2008 (6) TMI 573 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Non-production of way-bill at the time of taking delivery of consignment.
2. Imposition of penalty under Section 73 of the VAT Act.
3. Consideration of intent and possibility of tax evasion.
4. Interpretation and application of previous Tribunal and Supreme Court decisions.

Detailed Analysis:

1. Non-production of way-bill at the time of taking delivery of consignment:
The petitioner, a manufacturer and reseller of cement, imported 677 M.T. of raw materials and took delivery on October 16, 2006, without producing the way-bill at the sales tax check-post for endorsement. The petitioner claimed that the way-bill and other documents were produced before the Sales Tax Officer, Alipur, on October 20, 2006, and subsequently advised to present them at the Kharagpur Range Office, which was done on October 23, 2006, due to holidays. The Sales Tax Officer refused to endorse the way-bill, initiating penalty proceedings.

2. Imposition of penalty under Section 73 of the VAT Act:
The Sales Tax Officer imposed a penalty of Rs. 3,80,000, citing contravention of Section 73 of the VAT Act. The officer argued that the petitioner could have produced the way-bill earlier as there were no holidays between October 16 and 20, 2006. The officer believed that the non-production of the way-bill could lead to tax evasion. The Assistant Commissioner and Deputy Commissioner upheld the penalty, with the latter reducing it to Rs. 76,000.

3. Consideration of intent and possibility of tax evasion:
The petitioner argued that the voluntary production of the way-bill indicated no intention to evade tax. The Tribunal noted that there was no conclusive proof that the way-bill was produced on October 20, 2006, but it was admitted that the documents were produced on October 23, 2006. The Tribunal found no evidence of intent to evade tax or conceal the import, as the materials were entered in the stock register, and the authorities did not allege any discrepancies in the documents.

4. Interpretation and application of previous Tribunal and Supreme Court decisions:
The Tribunal referenced its decision in Century Cement v. Assistant Commissioner of Commercial Taxes, which stated that mere contravention of procedural requirements does not automatically lead to penalty unless there is an intention or possibility of tax evasion. The Tribunal criticized the revenue authorities for not considering this principle and acting mechanically. The Tribunal also referred to Cal-Cox Syndicate Pvt. Ltd. v. A.C.C.T., which explained the Supreme Court's decision in Guljag Industries, emphasizing that penalties should not be imposed for mere technical infringements without adverse impact on revenue.

Conclusion:
The Tribunal set aside the orders imposing penalties, noting that the petitioner voluntarily produced the way-bill within seven days and there was no allegation of intent to evade tax. The Tribunal stressed the importance of following established legal principles and cautioned revenue officials to adhere to Tribunal decisions unless inconsistent with higher courts. The application was allowed, and no costs were ordered.