the transactions between the assessee and the U.P. State Sugar Corporation Ltd. were inter-State sales, as accepted in a previous assessment order. This argument supported the contention that there was no violation of the provisions of the U.P. Trade Tax Act, justifying the setting aside of the penalty imposed by the Tribunal.

In conclusion, the High Court allowed the revision, setting aside the penalty imposed on the assessee by the Tribunal. The Court found that the transactions were in the nature of inter-State sales, as recognized in a previous assessment order, and therefore, the penalty imposition was deemed unjustified.