2010 (3) TMI 1022 - AT - VAT and Sales Tax

Whether imposition of penalty was wholly unjustified and unreasonable? Held that - Receipts and certificates granted by the competent officials of the petitioner should not be brushed aside lightly. If all the documents are properly looked into and scrutinised it appears that if the petitioner offered appropriate explanation for the difference in vehicle No., it could be definitely held that the goods were sent out. But still all other documents suggest that the goods might have been sent out to its destination in Madhya Pradesh. The petitioner is a Central Government undertaking, it is very difficult and unusual for it to divert such valuable imported goods and to sell it in West Bengal surreptitiously. Taking a comprehensive look at all the relevant facts and circumstances of the present case we are of the view that penalty should be imposed but not at the maximum rate. Accordingly we modify the impugned penalty order and the revisional order confirming the penalty and reduce the penalty to ₹ 1,25,000 (rupees one lakh twenty five thousand only).

Summary

Issues Involved:
Violation of transit declaration requirements; Imposition of penalty for failure to prove goods exit from West Bengal.

Detailed Analysis:
The case involves the petitioner, a Central Government undertaking, purchasing coal cutting machinery from the United Kingdom for use in a subsidiary company in Madhya Pradesh. The machinery was imported through West Bengal for transit to Madhya Pradesh. The petitioner obtained a transit declaration but failed to produce it at the exit check-post within the specified period, leading to a penalty imposition notice by the Sales Tax Officer.

During the penalty proceeding, the petitioner's representative provided documents showing delivery in Madhya Pradesh, but the Sales Tax Officer was unsatisfied, citing discrepancies and demanding further documents. The Officer imposed a substantial penalty as the disputed consignment's exit from West Bengal was not proven.

The petitioner appealed the penalty order before the Joint Commissioner, who dismissed the revision, upholding the penalty. The petitioner then approached the Tribunal, arguing that the violation was technical and the penalty unjustified, as the goods were sent out of West Bengal, rebutting any presumption of sale within the state.

The State Representative contended that the petitioner failed to prove the consignment's exit from West Bengal and had a history of non-compliance with transit declaration requirements, leading to repeated penalties. The failure to present transit declarations at the exit check-post creates a presumption of goods being sold in West Bengal without tax payment.

The Tribunal noted that the exit of goods is crucial, and those who prove goods exit should not be equated with violators who cannot. The revisional authority erred in not considering the petitioner's claim and imposing the maximum penalty without verifying the exit of goods. Despite some discrepancies, the petitioner provided documents supporting the consignment's dispatch to Madhya Pradesh.

Considering all facts, the Tribunal modified the penalty, reducing it significantly from the original amount, acknowledging the petitioner's status as a Central Government undertaking and the documents presented indicating the consignment's dispatch to its destination.

In conclusion, the Tribunal upheld the penalty but reduced it, emphasizing the importance of observing statutory rules and ensuring proper documentation for goods transit to avoid penalties for non-compliance.