2008 (7) TMI 909 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to penalty under section 13A(4) of the U.P. Trade Tax Act for assessment year 1998-99.

Analysis:
The petitioner, a registered dealer under the U.P. Trade Tax Act, challenged the penalty order dated March 31, 2003, passed by the Trade Tax Tribunal for the assessment year 1998-99 under section 13A(4) of the Act. The petitioner maintained account books in the regular course of business. Goods dispatched were found different upon interception by the Department, leading to penalty proceedings. The assessing officer levied a penalty of Rs. 2,21,000, reduced to Rs. 1,48,000 on appeal, which was further confirmed by the Tribunal. The petitioner contended that the penalty was unjustified as the goods were properly accounted for and traceable to a bona fide dealer, citing human error for the mix-up. The Tribunal upheld the penalty, stating that the explanation of human error was not acceptable, as evidenced by the driver's behavior and the lack of protest during the release of goods.

The first appellate authority reduced the penalty but found that the vehicle was carrying different goods than mentioned in the challan, with the driver showing reluctance and needing police help to reach the Trade Tax Department. This indicated awareness of the issue, contradicting the claim of human error. The Tribunal did not provide reasoning for upholding the modified penalty amount. Despite being a bona fide dealer with no prior record, the penalty was maintained at 150% of the tax amount. The High Court found the penalty excessive and reduced it to the amount of the tax, granting further relief of Rs. 48,000 by reducing the penalty to Rs. 1,00,000. The Court decided in favor of the assessee partly, holding that a penalty of Rs. 1,00,000 would serve the interest of justice. The revision was allowed in part, granting the mentioned relief.