2009 (4) TMI 876 - AT - VAT and Sales Tax

Penalty of 3, 16, 63, 140 imposed under section 79 of the West Bengal Value Added Tax Act 2003 - Held that - The facts revealed that the applicant was thoroughly negligent in the matter of compliance with statutory obligations. We therefore do not find any reason to interfere with regard to the initiation of penalty proceedings. Though admittedly goods were received by Bokaro Steel Plant unexplained violation of the statutory provision cannot be totally ignored. Recurring incidence of such negligence and unexplained violation should be discouraged. However considering the facts and circumstances we are of the view that the quantum of penalty should be kept at minimum. We reduce the quantum of penalty to 63, 32, 625 being five per cent of the value estimated by STO/CS.

Summary

Issues:
Challenge to penalty imposed under section 79 of the West Bengal Value Added Tax Act, 2003 for violation of provision of the Act.

Detailed Analysis:

1. Violation of VAT Act and Penalty Imposition:
The applicant, a company acting as a customs clearing and forwarding agent, challenged the penalty imposed by the Sales Tax Officer under section 79 of the West Bengal Value Added Tax Act, 2003. The penalty of Rs. 3,16,63,140 was initiated due to the failure of the applicant to produce endorsed transit declarations at the exit check-post. The applicant argued that the drivers were new and not familiar with the formalities, emphasizing that the consignments were meant for a single buyer and not for sale within West Bengal. The applicant contended that the penalty imposition was unjustified and should be quashed.

2. Arguments and Counter-Arguments:
The applicant's advocate highlighted the compliance with regulatory measures for transporting goods through West Bengal and the submission of necessary documents to prove the delivery to the ultimate buyer. On the other hand, the State Representative contested the application, pointing out the non-endorsement of transit declarations at the exit point check-post and the incomplete way-bills produced by the applicant. The State Representative also mentioned the applicant's history of non-compliance with statutory provisions.

3. Judicial Decision and Rationale:
After hearing both parties and reviewing the records, the Tribunal acknowledged the negligence of the applicant in accounting for the transit declarations and incomplete documentation. The Tribunal upheld the initiation of penalty proceedings, recognizing the unexplained violation of statutory provisions. However, considering the circumstances, the Tribunal reduced the quantum of penalty to Rs. 63,32,625, which was five per cent of the estimated value by the Sales Tax Officer. The Tribunal aimed to discourage recurring negligence while minimizing the penalty amount based on the facts presented.

4. Final Disposition:
The Tribunal disposed of the petition, with no order as to costs. The decision was agreed upon by the Chairman, concluding the case regarding the challenge to the penalty imposed under the West Bengal Value Added Tax Act, 2003.