2010 (3) TMI 1004 - HC - VAT and Sales Tax

Penalty under section 51(7)(c) of the Punjab Value Added Tax Act, 2005 - whether mere non-reporting at the ICC barrier and non-production of the documents by the driver, is no ground to impose the penalty ? Held that - It is evident from the record that the driver, who was person in-charge of the goods of the assessee, did not stop his vehicle despite signal. It was chased and brought back to the ICC barrier. The driver failed to produce the relevant documents, so much so the assessee did not produce any material before the designated officer to prove the genuineness of the transaction, despite adequate opportunities. All these facts if cumulatively put together, then the conclusion of evading or avoiding the tax is inevitable. Hence, it is held that the assessee has contravened/ violated the provisions of the Act and the authorities below have rightly imposed the penalty on it (assessee), in the present set of circumstances. Appeal dismissed.

Summary

Issues:
- Imposition of penalty under section 51(7)(c) of the Punjab Value Added Tax Act, 2005.
- Failure to report at the ICC barrier and non-production of documents by the driver.
- Allegations of tax evasion by transporting goods without proper documents.
- Appeal against the penalty imposed and subsequent dismissal by authorities.

Analysis:
The judgment involves the imposition of a penalty under section 51(7)(c) of the Punjab Value Added Tax Act, 2005, on an appellant-assessee, M/s. Rajiv Enterprises, for attempting to evade tax by transporting goods without proper documents. The case originated from the interception of a vehicle carrying goods (tobacco) for the second time using an already used VAT form XXXVI, old invoice, and GR. The designated officer imposed a penalty of Rs. 1,79,739 on the assessee after finding an attempt to evade tax. The subsequent appeals filed by the assessee were dismissed by the Deputy Excise and Taxation Commissioner (Appeals) and the VAT Tribunal, Punjab, Chandigarh.

The main argument raised by the counsel for the assessee was that the penalty was unjustified as the goods were not liable to tax, and failure to report at the ICC barrier did not warrant the penalty under section 51(7)(c) of the Act. However, the court rejected this argument citing various legal precedents that were not applicable to the present case. The judgment highlighted the necessity of furnishing required documents at the ICC barrier to avoid tax evasion.

The court emphasized that the driver, as the person in-charge of the goods, failed to report at the ICC barrier and did not produce relevant documents, leading to the conclusion of tax evasion by the assessee. The authorities found that the assessee did not provide evidence to prove the genuineness of the transaction despite multiple opportunities. The Commissioner and the Tribunal upheld the penalty based on factual evidence and legal provisions.

Ultimately, the court dismissed the appeal, affirming that the assessee contravened the Act by evading tax through improper documentation and failure to report at the ICC barrier. The judgment concluded that there was no merit in the appeal, and the penalty imposed by the authorities was justified based on the circumstances of the case.