2010 (3) TMI 1013 - HC - VAT and Sales Tax

Whether the Assistant Excise and Taxation Commissioner has travelled beyond his jurisdiction while imposing penalty under section 51(7)(c) of the Punjab VAT Act, 2005 when the goods were detained by the detaining officer on the short ground of nonproduction of form VAT-XXXVI issued by any ICC ignoring the fact that the State Government has not established any ICC on Pabhat to Shimla Road via Panchkula? Whether penalty could be imposed under section 51(7)(c) of the Punjab VAT Act, 2005 when the goods were sent to Himachal Pradesh by way of stock transfer and for sale on consignment basis which is permissible under section 6A of the Central Sales Tax Act, 1956 and no tax of the State is involved? Held that - Once, it is proved that neither the assessee reported the goods meant for trade at the ICC barrier adopting the escape route nor produced the indicated relevant documents before the detaining or designated officer, then the intention of the assessee to avoid/evade the tax is inevitable, in the obtaining circumstances of the case. Therefore, it is apparent from record that the driver, who was the 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 obtaining circumstances of the case. Against assessee.

Summary

Issues:
- Imposition of penalty under section 51(7)(c) of the Punjab VAT Act, 2005 for non-production of form VAT-XXXVI
- Applicability of penalty under section 51(7)(c) of the Punjab VAT Act, 2005 for goods sent to Himachal Pradesh on consignment basis

Analysis:
- The judgment revolves around the imposition of a penalty under section 51(7)(c) of the Punjab VAT Act, 2005 on an assessee for non-production of form VAT-XXXVI. The case involved the transportation of goods from Punjab to Himachal Pradesh, where the drivers of the trucks carrying the goods did not report at the Information Collection Centre (ICC) and took an escape route, leading to the detention of the goods. Despite multiple opportunities, the assessee failed to produce relevant documents to substantiate the transactions, resulting in the imposition of a penalty by the designated officer. The appellate authorities upheld the penalty, considering the evasion of tax evident from the lack of genuine documents and failure to comply with required procedures at the ICC barrier.

- The second issue addressed in the judgment pertains to the applicability of penalty under section 51(7)(c) of the Punjab VAT Act, 2005 for goods sent to Himachal Pradesh on a consignment basis. The assessee argued that since it was a stock transfer from Punjab to Himachal Pradesh with no tax involved, the penalty should not be imposed. However, the Tribunal found that the transactions were not merely stock transfers but involved consignment sales, indicating an intent to evade tax. The invoices and documentation presented by the assessee raised suspicions of tax avoidance, leading to the confirmation of the penalty by the appellate authorities based on the evidence presented.

- The judgment emphasizes the importance of compliance with tax regulations and the obligation of parties involved in the transportation of goods to adhere to prescribed procedures. It underscores the significance of producing genuine documents and following legal requirements to prevent tax evasion. The decision reaffirms the authority's right to impose penalties under the law when violations are established, irrespective of the nature of the transaction or the absence of immediate tax liability. The judgment serves as a reminder of the consequences of non-compliance and the need for transparency in commercial dealings to maintain tax integrity and accountability.