2011 (7) TMI 1042 - HC - VAT and Sales Tax

Whether the contravention of provision of law is deliberate is relevant for applying the said discretion? Held that -In our case there is no record as to whether the gold ornaments bore any mark. The copy of issue voucher dated May 29 2008 annexed with the supplementary affidavit filed by the petitioner indicates sending of new ornaments after repair and polish wash in exact weight without changing the weight. On repair usually the ornaments either gain or lose the weight. On polishing the ornaments usually lose the weight. No explanation offered as to why these ornaments on being repaired and polished did not change weight. So this issue voucher is incapable to prove return of the gold ornaments. The copy of the air way-bill dated May 30 2008 speaks of sending 1.5 kg. gold the declared value thereof was 80, 000. This is also incapable to prove return of the gold ornaments. Therefore sending back of the gold ornaments is not proved. There are no materials before us to say that the gold ornaments were returned to the petitioner for the purpose of repairing and/or polishing. We therefore find no reason to interfere with the impugned order of penalty. The application therefore fails.

Summary

Issues Involved:
1. Seizure of gold ornaments.
2. Imposition of penalty.
3. Application of Rule 99(2) of the West Bengal Value Added Tax Rules, 2005.
4. Compliance with procedural requirements for way-bill and invoices.
5. Intention to evade tax.

Issue-wise Detailed Analysis:

1. Seizure of Gold Ornaments:
The gold ornaments weighing 1313.360 gm were seized by the Assistant Sales Tax Officer at N.S.C. Bose International Airport check-post on April 18, 2008, under section 76 of the West Bengal Value Added Tax Act, 2003. The seizure was based on the carrier's failure to produce the way-bill and invoice for the gold ornaments, which were found in the consignment along with a 5000 gm gold bar.

2. Imposition of Penalty:
A penalty of Rs. 5,06,674 was imposed under section 77 of the West Bengal Value Added Tax Act, 2003, valuing the gold ornaments at Rs. 16,88,981. The reasons cited for the penalty were misdeclaration of the consignment contents and non-production of the required way-bill and invoice for the gold ornaments. The Tribunal upheld the penalty, finding no evidence to support the petitioner's claim of presenting the way-bill within the prescribed time.

3. Application of Rule 99(2) of the West Bengal Value Added Tax Rules, 2005:
The petitioner contended that the gold ornaments should be exempt from the provisions of Rule 100 under Rule 99(2)(c)(ii), which exempts gold and precious stones from certain procedural requirements. However, the authorities and the Tribunal interpreted "gold" in Rule 99(2)(c)(ii) to mean gold bars, not gold ornaments, and thus maintained the seizure and penalty.

4. Compliance with Procedural Requirements for Way-bill and Invoices:
The petitioner argued that way-bills were produced within the prescribed time, but the authorities refused to accept them. The Tribunal found no evidence to support this claim, noting that the petitioner failed to present the way-bill and other documents as required by sub-rule (1) of Rule 100. The Tribunal concluded that the infringement of Rule 100 justified the seizure under section 76.

5. Intention to Evade Tax:
The petitioner claimed there was no intention to evade tax, as the gold ornaments were returned for repair and re-exported. Citing the Supreme Court's decision in Guljag Industries v. Commercial Taxes Officer, the Tribunal held that intention is irrelevant for the imposition of monetary penalty for non-compliance with the law. The Tribunal found no evidence to support the claim that the gold ornaments were returned for repair and polishing, and thus upheld the penalty.

Final Judgment:
The High Court found that the authorities and the Tribunal erred in interpreting Rule 99(2)(c)(ii). The court held that gold ornaments, being made of gold, should be exempt from the provisions of Rule 100, as they fall within the scope of Rule 99(2)(c)(ii). Consequently, the court set aside the order of seizure and penalty, directing the respondent to refund the security amount paid by the petitioner for the release of the gold ornaments. The writ application was allowed, and the respondent was ordered to release the security amount within one month.