2010 (7) TMI 906 - HC - VAT and Sales Tax

Whether penalty can be levied under section 15A(1)(o) of the Act only if the dealer is found to have contravened the provisions of section 28A of the Act coupled with the fact that there is an attempt to evade payment of tax? Held that - The question raised in this revision as to whether the levy of penalty under section 15A(1)(o) was justified, is answered in favour of the assessee/dealer and against the Revenue and it is held that as there was no attempt to evade payment of tax, the penalty could not have been imposed. The revision is allowed

Summary

Issues involved:
- Imposition of penalty under section 15A(1)(o) of the U.P. Trade Tax Act for importing goods in contravention of section 28A.
- Interpretation of the penalty provision in relation to contravention of section 28A and attempt to evade payment of tax.
- Analysis of case law precedents regarding the imposition of penalty for non-compliance with form XXXI requirements.

Imposition of Penalty under Section 15A(1)(o) of the U.P. Trade Tax Act:
The case involved a registered dealer engaged in the business of foodgrains who had imported groundnuts into the State of U.P. from Madhya Pradesh. The goods were intercepted at a check-post and seized for not being accompanied by form XXXI as required by section 28A of the Act. Penalty proceedings were initiated under section 15A(1)(o) for contravening section 28A. The Tribunal imposed a penalty, which was challenged in revision.

Interpretation of Penalty Provision and Attempt to Evade Tax:
The key contention was whether the penalty under section 15A(1)(o) could be justified in the absence of an attempt to evade payment of tax. The dealer argued that penalty could only be levied if there was a contravention of section 28A coupled with an attempt to evade tax. The Revenue defended the penalty on the grounds of clear contravention of section 28A, citing discrepancies in documentation as evidence of an attempt to evade tax.

Analysis of Case Law Precedents on Form XXXI Compliance:
The court referred to various judgments to interpret the penalty provision in cases of non-compliance with form XXXI requirements. Previous decisions highlighted that the mere absence of form XXXI may not justify the imposition of penalty if the form was subsequently produced before seizure. The intention to evade tax must be established for penalty imposition. In this case, the dealer voluntarily produced form XXXI and other documents before the seizure order, indicating no attempt to evade tax. The court, relying on precedents, held that the penalty was not justified due to the lack of evidence of tax evasion.

Conclusion:
The court ruled in favor of the dealer, holding that the penalty under section 15A(1)(o) was not justified as there was no attempt to evade tax. The orders imposing penalty were set aside, and the revision was allowed. The decision emphasized the importance of establishing intent to evade tax before imposing penalties for non-compliance with statutory requirements.