2007 (10) TMI 604 - AT - VAT and Sales Tax

Penalty being 25 per cent of the declared value of the goods under section 79(1) of the West Bengal Value Added Tax Act 2003 read with rule 127(5) of the West Bengal Value Added Tax Rules 2005 Held that - In view of the findings of the Additional Commissioner it is established that the petitioner had to despatch the goods to Ahmedabad by air without getting the way-bill endorsed as there was no competent person in the airport check-post to endorse the way-bill/transit declaration. In the present case violation took place under circumstances beyond the control of the petitioner and created by the admitted absence of the competent person to endorse the declaration at the time of exit. Only fault committed by the petitioner is that it did not intimate the fact of exit and delivery of goods at Ahmedabad to the sales tax authorities in West Bengal. Had it done so penalty proceeding might not have been initiated at all.Application is allowed. In any event as the respondents themselves are responsible for the situation leading to the technical violation and there was no possibility of evasion of tax we set aside the impugned order of penalty passed by the Assistant Commissioner and the order passed by the Additional Commissioner.

Issues:
Imposition of penalty under the West Bengal Value Added Tax Act, 2003 for transporting goods without proper endorsement of way-bill/transit declaration.

Detailed Analysis:

1. Background and Facts:
The petitioner, a courier company, transported a consignment of mobile phones from Bhubaneswar to Ahmedabad via West Bengal. Due to the unavailability of a competent person at the check-post in N.S.C. Bose International Airport to endorse the necessary documents, the petitioner sent the goods by air without the required way-bill endorsement. Subsequently, a penalty was imposed for this action.

2. Imposition of Penalty:
The Assistant Commissioner, Sales Tax, Howrah, imposed a penalty of Rs. 85,428 under section 79(1) of the West Bengal Value Added Tax Act, 2003. The Additional Commissioner, while confirming the penalty, reduced the amount to Rs. 40,000 considering the absence of any mala fide intention on the part of the petitioner.

3. Judicial Review:
Challenging the penalty, the petitioner approached the Appellate Tribunal. The Additional Commissioner acknowledged the absence of mala fide intent but upheld the penalty due to the violation of statutory provisions. However, the Tribunal found that the petitioner was compelled to dispatch the goods without proper endorsement due to the absence of a competent person at the check-post.

4. Legal Analysis:
The Tribunal held that since the petitioner had to send the goods outside West Bengal without endorsement due to the check-post's failure, and there was no possibility of tax evasion as the goods reached the destination, the penalty was unjustified. The Tribunal emphasized that even in cases of civil liability, consequences of infringement must be considered, and penalty cannot be imposed if there is no tax evasion possibility.

5. Decision:
Considering the circumstances and the responsibility of the authorities for the technical violation, the Tribunal set aside the penalty orders passed by the Assistant Commissioner and the Additional Commissioner. The Tribunal highlighted that the petitioner's failure to inform the sales tax authorities about the goods' delivery at Ahmedabad was the only fault, which could have prevented the penalty proceedings.

6. Conclusion:
Ultimately, the Tribunal allowed the application, setting aside the penalty orders without imposing any costs. Both the Chairman and the Technical Member of the Tribunal agreed on this decision, emphasizing the lack of mala fide intent and the circumstances beyond the petitioner's control that led to the violation.

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