2009 (11) TMI 845 - HC - VAT and Sales Tax

Levy of penalty under section 13A(4) of the Trade Tax Act, 1948 - Held that - It is notable that in the present case, the authorities were not solely guided by the non-production of books of account, but have also taken into consideration the statement of the employee made during survey and various other factual aspects as have been noted above for levying this penalty. In my view penalty is imposed essentially as a deterrent that any violation of statutory requirement by the dealer will have pecuniary ramification and thereby ensuring strict adherence of law. Upon the facts and circumstances of the present case, the imposition of penalty is justified and the Tribunal has committed no error either on facts or in law in upholding the same. Revision dismissed.

Summary

Issues:
1. Levy of penalty under section 13A(4) of the Trade Tax Act, 1948.
2. Justification of the quantum of penalty under section 13A(4) of the Act.

Analysis:
1. Levy of Penalty under Section 13A(4) of the Trade Tax Act:
The case involved a revision filed against the penalty order under section 13A(4) of the Trade Tax Act, relating to the assessment year 2003-04. The applicant, engaged in the sale and purchase of foodgrains, faced penalties after a survey found discrepancies in stock and non-production of books of account. The survey report revealed goods stored at an undeclared location, unverifiable entries in books, and suspicious transactions. The assessing authority, appellate court, and Tribunal upheld the penalty, considering non-production of books, discrepancies in stock, and circumstantial evidence. The applicant argued that absence during the survey and reasons for non-production should not lead to penalty imposition. However, the court emphasized the importance of maintaining and producing books of account, citing precedents where non-production alone did not justify penalties. The court highlighted that penalties serve as a deterrent for statutory compliance, ensuring adherence to the law. Ultimately, the court found the penalty justified based on the facts and circumstances, dismissing the revision.

2. Quantum of Penalty under Section 13A(4) of the Act:
The second issue raised was regarding the quantum of the penalty imposed under section 13A(4) of the Act. The applicant contested the penalty amount, arguing that the circumstances did not warrant such a high penalty. However, the court, after considering the facts presented, upheld the quantum of penalty imposed, emphasizing the seriousness of non-compliance and the need for strict adherence to legal requirements. The court found no error in the Tribunal's decision regarding the penalty amount, concluding that the penalty was justified given the violations observed during the survey and subsequent proceedings.

In conclusion, the High Court upheld the penalty imposed under section 13A(4) of the Trade Tax Act, 1948, for the assessment year 2003-04. The court emphasized the significance of maintaining and producing books of account, considered circumstantial evidence, and affirmed the penalty as a deterrent for statutory compliance. The court found no merit in the revision and dismissed it accordingly.